Saturday, August 16, 2014

Wellness Incentives Are Like Cents-Off Coupons: Good for the First Sale, But Not For Brand Loyalty

I continue to find interesting parallels between my career in advertising and my current involvement with health and well-being improvement.Recently, I've written about customer engagement and the lessons that the Mad Men of the past can provide in serving today's employer and health plan buyers. Another post related to the experience of advertising development as a blueprint for member communications planning.Today, I'm comparing participation incentives to promotional spending on consumer brands. Each are helpful in driving some action, but neither produce sustainable results.Most employers today, along with their vendor partners, have gotten into the practice of embedding incentives into program design. Employees expect it and some of the payola is actually quite rewarding.And, according to the most recent Fidelity/NBGH survey, employers had planned to spend an average of $594 per employee on wellness-based incentives this year - up 15% from last year and more than double the $260 figure from five years ago. Nearly all (93%) said they plan to expand or maintain wellness-based incentive spending over the next 3-5 years.Incentives are definitely a way to spur people to action, and have proven effective in many areas of consumer marketing.They work in getting prospects into dealer showrooms, initiating purchase decisions at the supermarket, and driving fast-food sales volume.Price-based tactics are funded from promotional budgets, usually at the expense of advertising. In consumer marketing, there's always been a tug of war between above-the-line advertising and below-the-line promotional spending.Advertising is generally designed to build brand awareness and image, define and reinforce positioning, and encourage preference in purchase decisions.

Promotion - which includes coupons, rebates, end-aisle displays, retail allowances, and buy-one get-one free offers - are intended to push a short-term sales bump, but are not sustainable.Few companies want their product lines to be known as the low-price or cheap choice in a category.That is not the way to create brand equity and superior brand power. Similarly, health and wellness programs shouldn't be thought of as "pay for participation" schemes.But, many employees do simply "check the box" and then cash the check.The question of how and whether incentives work in the wellness arena is still a somewhat open question. And with the Affordable Care Act broadening the scope of spending, we can expect to see increased investment.Unfortunately, incentives have become the "go-to" solution to drive "engagement" - largely because most company's cultures aren't yet strong enough to support the natural appeal of health and well-being improvement.In employee wellness, the "advertising" component can be thought of as the overall story and rationale for having such a program. We need to deliver good context and sufficient transparency about why this is important - to the company and to the employee.With strong story-telling and effective communications, the reliance on the "promotion" side can eventually be reduced.In truth, incentives are probably here to stay. They do serve a purpose in stimulating action, but their use needs to be considered in the context of the overall engagement strategy and desired outcomes.

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