While broader economic challenges and higher advertising costs are likely to persist, some digital health companies are building platforms that could be resilient.
A growing number of consumer-facing companies are building grassroots communities instead of acquiring customers with traditional advertising.
“Instead of having to pay through the roof for every new customer you generate, you're just acquiring new people all the time through referrals that come in from your community,” said Christina Farr, an investor at venture firm, OMERS Ventures.
Farr’s fund is experiencing this with a company in its portfolio, Oath Care, a digital health platform that connects parents with expert-led workshops. The company assigns parents to pods based on shared experiences.
“In the past community has been something of an afterthought,” said Camilla Hermann, Oath Care’s co-founder and CEO. “We have always built that as a central pillar of how we deliver care and create connection.”
Community is core to the user experience and value proposition, Hermann said. “How do you make someone feel connected? How do you bring them that community they've been searching for? And how can you answer those urgent questions about their kids’ health at 4 a.m.?” she said.
Instead of having to pay through the roof for every new customer you generate, you're just acquiring new people all the time through referrals that come in from your community"
Christina Farr, OMERS Ventures
About 80% of the company’s growth comes from word of mouth, Hermann said. She said paid marketing costs have increased, which made them easier to forgo.
“It was clear to us that it was much better, if we could do it, to build a really solid word-of-mouth core to our marketing strategy, because that would give us compounding returns," Hermann said. She added that Oath Care has no plans to invest significant resources in paid advertising.
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Rising costs allow for a different method of growth
Many experts anticipate the costs associated with acquiring new customers for direct-to-consumer digital health companies to rise.
"The complexity with consumer-focused models is that they are front line—they maybe see that [economic] reaction first,” said Bill Geary, co-founder and partner at Flare Capital, a venture capital firm investing in early-stage and emerging healthcare and technology companies. “The focus on customer acquisition cost, the long-term value of customer—those are super hard metrics to get right.”
Geary and other experts say balancing profitability with growth can be difficult, especially for early-stage companies. Many are reducing advertising spend as a result.
Oath isn’t the only company attempting to create engaged, virtual health communities. Kate Steinle, chief clinical officer at FOLX Health, a digital healthcare service provider primarily servicing LGBTQIA+ patients, said the platform recently launched a community feature with hopes of engaging patients with each other.
“Having that one clinician is great or the clinical team that's taking care of them, but it's even more powerful to know that other people are going through the same process as they are,” Steinle said. “The only ways that you're going to make positive outcomes happen is when engagement happens.”
FOLX is using a portion of the $30 million in venture funding it secured last month to establish its peer support groups.
Oath Care and FOLX are joining a growing list of companies in these efforts that include NOCD, a digital health OCD therapy platform, and Noom, a digital weight loss company. Farr said identifying pockets of patients who seek additional engagement and authentically curating it are key as platforms grow larger.
Positive user experiences are core to growth
As companies take this approach, users say founders should be purposeful in how communities are built. While it is important each feels organic, most agree there’s a balance to strike.
Lauren Rubin participated in Oath Care’s beta community groups. While she had a positive experience, she drew distinctions between the dialogues taking place there and others online.
“There are a lot of communities that exist today--Facebook groups [and] subreddits—that I’m still a part of,” she said. “But that’s more of the wild, wild west.”
At Oath Care, she found engagement to be more monitored.
“It’s very much a safe space,” Rubin said. “They’re going to have to continue to monitor that and make sure it stays that way.”
Sharon Stiteler, who works for the National Parks Service in Alaska, was seeking to engage with a weight loss community early during the COVID-19 pandemic. While she had a largely positive with Noom, she cautioned certain conversations and community forum interactions could be difficult for people with nuanced, special conditions.
“If those conversations start to happen in a community forum, you really need an actual person to watch that and not a bot,” Stiteler said.
Stiteler has engaged with other digital health companies. She and other users say these digital health communities are appealing because they’re more nuanced and contain less spam than other social media platforms.
As platforms grow—both in number and users—Stiteler has advice to founders: “Be more thoughtful about the communities and have actual people running them,” she said.
This story first appeared in Digital Health Business & Technology.