Best Practices of Practice Fusion

“I just signed up for this new software package,” my friend Dr. Grace Alessi said over Margaritas at a family outing on Mother’s Day. “It’s incredible!”

Formerly an internist at a family medical group, Grace started an independent medical practice in town two months ago. It’s called Balanced Well-Being Health Care of Fort Collins, Colorado. She and I were catching up, and I told her I was doing work in cloud computing these days. Grace proceeded to RAVE about how wonderful the cloud concept was and how much she liked her new web-based application.

When opening her new office, she had considered buying a software license to manage medical records through her former practice, but the cost would have been $15,000 right out of the box. It was well out of her budget for just getting started. Instead, she discovered Practice Fusion, a freemium SaaS offering that manages Electronic Health Records (EHR) for medical offices.

She couldn’t believe how easy it was to set up and use. “They said, ‘Live in Five’ and they weren’t kidding!” Practice Fusion advertises that any new customer can be up and charting patients in five minutes. Grace said they solved a browser issue on her computer right away and she was rolling, as promised.

“I have a dedicated assistant, Jason, who’s fantastic. I can call for him help any time. He always answers, ‘Yes, Dr. Alessi, how can I help you?’” Practice Fusion boasts over 170,000 users and says it’s the fastest growing EHR application. Clearly the company has found a way to keep an intimate feel while scaling operations quickly. They understand the personal touch makes customers raving fans, and they’ve implemented the technology, staffing, and processes to make it all work. Can they keep it up? The robustness of their strategic management system will ultimately determine that; how well their practices enable planning, execution, and learning amidst rapid growth.

Grace said she didn’t know how Practice Fusion could make money with a free price tag, and commented that after a while she didn’t even notice the ads scrolling at the bottom of the screen. She said she would have paid $100/mo. without blinking since it was still a fraction of what she would have spent. Do the math. With over 170,000 subscribers, that’s a cool $17M per month run rate if everyone felt the same way. I’m left wondering if advertising to physicians brings in anywhere near that number.

If being free, easy to use, and HIPAA compliant weren't enough, Practice Fusion further differentiates by publishing ‘three nines’ of availability in their Service Level Agreement (SLA). In the medical industry, system reliability is obviously a concern. The contract offers service credits if the company doesn’t deliver. Grace didn’t mention this, but to me it’s always impressive to make a customer promise and hold yourself accountable to it.

Looking at what I’ve written above, I need to clarify: I’m a management consultant, NOT a paid spokesman for Practice Fusion. Neither is Grace. But her enthusiasm is contagious—to use a medical term. And like recognizing the attention to detail that distinguishes Ritz-Carlton, a two-time recipient of the Malcolm Baldrige National Quality Award and perennially successful in the commodity-driven hotel industry, I appreciate rare SaaS companies like Practice Fusion that understand unparalleled service is the key to low customer churn, higher referral rates, and maximum profitability. After all, SaaS stands for “Software as a SERVICE.” Sure, some IaaS and PaaS vendors may scoff, saying SaaS providers serving end customers are the only ones needing to worry about good service, but last I checked the acronym applies to them, too.

“I don’t know why anyone would buy anything else. What’s going to happen to the other software companies?” On that cloud computing observation, Grace asked the most important question of all. From their actions, it's clear Practice Fusion intends to be here for a while.

What Starts Right, Stays Right

More cloud computing organizations are “onboarding,” implementing processes to ensure customers experience a smooth transition to their technology product or managed services right after the sale. Managers intuitively recognize the need to begin new customer relationships on a positive note.

Their instincts are well-founded. Research shows creating and maintaining positive customer experiences, especially at the very beginning, pays dividends. Ruth Bolton studied customer satisfaction and churn in the cellular phone industry¹ and found:

·         Negative experiences in the beginning are a major factor in short-term customer exits

·         The longer people have satisfactory experiences, the less likely they are to churn

·         Customers who have many months of positive experiences weigh cumulative satisfaction more heavily than any occasional, negative experiences that occur later

Researcher Ho Huy Tuu confirmed that specific factors affect the satisfaction–loyalty relationship in a combined and interactive way: ²

·         Involvement: an individual’s long-term evaluation of importance and significance consuming a product

·         Ambivalence: an individual’s emotions towards consuming a product (Tuu proved ambivalence was negatively correlated, i.e. Caring is the factor in satisfaction)

·         Knowledge: a person’s evaluation of their familiarity, expertise performing a task, and consumption of a product in a specific transaction

·         Certainty: the consumer’s confidence evaluating their satisfaction with a product

Tuu also verified that actively mitigating customer’s perception of risk is essential. Fear, he demonstrated, trumps positive loyalty gained from high satisfaction.

What’s more, along with Svein Ottar Olsen,³ Tuu confirmed the effects between satisfaction and loyalty are nonlinear—at high levels, small increases in satisfaction have a disproportionate impact on customer loyalty. That means there’s no point of “diminishing returns” when it comes to continuous improvement; above certain levels, loyalty impact from customer satisfaction multiplies. They suggested offering ‘delight’ or ‘exceeding expectations’ explains these nonlinear loyalty behavior effects.  

Research shows cloud computing companies are on the right track; onboarding is indeed an important strategy for reducing customer churn. An effective process engages the customer, increases their knowledge, and gives customers reasons to care about the product and the people behind it. Orientation should not simply be a “data dump” of technologies and product features—feelings matter! Companies should pay close attention to allaying customer fears, such as emphasizing data security, privacy, system reliability, and responsive support. To put the customer experience into orbit, companies should surprise customers, showing them extra benefits in exceptionally positive, personal interactions. First impressions linger, and maintaining and improving service increases customer certainty, reducing the potential for customer churn down the road.  

Footnotes:

1.       Bolton, Ruth. “A Dynamic Model of the Duration of the Customers’ Relationship with a Continuous Service Provider: The Role of Satisfaction.” Marketing Science, Volume 17, No. 1, 1998

2.       Tuu, Ho Huy. “Moderators in the Relationship between Satisfaction and Loyalty of Vietnamese Fish Product Consumers,” a thesis for the degree of philosophiae doctor, University of Tromsø, February 2011.

3.       Tuu, Ho Huy, and  Olsen, Svein Ottar. “Nonlinear Effects between Satisfaction and Loyalty: An Empirical Study of Different Conceptual Relationships,” Journal of Targeting, Measurement and Analysis for Marketing Vol. 18, 3/4, 239–251. 2010 Macmillan Publishers Ltd. 0967-3237