new 1,200 sq. ft. “health technology departments” in 3 suburban Chicago
locations. In these departments, Best Buy is selling a broad
range of technologies and tools for fitness, sleep, nutrition and beauty
alongside the Aetna programs. The strategy: target Best Buy’s tech savvy
customers when they are thinking about health and when they have an expectation
to buy (vs. for example being on-line when there is more of an expectation of
getting stuff for free or in return for squinting past advertisements).
- Business model: can wellness programs be monetized by selling
directly to consumers in the right setting (a store vs. on-line or as part of
an insurance package)? What’s a viable price point (Aetna is starting
with $19.99 per program)? Is there a
stand-alone business model here?
- Insurer brand: is the Aetna brand a plus, neutral or a negative
in selling the programs? Does consumer
perception of the Aetna brand change before and after an experience in the
department? After buying a product?
- Retailer brand: how far can the Best Buy brand and buying
experience be stretched? Are consumers
really ready to think about / admit to the Best Buy sales person their health
gaps and coaching needs or do they really just want to buy gadgets? Can Best Buy sales people be trained to pitch
what must be an unfamiliar product and value proposition?
- Product: what’s the right product configuration? Gadget and on-line coaching programs separately
and side by side? Bundled (for example a
pedometer with fitness coaching or stress management and blood pressure cuff)?
Beyond the specifics of the pilot, Aetna may also be
building a beachhead in one of the most trafficked retail formats in the
country (I’d estimate around 700K-800K visits per store 900M visits a year to the US retail system). Creating band awareness among consumers who
are interested in improving their health may be a good thing: likely as not, the health status of these consumers
as measured by risk adjusters may look average.
But the fact that they are interested in doing something about it
(patrolling the health section of Best Buy is a good indication) means they may
be in better shape than the risk adjusters can detect: a nice arbitrage opportunity in a
consumerized post-reform insurance world.
business model: the test seems like too
direct an insertion of health care services thinking into a retail
context. “Buy this program we give our
members for free”. I would be surprised
if the sales took off if that is all there it.
But add a few tweaks and there could be something interesting. Imagine:
- Product: More customized bundles specific to the gadgets
being bought: fitness software which auto-connects to whatever device you
bought, tells you how you are doing and what else you should be doing
(stretching, other exercises) to have a balanced regime; bonus, you can sell
those other devices. Sell it like the
extended warrantee Best Buy pitches as part of many big consumer electronics
purchases (perhaps even test a consumer satisfaction guarantee: if you use the device regularly for 90 days as
tracked by the software and still want to return it, fine).
- Value proposition: Specific incentive packages for Aetna
members: if you happen to have an Aetna
membership, you get the package for free plus an $x coupon at Best Buy
redeemable after 90 days of trackable use (whatever is the equivalent
acquisition cost Aetna spends trying to get people on these programs among its
membership plus a piece of the health care cost impact). Second order effect: non-Aetna members are
intrigued with Aetna putting dollars in the hands of their members.
- Positioning: Alternative locations inside Best Buy besides
the “health department”. Take the smart phone department: Imagine offering a bundled smart phone and pedometer:
the pedometer connects to a smart phone, collects your walking data and upon
achieving certain milestones, puts money against your phone bill or on your
credit card. Again, for Aetna members
only. Sure, complicated sale, but you
can strip down the sales pitch if the model proves out. And in the meantime, every customer is asked “do
you happen to be an Aetna member? Aw,
too bad, we’ve got a great program…”
well – they could build up a very interesting lead in understanding the right
model. But the stand-alone business model is probably not the essential part of the story: What remains more interesting is the impact on brand awareness and brand perception (Aetna = technology worthy of Best Buy shelf space) among the health-interested.