by Richard Hamer

The Way to Ask a Loyalty Question: “On a scale from 0 to 10, with 0 being very unlikely and 10 being very likely, how likely are you to refer your health/drug insurance to a friend or colleague?”

Senior consumers are currently showing some lack of vigor in their shopping habits for senior health insurance and drug coverage. Infrequent need to purchase and high switching costs (the effort required and potential risk of switching) define the health insurance competition.

For companies that want to grow a Medicare business, the loyalty of customers is important. We offer the Net Promoter metric for loyalty as an alternative to measures of retention or satisfaction. These metrics are often too complex to influence action and are difficult to link to growth or profit.Net Promoter was developed by Frederick Reichheld of Bain and Company, by matching survey responses to actual subsequent customer behavior. He found that the Net Promoter survey question was most closely related to future customer retention and referral behavior across a variety of industries.The Net Promoter loyalty question asks a survey respondent to consider the likelihood of a concrete action – that being, making a recommendation to a friend. Because of this, it performs better than questions about loyalty or satisfaction in the abstract such as “how satisfied are you?” or “do you think company x deserves your loyalty?”

by Richard Hamer

The Impact of an Aging Population

If all anybody ever looked at was demographic trends, we would have a gloomy picture of inactive senior citizens.  Among our findings we’d discover that seniors are living longer, but not working longer.  They have failed to save and they have not anticipated the cost of living in retirement.  Obesity rates are still increasing and the impact of that yields greater disability but not shorter life expectancy, therefore greater pressure on Medicare’s finances   And finally the one that everybody has heard over and over, the ratio between elderly people and younger people keeps getting worse. 

The U.S. Census Bureau looks at the latter indicator as a comparison between persons aged 85 and over and their children or potential caregivers, who they judge to be aged 50 to 65.  In 1970 there were 3.4 persons 85+ for every 100 persons 50-65.  Now there are 10.5 people 85+ to be taken care of by those one hundred 50-65 year olds.  In 2030 the 85+ number will be 16.

It’s a lot to absorb.  And if you try, the exorable quality of demographic trends leaves you unable to imagine getting through the next 50 years.

Here’s what we say: Demographic trends are real, but they are abstracted from real life.  In demographic trends, there is no self-determination.

A Ray of Hope

The gloom of demographics is turned to a ray of hope when the changing attitudes and aspirations of young seniors and those aging into retirement are considered.  According to the “Future of Retirement Survey” commissioned by HSBC, new seniors — the boomers –expect to remain active after 65 through work, leisure, education, and spiritual development.  They want to do something with their later years.  They are looking at retirement as a process, not an event.

Moreover, new seniors do not expect to rely on governments alone to help them in old age.  And, according to the Census Bureau, boomers at 65 may have less disability than previous retirees.  The Bureau charts that the percent of seniors with disability has dropped from 26% in 1970 to around 20% now.  They attribute this to higher educational levels and also note that poverty levels for persons 65+ continue to decline. 

Implications for Health Plans 

The implications for health plans is that a critical need they could meet is to facilitate disability free years for persons in their later years.  If the new seniors want flexible work arrangements, active lifestyles, and the freedom to pursue their many interests, then 75 is going to be the new 65.  And this will happen because seniors are addressing their post 65 years that way, not because some mis-managed government program ran out of money.  We are not trying to gloss over the real and looming problems of public finance.  We appreciate our readers granting us the luxury of, for now, focusing on the self determination of seniors and what the research says they want.

To facilitate disability free years for people aged 50 or more, health plans need outreach.  Such a program implies some manner of health coaching and cajoling of enrollees, prevention and early detection programs, effective physician involvement and management.  And it also implies an active marketing and outreach program to keep new members coming in. 

Without new members, a health plan’s enrolled population will age relative to the overall older population.  At some point, not withstanding risk adjustment, the cost of the “disability-free” programs won’t work economically.  Moreover, whatever products health plans invent to help employers and older workers work under flexible arrangements will not succeed without new blood.

Importance of Psychographics It is our argument then, that demographics are removed from real life and that understanding the psychologies of seniors will help us understand how they will address their post-65 lives.  Retirement, as the last two generations knew it, is dead.

Psychographics is one of those nasty words you hate to hear.  But behind its clunky combination of latinates is a straightforward idea:  psychographics is the measurement of psychological, as opposed to physical, characteristics.  So any political poll, public opinion poll, survey of attitudes and likely behaviors, is a psychographic study.  For health plans that want to know why seniors are interested in a product or service, a psychographic study will help segment the market into persons with similar perceptions and needs.  And from that, marketing and product development can proceed more effectively.

For more information:  http://www.deftresearch.com/deft_insights.htm Richard Hamer is a Principal at Deft Research, LLC —  www.deftresearch.com

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