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The Tipping Point: Apps vs. Wearables in Employee Wellness ‑ Transcript

Hello and welcome to this webinar. Our topic today is The Tipping Point - Apps vs. Wearables in Employee wellness. My name is Jesse Hercules. I'm the President of Extracon, and I'll be presenting the webinar today.

Okay, just a little housekeeping. First of all, all participants are in listen only mode so we're not all talking over one another. If you do have a question during the webinar just type it into the question box in your GoToMeeting panel. We'll be collecting those and answering as many as we can at the end. We have a pretty packed agenda, so if we don't get to all of them today we'll be following up with you directly. We will be using examples from Extracon's wellness portals and apps - but this is NOT a full demonstration of the portal. If you're interested in that just let us know and we'd be happy to arrange something for you.

We have a straight forward agenda today. We want to tell you a little bit about ourselves, and then we'll go right into the main topic. Wearables, Apps, and smartphones are some of the biggest stories in all of technology, and we're going to explain how these major trends affect your wellness program. Then, we're going to zero in on the choices you have to make as a wellness leader. There are two big choices. First, the choice between apps and devices. There are some important pro's and cons to each. Second the choice between using consumer apps and devices in your wellness program, compared to apps and devices that were designed specifically for employer wellness programs. Spoiler alert - here at Extracon we think the market is at a tipping point where Apps that are specifically designed for wellness programs have the advantage over all the other choices. Then we'll offer a summary and next steps, along with taking your questions and doing our best to answer them.

I'd like to start by introducing our business. Extracon is a cloud-based software company that builds and implements innovative, practical and incredibly powerful wellness portals for employers, wellness companies, benefit brokers and health plans.

Our customers come in all shapes and sizes. They include insurance organizations like Highmark Blue Cross. They include large employers like MARS, and Costco, and University of Phoenix. The include smaller organizations like Fremont County in Wyoming. They include wellness vendors who private-label our services. And they include Hospitals and healthcare organizations like Methodist Healthcare, and Indiana University Health.

Now let's move on to the second agenda item - the big trends driving the growth in Wearables, Apps and Smartphones

One of the best recent studies on the adoption of wearable devices was done by a consulting firm called TechnologyAdvice Research, using a large random sample of over 900 US adults. They found that just over 25% of American adults were using either a wearable fitness tracker or a smartphone app to track their health and fitness. That's a lot of people!! The study came out late in 2014, so the numbers are likely even higher today.

Now, of those 25% who use an App or Device, only about 11% have actually bought a device like a FitBit or Jawbone. Most of them - that's 14.1% - are using an App. Another 14.5% plan to start using a device or app - they just haven't gotten around to it yet. But then the largest group is the 60% who don't use an device or app AND DON'T PLAN TO. That's a majority of your population, and that's where the sedentary and high BMI people are. The most common reason for not tracking is a general lack of interest. The second most common reason was a concern over the cost of buying a tracking device.

So what would it take to engage a bigger slice of the population? They asked exactly that question in the study.. 57% of the non-tracking adults said that a health plan premium reduction would make them start using a tracking device or app. So let's add that up. 25% are already tracking. Most of the non-trackers would do it for an incentive. When you add up those two groups, that's 68% of your population that would use a wearable or app-based tracker if you had an incentive in place. I think this is a hugely important insight. Many of you on the call are struggling to get even 20% participation in lifestyle programs for physical activity and nutrition. This research is showing that lifestyle change can have the same kinds of high participation rates you are seeing for HRA's and screenings. They key is having automatically logged, accurate data that supports a strong, health plan premium linked incentive. Once you have those two things in place, you can start changing lifestyle in unprecedented ways. So I think the research that's out there is very supportive of the use of apps and devices along with health plan premium reductions.

A different study that came out last year was from Endeavor Partners. This study went a little farther and asked consumers if they were STILL USING the wearable trackers they bought. Most consumers were NOT still using their wearable tracker. The study's authors even went so far as to call it the Dirty Secret of Wearables. Most of these devices fail to drive long-term sustained engagement for a majority of users. They also said, quite accurately, “there's probably a fitness tracker abandoned in a junk drawer near you. The problem here is that consumer use of these devices, without the structure and incentives of a wellness program, is not able to sustain the engagement.

