Dolls and dollars: new insight for revenue: how we buy dolls may give some insight into how we can generate new revenue for health care

Healthcare Financial Management,  Nov, 2005  by Arthur C. Sturm, Jr.

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When I was growing up (and let's just say that was a while ago), purchases of many things were pretty simple. Take dolls, for example. Back then, we were in a manufacturing economy, and when a girl wanted a doll, she went with her more to the five-and-dime and bought one.

Today, at least if you go to American Girl Place (Chicago and New York), you don't necessarily buy a doll. You have an experience. You can spend hours there and not so coincidentally spend hundreds of dollars on lunch, a stage performance, tea, and--oh, yes, maybe a doll.

American Girl Place in Chicago is just steps from my office on Michigan Avenue. At Christmas, the line of moms, grandmas, and little girls eagerly clutching their American Girl dolls ribbons its way down the street as they wait their turn for "the experience."

This growing phenomenon is called "experience marketing." In it, consumers move from the mere purchase of manufactured goods or services (a manufacturing economy) to a confluence of activities and influences that encourage them to spend more money (an experience economy). It's not about the goods; it's about how we buy them.

If you think about it, do you really go to Starbucks just for the coffee? Is Disneyland just about the rides? Why, then, is going to the hospital arguably the most unsought--after experience in America?

Proponents of experience marketing believe it is a trend whose time is at hand. Reason: The ever-looming onslaught of baby boomers. A research report (Let's Meet the Boomers) released this past spring by C&R Research, Chicago, clearly summarized that baby boomers are much more interested in experiences than "stuff."

Here's how American Demographics (July 1, 2002), a leading publication on population trends, summarized the situation: "The members of the baby boom generation will face the inevitability of their mortality. In doing so, they will try to make up for lost rime and the things they may have missed by directing their energy and money toward experiences and away from the continued acquisition of material things. With the attitude of 'been there, done that' in buying more things, boomers will turn away from a consuming focus on things to a hunger for experiences and personal development."

For these reasons and others, major manufacturers like Sony to sports teams like the Colorado Rockies are reshuffling their senior management teams to add positions with titles like "chief customer officer," "chief experience officer," and so on.

It's Not About the Steak-It's About What Happens to You as You Eat It

Experience marketing makes it easier for us to spend money--and so far it seems to work. A new chain called Cereality recently debuted in Chicago. There, customers can "customize their breakfast cereal, topping, and drinks in a fun, funky environment." We're now seeing the applications to health care.

An early leader of experience marketing in health care is Starizon, a Keystone, Colo., experience design firm.

Gary Adamson, chief experience officer at Starizon, talks about this strategy as the next evolution in healthcare delivery. "If you look at how we have tried to change health care in its traditional setting, you'll see limited success. Experience marketing is about totally transforming a business. It's for people with big aspirations, big goals. You must create a true bond with customers based on what happens to them when experiencing your organization.

"We have to make sure people don't see this as a different form of customer satisfaction," says Adamson. "Satisfaction scores are a measure of the experience. But experience marketing is more of an immersion into every moment the customer spends with you to find out how you can make that moment valuable for the customer and ultimately financially rewarding for you."

The Healthcare Translation

For Mark Scott, a principal at Starizon and a former CEO at Mid-Columbia Medical Center, a 50-bed hospital in The Dalles, Ore., it did. Scott, who has an MBA degree, came to Mid-Columbia in 1985. "I ran it like an MBA would.. Drive the bottom line, focus on your metrics, and be competitively cutthroat. I also had the baggage that style of management creates: terrible relationships with the physicians. Frankly, I realized I didn't like my job."

Scott's transition started with an introduction to Planetree, a patient -centered approach to increasing the knowledge and involvement of patients and their families in the patients' healthcare.

"I thought they had invented the future of health care," Scott said, "with simple mandates to embrace the family, be honest about the patient's condition, and let patients participate in and be given choices about their care. I told my board this was where we needed to go--that I didn't know what it would cost, but we had to do this." The board agreed.

Scott started with a Planetree approach, and as his hospital grew, he began to apply the principles of experience marketing. "My MBA training said we needed to differentiate ourselves on technology," he said, "but I quickly learned that it was the experience of the patient and the family that would truly set us apart, hot the technology."