Women have the kind of customer loyalty that transmits real value in healthcare. By Lisa Suennen (Co-Founder & Managing Partner, Psilos Group)
I recently saw a statistic from my friends at Rock Health that said that women comprise only 4% of healthcare industry CEOs. For those of you who are slow at math, this means that 96% of the people running pharmaceutical, medical device, healthcare IT, healthcare service, provider system, health insurance and all of the other healthcare enterprises out there are men.
Despite 51% of the American population being female, this has been a persistent fact since anyone bothered checking. In fact, I bet the number of women CEOs in healthcare has more than doubled — to 4% – in the last 10 or 20 years. I don’t have a citation on that, but I bet I’m not far off.
Since it has been lamented and documented to death, I don’t want to talk here about how the above-stated statistic is either pathetic (which it is) or ill-advised for maximizing financial value (which it also is). Rather, I would like to direct you to pay rapt attention to Women in Healthcare Week, which commences July 30, 2012 and which has been catalyzed by some of the work at Rock Health and their partners. There are some really great resources at this site and a great video to come on July 30th, so check back HERE on that date.
I am also not going to use this particular blog post to explain how and why, at least in my opinion, the lack of female healthcare CEOs limits the financial success of the industry. Instead, recognizing that it will take decades to make a quantum change in this situation if history is any judge, I want to take this particular moment to talk to the men who run our healthcare industry about how important it is to have their eyes-wide open when it comes to selling their products and services to all of their potential customers within the marketplace, not just those that buy the same magazines, have hair on their backs and worry about their prostates.
The men who run our healthcare system often ignore the market needs of their female customers and they do so at their own financial peril. I have been on a number of healthcare company Boards of Directors and it suddenly occurs to me that not once has this topic ever been seriously explored by one of my companies. Of course, the fact that most of these Boards are as male-dominated as their leadership teams doesn’t help raise that topic to the top of the agenda.
It is a natural human behavior for people to congregate with people like themselves and to look at the world through me-colored glasses. There is no reason to believe that the average healthcare leader, male or female, would do this any less than anyone else. The results of this natural behavior in the healthcare industry are clear: we have had decades of clinical research where women were excluded from results and where much of the product development, marketing and advertising related to healthcare products and services has been targeted to the testosterone-fueled side of the marketplace.
The enterprise value-dampening effects of gender bias are further amplified in the healthcare field where so much of what is sold to the end-user customer has the physician as the real sales intermediary; in other words, we have XY chromosomes at companies selling to XY chromosomes in practices, most of whom have been educated by the same XY crowd.
A few statistics for you: while the number of female physicians has grown markedly over the last 30-40 years, the number still sits at 30% despite the fact that about 48% of medical degrees go to women. Of those 30%, a large number work only part-time. Even when you take a very narrow focus on “female medicine” and look at gynecology, it is notable that fewer than half of gynecologists are women (47% according to the American Congress of Obstetrics and Gynecology; notably 70% of their executive board members are men).
While I know that there are many excellent and highly qualified male gynecologists, it is hard to suppress the urge to say, “How would you know?” when they make recommendations about certain products and services. I mean, seriously; have these guys ever actually operated a tampon?
Women are also very underrepresented in medical academia, accounting for about 10% of department chairs, 16% of full professors and 11% of medical school deans. In other words, the system may be producing more female doctors, but they are being trained with the biases and blind spots of their male counterparts much of the time.
Notably, those who enter the senior ranks of healthcare industry leadership through the business school route have a similar experience. About 18% of full professors in the MBA schools are women despite more than 30% of the students, on average being female. In other words, virtually every river you can navigate into the waters of healthcare senior leadership courses with testosterone.
My point is this: if your company is male-centric, your sales force is male-centric, and the people who really sell for you (the doctors and pharmacists and insurance brokers) are also male-centric, you had better give some serious thought to how that impacts how you market your products and services to the female side of the marketplace. Failing to do so has very real implications for how healthcare industry leaders can unintentionally stunt their own success by being too much the product of their own chromosomes and experiences.
If you guys are still trying to put these thoughts to the side because they are coming from a woman, I’ll give you some hard core data to chew on that transcends my own gender bias (which, incidentally, largely plays out in excessive shoe purchases).
Here are 7 indisputable facts that should make you want to repackage all of your products in pink, ensure 50% of your clinical trial participants are chicks, and hire women to lead your social media marketing efforts right away.
- Women represent more than 50% of the U.S. population - and thus, companies have the potentially to as much as double their target market just by paying attention here. No doubt virtually all healthcare companies have women in their customer base, but it is worth investigating what percentage that customer demographic represents. If it is less than 50% and you sell a product that is not limited to use by men, then you have some obvious growth opportunities.
- Women control the checkbook - If one actually believed the stereotypes that have perpetuated about women and our national economy, one would readily overlook these interesting facts:
- The average U.S. woman is expected to earn more than the average U.S. male by 2028
- 51% of U.S. Private wealth is controlled by women
- Women account for over 50% of all stock ownership in the U.S.
- Women control more than 60% of all personal wealth in the U.S.
- Women control more than 80% of all U.S. spending
If those figures don’t make you want to figure out how to invest in sales and marketing programs to actively attract the attention of the female marketplace, you are not a very good CEO.
