By Ken Krivacic, OD, MBA
June 13, 2018
Thriving as an independent practice can be daunting, with competition from both online retailers and large chain-stores. Fortunately, there are strategies you can employ to make it more of a fair fight, and even win.
A couple of months ago I wrote an article in ROB about the pitfalls of discounting in an optometric practice. As with many articles, I received feedback from readers. One of those who e-mailed me was Dean Butler, one of the original founders of LensCrafters. He indicated, that from his years of experience, discounting can help build an optometric practice as it has done for the numerous optical stores he has overseen in his career.
An initial e-mail turned into an overseas phone conversation (he now lives in London), and I thought he had some good ideas to help, not just corporate optometric practices and optical shops, but also independent optometry.
Here are the three recommendations Mr. Butler offered, which could go a long way toward helping optometric practices grow and compete with corporate optometry and online retailers.
BOGO is Better than 50 Percent Off
Constantly have a promotional deal going in your office, Mr. Butler advised. In our practice we have attempted to promote ourselves every month through marketing and events, which often does not necessarily involve discounting:
• 2-3 frame trunk shows annually
• Back-to-school promotion
• Toys for Tots promotion
• LASIK education seminar
• Contact lens promotional fitting day
• New equipment screening visits
• Monthly e-mail newsletters
• School screenings
Mr. Butler said the promotion that worked the best for LensCrafters was the BOGO (Buy One Get One) sale. He said that sale is more enticing to glasses purchasers than the 50 percent off second-pair sale. The promotion is great because you make full profit off the first pair, and bring in an additional volume of patients and purchases in the practice, so that even though the second pair is free, you are profiting overall by the end of the year.
I would agree with him because if you price your spectacles appropriately then the profit on the first pair more than compensates for the almost break-even on the second pair.
One area where this would not be as profitable would be patients who have vision plans. In most cases the practice is already taking a reduction in revenue on the first pair, and to break even on the second pair would not make sense (pun intended). You could still offer this promotion to your private-pay patients to entice them to purchase with you.
Use an Online Presence to Capture Lost Contact Lens Sales
Another area Mr. Butler pointed out as weak for independent practices in the U.S. is the loss of contact lens replacement business. He noted that private research (not available publicly) by one of the leading contact-lens companies indicates that nearly 80 percent of contact lens replacement business is lost to internet retailers. In other words, if the patient did not purchase a year’s worth of lenses in your office then you may be potentially losing up to 80 percent of the remaining replacement-lens orders.
The ideal solution is to sell the patient a year’s supply of contact lenses at their exam visit while they are in your office. Even though I feel we do a good job of that in our office, our capture rate on one year’s supplies is close to 50 percent. Virtually half our patients will be back in the market anywhere from 3-6 months to purchase more lenses. That means close to 40 percent of all our contact-lens patients are buying their contact lenses from someone other than us, or patients are over-wearing their lenses.
Mr. Butler recommends using one of the services that integrate with your office to allow patients to buy online, but get them from you, rather than someone else. Our practice jumped into that market about nine months ago by partnering with MyEyeStore, which is sponsored by Alcon. Other e-commerce systems available to optometric practices include LensFerry by Cooper Vision and YourLens by ABB OPTICAL GROUP.
MyEyeStore integrates with your web site and seamlessly allows patients to order their replacement lenses online. We also sell solutions, drops and vitamins through the system, which takes care of the logistics and management of the ordering, processing and shipping of the products. Doing all that on your own would be a logistics nightmare.
You collect the price you set for your products minus the cost of the product. MyEyeStore charges a flat rate $99 per month fee to cover the logistics of the entire process from ordering to shipment to collecting payment. For us it has been a smooth transition, and we can continually update items on the site as new products are introduced.
The biggest challenge for us has been signing patients up for the service. I promote it in the exam room if I know patients aren’t going to purchase with us, and then our contact lens technicians sign patients up in the office for the service. Later patients receive an e-mail that tells them they have been signed up for the service, and can order at any time.
Nine months in, the uptake has been small and slower than I would have liked, but I believe it will grow. Our numbers indicate we have gained back approximately 15 percent of our patients who in the past would have purchased elsewhere.
Learn the Best Time for a Second-Pair Sale
The final recommendation from Mr. Butler was the most interesting. He posed the question: “What is the best point in time at which an eyeglasses customer is most likely to respond to a promotion to purchase another pair?” My initial answer was that I thought it was when you made the initial sale, went over the benefits of having a second pair, and offered some type of second-pair promotion.
He answered: “Surprise (to most): the time is 5-6 months. This is because, when new eyeglasses are a positive experience, five or six months is the point at which the customer both recalls the positive experience, and is willing to again spend money. This has been true all over the world and in all spending ranges. E-mail or direct mail is the easy way to reach these customers. Include two or three offers — eyeglasses, sunglasses, contact lenses. This really does work.”
He also pointed out that online sellers understand this well, and that the average purchase cycle online is about every 10 months.
This last recommendation also cycles back to the first recommendation in that you always want to have some type of promotion happening on the retail side of your optometric practice. For us doctors, this is the business side of the practice, and we should implement business strategies to make it as profitable as possible.