David Edelman on The Power of Marketing
David Edelman is a senior lecturer in marketing at Harvard Business School and a sought-after advisor on AI, digitization, go-to-market strategy, marketing organization, and agile operations for corporations around the world. Over the course of his 30-year career, he has worked with clients such as JP Morgan Chase, SAP, American Express, Verizon, IBM, and McDonald’s and developed and popularized foundational marketing concepts such as “The Customer Decision Journey,” and “Segment-of-One Marketing.”
David served as Chief Marketing Officer of Aetna, now part of healthcare giant CVS Health, where he drove a broad transformation by implementing real-time analytics and agile operations into the 120+-year-old company. His approach of fast cycle “war rooms” that constantly test and learn accelerated the growth of its Medicare business. His team also worked to crack the code on using marketing to improve members’ health behaviors, saving the insurer millions of dollars.
David has been repeatedly recognized by Forbes as one of the “Most Influential CMOs in the World,” and by AdWeek as one of the “Top 20 Marketing and Technology Executives.” His work and writing have attracted over 1.1 million followers to his LinkedIn blog, and he has delivered dozens of keynote presentations at conferences around the world.
The Continuum recently talked with David about the foundations of marketing that he teaches his students, the challenge of using marketing to improve health behaviors, and how he sees AI changing the world of marketing.
You teach a required course in marketing to first-year MBA students at Harvard Business School. What’s the most important lesson you want them to take away from your course?
The number one thing we impress upon them is that marketing is not advertising. Marketing is a broader strategic discipline built around figuring out how to drive growth and build deeper connections with customers. There’s a lot of strategic thinking involved in segmentation and value proposition. Who is your market? What's the need that you're actually meeting in that market? What's the psychology -- the emotional and rational benefits you're tapping into? How are you going to distinguish yourself from your competitors?
Marketing also involves execution and making it happen. What will it take to actually get people engaged? What's that customer journey going to be like? And how will you address the barriers along the way for that customer?
Our students often don’t become marketers directly; they go into banking or consulting, or private equity. A lot of them go on to do entrepreneurial things, and they are very interested in marketing because they know that's key to the success of their business. Whatever role they’re in, they will need to understand marketing and have relationships with the people doing that work. That’s why the number one thing, as I said, is to make sure they recognize that marketing is not just about getting ads out the door.
Before going to Harvard, you were the CMO at Aetna. Many people are just handed their insurance plan by their employer, so what is the role of marketing in a health insurance company?
The fastest growing part of the health insurance market is Medicare for people over 65, and consumers do choose that directly. Medicare is actually a brutally competitive market. There are at least 10 different ways to market—external brokers, in-house brokers, agents online, partnerships, direct-to-consumer marketing, and all kinds of things. We worked on that and really grew that business. Also, in the commercial market, about 15% of employers offer a choice of carriers, so we marketed there as well.
Much of the work, however, wasn’t about marketing the insurance plans. It was what we call behavior change marketing. If I can get you to do healthier things, you’re healthier, and everyone saves money. When the CEO brought me in 2016, he said the economics of health care depends on people doing healthier things. He told me, “You’re going to help me drive growth and sales, but you're also going to change people's health.” That was very motivating.
“The number one thing we impress upon them is that marketing is not advertising. Marketing is a broader strategic discipline built around figuring out how to drive growth and build deeper connections with customers.”
What kind of behavior changes did you market? And how?
There were well over 50 actions that we were working on getting people to do, such as staying on their medications, getting their colonoscopy at 45, or not going to an emergency room for routine care. This was very much a “segment of one marketing” because it was all based on claims data that we had. If we noticed that there hadn’t been a claim for you to refill your statin prescription, we could target you with a “get back on your meds” message. If you were diabetic and hadn’t had your A1C checked in over three months, we could remind you to get blood work done. Or, if you’ve filed a number of claims through an emergency room, we might send you information on an urgent care center that was nearby and in-network.
The marketing challenge is that I know that I want to get you to do these things, but I don't know how to get you to do it. I don't know what it's going to take, and it’s going to vary from person to person. What motivates you versus what motivates me? I have to do all kinds of testing; I have to try different creative incentives and different ways of communicating with you.
We built a whole behavior change operation where we had pods of people from marketing, analytics, technology, and clinical operations working together to constantly put tests out in the market to find out what works.
Is there something you learned from all that testing that stood out?
People feel that health care is local. Their providers are local. Their conditions may relate to where they live. So, we found out very early on that the more local we could make the messages we sent, such as background images, the higher the response. Totally unexpected. It's the kind of thing that you’ll never know until you test and learn. And it’s why you need an engine by which you can constantly try out ideas.
“Our students often don’t become marketers directly; they go into banking or consulting, or private equity. A lot of them go on to do entrepreneurial things, and they are very interested in marketing because they know that's key to the success of their business.”
Health insurance companies are not necessarily popular with consumers—we complain about red tape and things that aren’t covered. How do you market around those negative impressions?
When I was at Aetna, we came up with a new brand position: “You don’t join us; we join you.” Our position was that we were going to help you realize your health goals. If we’re going to say that, though, we have to put things behind it. There was a major internal push around the theme, and we started looking at what we were doing which led to dissatisfaction and very
deliberately worked through ideas on how we could change that.
We re-trained our call center staff on better ways to handle customers, we upgraded their information systems, and we gave them more slack in how they addressed any complaints. They were more empowered to make decisions without having to escalate as much. The call center staff loved it, and their employee engagement scores rose.
We worked with a provider of personalized video capabilities, called SundaySky, to give members a tailored video upon their enrollment, which explained their specific plan and how to use it in very simple terms. Over 70% of members watched a video over three minutes long, call center volume went down, and satisfaction rose.
These were the kind of programs that we did behind the scenes to improve the customer experience customers, and it paid off. In Medicare, we eventually rose to be the highest star plan in the country. The government actually audits insurers’ records and creates a star rating based on a combination of customer satisfaction surveys and health outcomes. We built up to having the most five-star plans. Once you have that rating, it helps you in marketing.
This sounds like it goes back to the core messages of your course, that marketing is about a lot more than advertising. Did you consider all of those internal steps to be part of your marketing strategy?
Yes, absolutely, because otherwise, we're just making empty promises. When we developed the brand position of “you don’t join us, we join you,” we went to the board of directors to get their support. It was a risk because if we started saying that and couldn’t deliver, it could backfire. The board was supportive of the conversation and the extra budget needed to improve our members’ experiences. And it paid off, especially in Medicare, which was the most important market because of its growth and its dependence on consumer choice.
Everyone in advertising and marketing is talking about AI right now. You’ve been in marketing your entire career and were at the forefront of digital when that changed the business, and now you advise clients on using AI. How do you think AI will change marketing?
I think there are two vectors. One vector is the things you can do with AI to just get more cost effective. I think that’s going to be the baseline use—just doing things in a faster, more automated way. You come up with a messaging approach, and then you use AI to generate 10 variants that you’re going to test.
Then there's the AI that's going to be able to provide more insights and help you do more advanced strategic moves not just via generative AI but also from other machine learning forms of AI that can help you figure out who to target, for example. AI can take a whole pile of client data and sort through it to understand different cuts of segmentation that you may not have realized existed. It can help you figure out how to test as many variations as possible with as few cells as possible.
I think AI can take the grunt work out of testing marketing ideas and offer the opportunity for rapid test and learn cycles. Humans are still coming up with ideas to test, and AI is helping them get those out to market faster. I see a lot of innovation potential coming out of that. The creativity it will unleash is exciting, but we also have to be mindful of the risks that will simultaneously grow as well.
August 15, 2023