And it's the same story with Consumer Apps. This is from a study done by Localytics in June of last year. It shows the number of times a free consumer health & fitness app is used - about 15% of these are only used once. Another 10% or so are only used two or three times. In fact, only about 1/3 of these free consumer apps are used 11 times or more. If a participant doesn't use an App for 7 days - most of them never return. So this really disproves the idea that flashy consumer Apps are the ticket to health engagement. If we want Apps to be successful in our wellness programs, we need some actual program structure and incentive structure around them .

So now let's talk about smartphones. I'm going to use a chart from a study by Daniel Tello at Asymco. There's an important concept from the technology research called the Technology Adoption lifecycle. This concept came out of Everett' Rogers' research at the University of New Mexico about 20 years ago. The model tells us that there are 5 specific groups of technology users, and they have different reasons for buying a new technology like a smartphone. There are the Innovators, the Early Adopters, the Early Majority, the Late Majority, and finally the Laggards. You can see the 5 categories on the bottom of the chart, along with the dates. Innovators & Early Adopters try out anything that's new in technology. So the innovators bought the iPhone when it came out in 2007, and the Early Adopters were buying them through 2010. And during that time the smartphones got better and cheaper. In 2010, the Early Majority started paying attention to smartphones and started buying them. The Early Majority is the more tech-savvy half of your population. Between 2010 and 2013 the early majority moved to smartphones. By 2013 fully half the US adults had smartphones. Finally, in 2013 we saw the late majority start getting smartphones. The Late Majority is the adopts a new technology when it becomes the default choice. You can think of the Late Majority as the people who got smartphones because they got tired of being the only ones who didn't have a GPS to find place, or couldn't get their email when they're out and about, or couldn't Instagram with their children. The Late Majority has been adopting Smartphones at a rapid rate over the last two years. You can see that by the end of this Fall and Christmas 2015, the entire late majority will have adopted the smartphones. That's about 85% of working adults. The only people left are the laggards. As you might expect, the laggards are the ones who are actively resisting new technology. So in looking at this chart, the question is, when am I going to make smartphones an integrated part of my wellness program? The Innovators and Early Adopters had smartphones 5 years ago. The Early Majority all had their phones two or three years ago. By the end of this year, even the Late Majority will be smartphone users - about 85% of your population. So the point here, is that there's absolutely no reason to wait any longer before making Smartphones a part of your wellness program. The only people who don't have them are the ones that are actively resisting new technology.

So that covers the big trends in wearables, apps and smartphones. Now, let's focus in on your choices as a wellness leader.

There are two main choices you'll face: whether to focus on Apps or on Devices, and whether to use consumer apps and devices within your wellness program, or use ones that were designed just for employee wellness. I've represented that on this chart. So you can see devices in the top row, and apps in the bottom row. Then you see things that were originally designed for consumers - that's the left side of the page - compared to ones that were designed just for wellness programs - that's the right side. So let's go through the chart. At the top left, you have consumer devices like the FitBit and Jawbone. Also the MisFit, devices from Garmin, Nike, and about 100 others. These are all consumer devices that were developed for people to buy and use by themselves. A lot of wellness portals - including Extracon - allow you to link these devices so that participants' steps come into the wellness portal. But they are primarily designed and sold to consumers. Now look to the right. There are some wellness vendors that have their own devices - typically private labeled from FitLinxx like the Pebble shown here. These devices are not for sale to the public, they designed for employers to buy and hand out as part of a particular wellness program. Now, have a look at the bottom left. You have consumer apps like RunKeeper, LoseIt, MapMyRun, MyFitnessPal, and others. Wellness portals often allow participants to link these accounts into the wellness portal as well, so the data they log in RunKeeper will come over to the wellness program. Now look at the lower left box. That's Apps that are designed just for use in wellness programs. This is the category that wellness leaders are the LEAST familiar with. This is the category of apps, running on smartphones, that are part of your wellness portal.

