An article written with Bingcan Chen, executive director of data science, and Darren Malysa, senior data scientist, at CVS Health®
Predictive analytics play an increasingly important role in corporate decision-making, equipping business division leaders with the data they need to make informed choices. While developing market-based insights typically has been the domain of data analytics and information management teams, this capability is now becoming more broadly distributed across the enterprise. Data democratization represents a significant shift in increasing an organization’s in-house data maturity and literacy, especially with the proliferation of self-service tools and dashboards customized and optimized for specific business use cases. Decision-makers can interpret data and guide business planning with greater autonomy and, over time, lower costs by setting up standardized in-house capabilities. Our recent collaboration with CVS Health highlights how ZS partners with organizations to accelerate this transition.
Medicare Advantage represents a substantial opportunity for insurance carriers such as CVS Health, with almost half of Medicare beneficiaries enrolled in a Medicare Advantage plan. In the 15-year period beginning in 2015, the number of Medicare-eligible U.S. senior citizens is expected to grow by nearly 50%, from 54 million to an estimated 80 million.
Medicare-eligible beneficiaries each year have the option to enroll in a Medicare Advantage plan during a brief window known as the annual enrollment period (AEP). With advertising commitments required several weeks in advance, health plans must know which digital and traditional advertising channels best position them to retain members, attract new members or persuade members to switch from a competitor.
CVS Health is one of the largest health insurance providers in the U.S., with a strong presence in the Medicare Advantage marketplace. Achieving success in this highly competitive market requires organizational cohesion and agile decision-making across analytics and marketing stakeholders. CVS Health collaborated with ZS to make real-time data-based insights available to stakeholders during the AEP. This enabled the teams to optimize their marketing outreach and increase healthcare access by driving new Medicare Advantage enrollments. The interactive Budget Planner tool we developed and collaborated with CVS Health to customize for CVS Health’s application helped inform budget decisions for the 2023 enrollment period. In future years, it will be used to optimize overall marketing budgets to reduce inefficient spending and increase profits.
The key business objectives that we helped CVS Health address through our partnership included:
- Optimizing campaign spend in real time to align with the Medicare Advantage AEP and fund national and regional marketing
- Looking beyond traditional, descriptive key performance indicators (KPI) to quantify new enrollment drivers (e.g., via attributive models)
- Accelerating time to insight to expedite decision-making
- Integrating and scaling CVS Health’s existing marketing mix modeling toolkit
- Developing a scalable and standardized analytics capability with consistent data practices across the organization
Moving forward, CVS Health expects to see greater in-house collaboration in making marketing spend decisions across its divisions. Teams can share goals and collectively understand what performance metrics mean with respect to choosing channels that best reach existing or aging-in Medicare beneficiaries. Eventually, data generated by the tool can help CVS Health marketing teams tailor the customer experience and create calls to action that guide customers to the most cost-effective channel to enroll in a Medicare Advantage plan.
We began our collaboration by creating a multisource dashboard with a standardized sales funnel across multiple online and offline channels. This dashboard allows business users to view KPIs of interest and perform real-time deep dives across different markets and promotional channels to find opportunities to further optimize campaigns during the AEP.
Next, we leveraged our ZAIDYN platform to help CVS Health expand its in-house marketing mix modeling solution to address budget planning use cases and conduct post-campaign analyses. The comprehensive models developed as part of our collaboration with CVS Health were used to evaluate the overall impact of CVS Health’s marketing. Results from the models were fed into our Budget Planner application to derive real-time, exhaustive Channel X market-level budget recommendations and help CVS Health meet KPI targets. To maximize impact, we seamlessly configured Budget Planner to meet CVS Health’s specific business needs and financial constraints.
Having access to the planning tool allowed CVS Health stakeholders to test assumptions and hypotheses in real time and build internal consensus around which channels could deliver optimal results. While the full effects of the new tools won’t be known until 2023, early indicators are strong. Improved promotional investment productivity, led by a strategic reduction in underperforming regions and channels, is expected to yield a significant (10% to 30%) increase in returns on marketing investment. Standardizing CVS Health’s marketing mix modeling capabilities is expected to lift the company’s margins by cutting the effort to train and refresh model iterations by more than half.
Making data insights more accessible via an interactive go-to-market dashboard and creating transparency around how recommendations were developed has increased confidence in both the data and the process. The approach moved marketing mix discussions between CVS Health’s internal teams and outside agencies from opinion to an analysis of data-backed benchmarks, supplementing the domain knowledge of internal subject matter experts.
Our collaboration with CVS Health to support its Medicare Advantage business complements its broader corporate digital transformation initiatives. As the company works to become a leading technology-enabled and data-centric health plan, its ability to grow hinges on how well it can mine large data assets to yield the right insights at the right time. Through our partnership, we established successful ways of working, incorporating inputs from key business and marketing stakeholders to ensure optimal impact from our tools and recommendations. The tool we developed positions CVS Health business division leaders to ensure analytics accuracy and rigor while quickly iterating new scenarios to determine the best path forward.
Increasing the availability of campaign performance data promises to help CVS Health marketing teams accurately forecast future advertising budgets, optimize marketing mix to win more members and continually refine models. Our real-time dashboard integrates and makes accessible KPIs of interest to all business stakeholders, thereby aligning objectives across the organization. Through our marketing mix modeling exercise, we helped CVS Health standardize data capture practices, ensuring that the granularity and frequency facilitated operational insights. Although our work with the company initially focused on its Medicare Advantage plans, the scalable approach we developed is being implemented across the company’s other insurance products.
This collaboration has demonstrated how health plans can embark on a platform-driven approach to democratize analytics and accelerate their transition to a data-led organization.
CVS Health® is a registered trademark of CVS Pharmacy Inc.