- Women also influence or control much of how the other 50% purchase healthcare - It is pretty obvious that women decide when and how their children will utilize healthcare services most of the time. I am not saying that fathers never have a say or participate in that decision, but let’s get real. It’s the moms that generally drag the kids to the pediatrician and buy them anti-colic drops at Whole Foods. The global pediatric market is estimated at around $81 billion by at least one group. With expanded insurance coverage of children courtesy of the PPACA, that market is expanding markedly. Appealing to the moms that control the bulk of that $81 billion is a good way to get your hands on it. On a more global basis, it is estimated that moms represent a $2.4 trillion market.
- Women also control or at least heavily influence much of the healthcare purchasing behavior related to the men in their lives. For instance, Kaiser Permanente did a study a few years back that showed that, on average, 75% of health plan choices were made by women and that, overall, 80% of all family healthcare decisions were made by women.
- Women live about 10 years longer than men - As a result, they represent 10 more years of customer purchasing power than their male counterparts. If the lifetime value of a customer is important to your product line because you have a recurring revenue model (and assuming your product is relevant to the over-50 market), understanding how to serve the female marketplace enables you to create about 10 more years of same store value than you can get out of your male customers.
- Women are willing to spend money, and lots of it, on health and wellness and related verticals - It is essential to recognize that women’s health does not equal medicine that is directed to areas covered only by a bikini. Yes, women care about gynecology and breast cancer, but in the scheme of things the healthcare issues associated with those two categories are small potatoes. Heart disease, lung cancer, diabetes, orthopedic problems, health insurance, choosing what provider/hospital to go to... those are the bread and butter of human healthcare purchases.
- It is time to redefine women’s health as healthcare that happens to be for women. When you open your mind to that definition, the market potential rises exponentially. In fact, look at it this way: the U.S. healthcare market is estimated at about $2.8 trillion in 2012.
If 80% of all that money is being influenced in some way by women, you should be paying better attention to your mom. Of course this is not exactly the right way to look at it since so much of medicine is based on what physicians (majority: men) recommend to their patients, but no matter how you slice it, the number is large. And women are the ones picking the family doctors, so marketing to doctors who appeal to women is a key part of the value creation chain.
- Women have the kind of customer loyalty that transmits real value in healthcare - It used to be believed that women are “more loyal” customers than men. That theory has largely been altered to recognize that women and men exhibit different kinds of customer loyalty. Whereas female customers are relatively more loyal than male customers to individuals such as individual service providers, males are relatively more loyal than females to groups and group-like entities such as companies.
- When you are talking about an industry, such as healthcare, where purchases are extremely personal and largely made as the result of person-to-person, one-on-one relationships (e.g., through physician or pharmacist recommendation, broker sale, etc), attracting a female customer base can be a significant advantage in establishing long-term customer loyalty.
In fact, while it is often conventional wisdom that advertising should promote loyalty to company brand names (something we see a lot of in pharmaceutical marketing, hospital marketing, insurance plan marketing, etc.), it would seem that the smart money would be on promoting the personal experience/relationships between individuals (doctors, pharmacists, brokers, etc.) and consumers if women control 80% of healthcare spending. Kaiser has been particularly sensitive to this, I note, in the development of advertising that emphasizes the individual physicians in their employ vs. the corporate brand itself. These guys know where their bread is buttered.
- Women communicate about their experiences - Yeah, everyone knows women talk a lot. But if you are the purveyor of a product or service and you want to proliferate its use, you want them to keep talking. This is particularly so in the brave new world of social media, which the healthcare industry is desperately trying to figure out how to utilize to its advantage.
- Women tend to do far more research and ask for referrals and advice than men when making a significant purchase decision, including a decision around service providers. Research also shows that women tend to shop around longer and make more “wholistic” decisions about purchases, taking into account more lifestyle factors than do men. It is worth noting that 78% of women in the U.S. use the Internet for product information before making a purchase and account for 58% of all total online spending; 22% shop online at least once a day. Notably 92% of women pass along information about deals or finds to others.
When it comes to moms, the primary healthcare purchaser in our country, note that 63% read blogs online and that the average moms mention brands an average of 73 times/week vs. 57 times/week among males. 64% of moms ask other moms for advice before making purchases. Women spend 2 more hours per week on social networking sites. When you combine that statistic with the fact that people over age 55 represent the fastest growing segment of social media users, you know healthcare is going to be a major topic of their social communications.
Overall these statistics have significant ramifications for how marketing should be conducted in this age of social media. If you fail to appeal to women in your efforts to market your healthcare product or service in this day and age, you are missing out on a true advantage of the medium: free advertising through customer testimonial.
And perhaps more importantly, if you provide healthcare products and services to women that are not well-received, the blogosphere and everyone else in the world is going to know about it and fast.
In summary, healthcare may be a mans’ world, but it’s a woman’s marketplace. If men want truly to maximize their market success while they still run the world, the way to do it is through walking a mile in our very attractive and uncomfortable shoes. As for the women who aspire to leadership in the healthcare field, keep on keepin’ on and never give up. At a minimum you will get your shot during those 10 years when you outlive your male colleagues.
This post was originally posted at Venture Valkyrie. About the guest blogger: Lisa Suennen is the Co-Founder and Managing Partner of Psilos Group, a healthcare investment firm focused on providing venture and growth capital to companies operating in the healthcare economy. She serves as a Director on the Board of several Psilos portfolio companies, including AngioScore (chairman), PatientSafe Solutions, OmniGuide and VeraLight (chairman). Lisa blogs at Venture Valkyrie. Follow her on Twitter at @VentureValkyrie.