Now, when we talk about wellness portal apps, a lot of people get confused. The wellness portal is a website, how can be it an app? The whole ideas is so new, it needs some explanation. The comparison I like to use is Facebook. Facebook is one of the most-visited and most-used websites in the world. And also, the Facebook app is one of the most downloaded and most-used apps running on smartphones today. So Facebook is both an App and a website. So here are the key points: Key number one: all your data is in both places. So if you look at your newsfeed on the website, it's the same stuff as you'd see on the app. If you upload a picture on the App, its available on the website and vice-versa. Key number two: the facebook app is a native app. That means you download and install it, and since it is a program running on the phone it can use the phone's camera, the GPS, the microphone, the speakers, the accelerometer - it can use any of the sensors and hardware on that phone. So the app can do things that a website cannot. Right? A website cannot just fire up the GPS on the phone the way a native app can. Native apps are much more powerful than websites. Key number three - have a mobile version of the website available also. That's just a smaller version of your website that's optimized for the smaller screens and touchscreens on the phones. If someone just wants to check something quickly and doesn't want to download and install the app, give them the choice to just use the mobile website.

So when we talk about wellness portal apps, it's the same concept. The wellness portal is a website, and yes there is a smaller version of the website that's optimized for phone use. All your data is in both places, just like Facebook. But here's what is new and different, and as far as I know Extracon is the only wellness portal with this feature today. The portal has a native app that uses the phone's pedometer to record steps. It uses the camera for photo-logging of nutrition and weight, and scanning in paper lab reports. Native mode apps can use GPS to tell how far you've walked or run. So the wellness portal's app is installed on the phone and it taps into all the great sensors in the phone - making the app much more powerful that just a website. So when we talk about the wellness portal's app, we mean a wellness portal that has a native app that uses all those powerful features of the phone.

I want to talk first about the comparison between apps and devices. Obviously, it costs money to manufacture, package, ship out, and provide warranty repair on a device. Consumer devices are largely in the $59 to $99 range. For devices within wellness programs, the cost to manufacture is about the same, but the costs are typically baked into an overall wellness program cost. So you may or may not see a per-device cost on your invoice - but it's certainly baked in there somewhere. Now apps are basically free. Once an App is developed once, it costs nothing to install that same app on a million phones. If you want to use economic terms, the marginal cost is zero. Now of course, companies that build Apps have to stay in business somehow. Free consumer apps are largely supported by advertising. If it's a wellness portal app, the cost is usually baked into the portal cost. On the cost comparison between Apps and Devices, the Apps are clearly the winner.

Now you might say, the app is not free, it runs on an expensive new iPhone. And that's true. But as the employer you aren't the one buying that expensive new iPhone. In fact, your employees have already made a HUGE INVESTMENT in smartphones. Let's take an example of an employer with 10,000 employees. 85% of your employees already have a smartphone. They are paying well over half a million dollars EVERY MONTH for the phone and a data plan that keeps the phone connected to the internet - 24 hours a day, at home and at work and on the go. When they lose or break the phone, they spend their own money to buy a new one. Every 2 to 3 years, they spend their own money to buy a new phone JUST BECAUSE IT's BETTER. Our participants are making a huge investment in these devices, and shame on us in employee wellness if we don't capitalize on it. On the other side of the scale, if you want to buy 8500 devices for those employees, you'd have to spend more than $400,000 out of your wellness program budget. That's money out of your pocket, just to duplicate the capability of the phones your participants already have. And don't forget replacement cost. I've had half a dozen of them since 2007, and I can say from personal experience that these are about a one-year device. So that $400,000 is an every year cost, not just a onetime cost.

Now let's take a look at the quality of the smartphone versus the typical wearable activity tracker. The smartphone is just a much better device. The smartphone has its own internet connection - 24 by 7, anywhere you go, always online. It has a large, bright touchscreen with thousands of pixels, so the Apps can have a friendly and intuitive user interface. The smartphone also has a lot of other sensors. It has a GPS. It has not one but two cameras - in fact the main camera is good enough to serve as a scanner. So with the right software the phone can photo-log weight and nutrition, scan in lab reports, and do all kinds of things that a simple pedometer can't do. ON the other side of the page, the wearable tracker does not have its own internet connection. It needs a computer or phone to synch to. It has a minimal display and user interface - maybe one button and one number on the display. So it can't really be user friendly. Finally, these devices can't track weight or nutrition or anything beyond steps.

