How DTC Disruptor Companies are Capturing Customer Attention in the Personal Health & Wellness Industry
There’s little more important than our health. But as tumultuous as the world around us has become, there’s a surprising fact: overall, people are living longer, happier, and healthier lives now than they ever have experienced in the past.
Maybe this isn’t so surprising after all, given the enormous technological advances, scientific discoveries, and medical innovations that have surfaced on the market in recent decades. And how has the market responded in turn? As customers vigorously ramp up their expenditures on the Personal Health & Wellness industry, companies are turning to disruptive business ideas to desperately find their niche and capitalize on a lucrative market segment.
Dissecting The Industry
The Health & Wellness industry is a fast changing, dynamic environment with strong upward momentum and a broad diversity of categories. The numbers are clear: between 2015 and 2017, the industry grew 12.8%, and represented an astonishing 5.3% of total global economic output. The average customer spends more than $100 per month – or $1,300 a year – on dietary wellness products and supplements; and, several key sectors are contributing to the significant economic profile of the industry within the US and globally:
- Beauty & Anti-Aging ($1.026 tril.)
- Healthy Eating/Nutrition/Weight Loss ($574 bil.)
- Wellness Tourism ($494 bil.)
- Fitness & Mind/Body ($446.4 bil.)
- Preventative/Personalized Health ($433 bil.)
- Complementary/Alternative Medicine ($187 bil.)
- Wellness Lifestyle Real Estate ($100 bil.)
- Spa Industry ($94 bil.)
- Thermal/Mineral Springs ($50 bil.)
- Workplace Wellness ($41 bil.)
Disruptions Have Never Been Healthier
For an industry that has blossomed into a beneficial, vibrant component of our everyday lives, there is an insidious force at play tearing apart the inner workings of time-honored institutions and hammering permanent change across the landscape. But this isn’t some malignant disease best left to fester within the dusty tomes on the darkest medical library shelves; we’re talking about “disruptors”, businesses that thrive on subverting the norm by tapping into deep seated consumer concerns.
Disruptors are everywhere in today’s world – just take a walk down the street, and you’ll notice Uber, food delivery services, Airbnb, and of course, the countless technology companies whose plaques and logos decorate almost every urban twist and turn. The Healthcare industry is not immune to the influence of disruptor businesses partly because customers crave the benefits disruptor companies have to offer:
- When it comes to dealing with companies, 72% of Millennials and Gen Zs prefer self-service options
- 39% of Millennials and 36% of Gen Xs would prefer personalized health programs
- 40% of younger customers (who will one day make up the majority of Healthcare and Wellness patients) prefer remote delivery of services, compared to only 19% of Baby Boomers.
And contrary to popular belief, technology doesn’t birth influential disruptors, unhappy customers do. And there are a few salient problems which contribute to broad customer unhappiness:
- Convenience – tapping into healthcare services currently takes a lot of time and effort
- Cost – traditional healthcare services, treatments, and products are often quite expensive
- Marketing Message – in spite of today’s diverse customer landscape, the messaging and branding disseminated by companies often do not reflect the demographic makeup of its target market constituents
DTC (Direct-To-Customer) Business Models: The Answer Customers Have Been Waiting For
Customer preference for personalization combined with advances in technology, data, and logistical distribution have presented disruptor businesses with a plethora of viable options for reaching their target audiences. But few have been more successful than the Direct-To-Customer, or DTC model.
DTC businesses offer customers the ability to receive the exact products they need with the convenience of never having to step out the door. The big deal for customers is that the products and services offered completely bypass traditional (and frequently obstacle-riddled) fulfillment channels.
The formula has proven lucrative, and an explosion of options now exist to deliver healthcare and wellness offerings to hungry markets.
Targeting women, Rory provides personalized healthcare services and connects patients with clinical directors and experts specializing in women’s health, featuring appealing branding and marketing messages uniquely tailored to its market segment. Leveraging a connected omni-channel platform, patients complete an online medical survey and receive follow-up care via message, phone, or video conferencing, with personalized medications delivered straight to the door.
Hims positions themselves as a one-stop-shop for men’s wellness and personal care; focusing on treatment options for hair loss and erectile dysfunction, they have expanded their product offerings to feature skincare, performance anxiety, and general well-being. All of their products are available for direct delivery, and prescriptions can be obtained via an online medical assessment available through their platform, leveraging technology to bypass the hassle of traditional doctor referrals and in-office visits.
SmileDirectClub is tackling the barrier-fraught orthodontics industry with a revolutionary new concept; direct-to-customer orthodontic treatment that leverages technology and teledentistry to deliver cosmetic dentistry remotely. Patients create their own molds for their teeth, monitor their own progress, and can benefit from orthodontic services that are less invasive and more aesthetically appealing than the traditional metal bracket braces of years gone by. As a result, overall costs are kept low, convenience is priority, and access to diverse customer segments is maximized.
The above case studies are powerful disruptors, but we have to wonder how they intend to build Customer Loyalty in the long run — beyond just being a convenient and socially-easy alternative to traditional pathways.
We reached out to Barry Kirk, Vice President of Loyalty Strategy at Maritz Motivation, for his input: “The DTC model in healthcare is essentially a no-brainer when you consider how much friction exists for patients going through traditional healthcare channels. These brands are positioned to do for healthcare what Uber and Lyft did for the ride hailing experience or Grubhub did for the food ordering experience ... The challenge for these companies will lie in how you maintain loyalty as a healthcare brand in the absence of a human-to-human interaction. While many standard healthcare channels can be difficult to navigate, they do ultimately offer you the chance to build a strong connection with your doctor or nurse practitioner that can be very sticky; DTC companies eliminate that personal interaction. As a result, they will likely have to rely on more tactical value props – like price or delivery speed – in order to compete with like companies.”
It goes without saying, we will be following these disruptors and their peers very closely.