Let's talk about the process to set up a device versus the App setup process. First, you need to get the device. Then the first thing you always have to do is charge up the device. Then you go and walk. Then you have to plug it into the computer dock. Then the computer has to download and install a program to let it talk to your device. And assuming that install goes smoothly, and you restart your computer, it's time to register the device at the FitBit website. So you create a new user account and UserID and password. Then you have to get that account connected to your device. OK, that's the first half. Now the second half of the process is that you have to log into the wellness portal, and click “Devices” and then link your FitBit to the wellness portal. Then comes the part where you have to develop a new habit of wearing, charging and synching the device. Let's not kid ourselves, that's a new habit that takes some getting used to. I can tell you that one time I forgot to unclip my FitBit from my running shorts and managed to put it through the washing machine. So I had to buy another FitBit and start the whole process again. But if you get it all right, then the steps show up in the wellness portal. Now, that's a lot of steps and a lot of chances for the user or the technology to have a problem.

By contrast, Apps can very easy to set up. Your participants already have the smartphone. So they go to the App store and install the App. When the app opens, they log in using the UserID and Password for they already have for the wellness portal. And that's it - their data shows up in the wellness portal. Since it's a wellness portal app, a lot of helpful things happen automatically in the background. The App automatically starts on install. It restarts whenever the phone restarts. Steps count in the background, whether or not the App is on. The App synchs with the wellness portal directly and automatically. Participants already have a habit of carrying and charging their phones. And if they want to carry their phones when running, there are a variety of comfortable armbands just for that purpose.

I do want to bring up one other issue on Apps versus devices. I guess we've all heard the stories about who's wearing the tracker. Maybe it's the dog or the cat? Maybe it's the son or daughter who is on the high school running team? Or maybe the employees are taking turns, so Tuesday is your day to wear all the trackers and get lots of steps. Then Wednesday is someone else's turn. It does beg the question, though. Would you let anyone wear your phone all day, just to accumulate steps? Probably not. And so we think this problem is substantially reduced with Apps as compared to devices.

So here's the summary. 85% of your employees will have a smartphone by the end of the year, only 11% have a wearable tracker. The app approach is much lower cost to the employer. The devices are very expensive for the employer. The apps let participant use a high-quality, internet connected smartphone. Wearables are less capable and user-friendly. Apps are easier to set up and use. We think it's clear that apps win over devices.

Now let's consider the second big question - should you plug consumer apps and devices into your wellness program, or should you use apps and devices that were designed for employee wellness? There's a lot of marketing out there right now that says you can just plug consumer Apps & Devices into your wellness program. The marketing says it's easy, and seamless, and almost like magic. Well, we've actually run these kinds of programs for three years now. After all of that, we think using consumer apps and devices in your wellness program is a little like putting a square peg into a round hole. Let's talk about why.

So the first point I want to make about consumer apps and devices is that they come with their own websites, app screens, widgets, and all the rest. On the one hand, that can be fun for participants. But ultimately, someone else is determining the goals, the messaging that goes out to participants, and the feedback about how they are doing. Compare that to your own wellness program and wellness portal, where you get to determine the goals, the messaging, and the feedback given to each participant. If you using a consumer app or device, there's a big possibility for mixed messages, where the participant is getting goals and feedback set by the consumer site that doesn't match what you are saying in the wellness program.

Consumer devices and apps have some other problems as well. Consumer apps have advertising. So why your wellness program is telling participants to eat lots of healthy fruits and vegetables, the advertisers are telling them about the latest diet pill or the latest herb supplement craze. There's a lot of questionable products being advertised these days. And here's another problem. Since these apps and devices are designed for consumers, they always want to let the participants edit their numbers. Want to change your steps from 2,000 to 10,000? Just click a button. Want to change your weight? Click a button. So you can't really be sure about the data quality if participants can always change their numbers. Finally, consumer apps or devices may get out of synch with the wellness portal. The consumer apps and devices aren't guaranteeing the quality of the data they send to 3rd parties like wellness portals. If a data packet gets lost in transit, often there's no mechanism to check and re-synch the data. So it's extremely common for the devices's site or the app's site to be slightly different from what the wellness program shows. And that can really make participants mad when their numbers don't add up between the device and the wellness portal.

So in the last section we showed how setting up a device involves a lot of steps compared to an App. It turns out that using anything designed for consumers adds some steps compared to a apps or devices that are designed for wellness programs. Added Step #1 is that the person has to register and set up yet another UserID and password for the consumer App or device. That's one more password to lose or forget. Then, they have to log into the wellness portal and take added Step #2: linking the consumer App or device into the wellness portal. And if you've run these programs you know how many people forget that second step. Any extra step is a chance for something to go wrong.

If you're using a wellness portal app, there are no extra steps. There is just one UserID and password - the same one used throughout the wellness program. For wellness portal apps, it really easy. Install the app, log in once, and it just works. For wellness-specific devices, there are still all those device steps - installing the program on your PC, synching the device with the PC, recharging the device, remembering to wear the device, not putting the device through the washing machine - etc….. But even so it is fewer steps than the consumer version.

Consumer Apps and devices, by definition, can only have the features and capacities that consumers want. But as a wellness program leader, you need more than that. For example:

  • App Notifications for Wellness Programs
  • Scan in Lab Reports - Biometrics
  • Photo-validate weight, blood pressure, glucose
  • Show screening results to your physician
  • Replace Physician Forms & Faxes
  • Obtain Physician Signature on touchscreen

So here are some more screenshots to give you more of a visual on how those wellness-specific features work. The point is that a wellness portal app is designed for your program, not designed around the average consumer.

So now we've covered the choice between apps and devices that are designed for consumers, compared to ones that are designed just for use in wellness programs. (Read Slide) And I think it's a pretty clear choice. Things that are designed for your wellness program are going to work better.

So if we choose Apps over Devices, and then we choose things that are designed for wellness programs over things designed for consumers, what are we left with? The obvious choice is Wellness Portal Apps. And yet this is the LEAST common choice today. But here at Extracon, this is where we strongly believe that Wellness Portal Apps are the future.

And we think it's actually going to lead to a whole new era in our wellness programs. You see, up to now most wellness programs have used inaccurate, self-report data because of all the problems with getting good data on lifestyle. So you had the paper tracking era, then the PC / internet tracking era. Then the era of consumer devices and consumer apps. We think today is the tipping point for measurable lifestyle change. With Wellness Portal Apps, now it's finally practical for programs like yours to start measuring and changing lifestyle in a validated way. Five or ten years from now, when you look back at 2015, I think you'll see that this was the year that validated lifestyle really took off on its own.

So now let's move on to the summary and next steps.

So here's the summary…
85%+ of Your Employees Have Smartphones: We're almost all the way through the technology adoption lifecycle. By the end of this year about 85% of your employees will have Smartphones, meaning that there is no point to waiting any longer to bring Apps into your wellness program.
Apps are Better & Cheaper than Devices: Apps use the powerful, user-friendly, internet connected smartphones that your employees already have. They have better usability and zero hardware cost.
Wellness Portal Apps are the Best Choice: They are easier to use and offer additional features that consumer apps never will. As a wellness leader, you want complete control over the goals, feedback and messages that go to participants. You want data that's actually validated - where the participants can't just change their numbers. And you want features like scanning in lab reports that wellness programs need but consumer apps will never have. Finally, our last point.
Effective Lifestyle Change is Possible: 68% of your participants would use validated tracking if it were linked to a health plan discount. Now that we can finally collect validated data on lifestyle, we can finally put real incentive dollars on lifestyle change. With real data and real incentives, we have the chance to really change lifestyle across our organizations - for 2/3 or more of our employees. And that's the biggest thing we can do right in our wellness programs.

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