Optometric Management Tip # 174 - Wednesday, May 18, 2005
Competing for Contact Lens Sales
I presented a practice management lecture last week at a conference and part of the program included breakout discussion
groups. After discussing the changing landscape of the contact lens product marketplace, one doctor in my group stated
that he didnít think it was worth bothering to sell contact lenses in his practice anymore. He felt that if he were to
try to compete with the new sellers of contacts, such as big box discount stores, warehouse clubs and mail order vendors,
there would be such little profit in the materials that he might just drop the service. He would rather examine and
prescribe, and advise the patient to go wherever they wish to fill his lens Rx. Others in the group echoed the
sentiment, even if they were not ready to throw in the towel just yet.
Not so fast! Letís not throw the baby out with the bath water! I love to challenge conventional thinking, so I thought
about this concept after the meeting and tried to look to the future. I just canít agree that dropping contact lens
sales is a good idea. I believe independent practices can compete very well for contact lens sales, and if a few
positive changes are made in our practices we can win the vast majority of contact lens reorders.
Why should we bother?
We can talk about the fact that providing contact lenses is a patient convenience, or that it allows the optometric
practice to ensure that the patient receives the correct lens parameters, but there is a far more practical reason.
There is a profit to be made. As doctors, we often get uncomfortable with that concept, but we are in practice to make
a profit. This newsletter is about the business aspects of professional practice, and profit is a primary goal of all
businesses. We should never reject a profit center, as long as itís within our practice scope and is ethical.
To be really certain about the profit motive to sell contact lenses, please do the math with me before we go further.
You pay $X for a multipack of disposable lenses. You sell the multipacks for $Y. Take the difference between these two
amounts and multiply by the number of multipacks that make up a yearís supply (eight if the lenses are 2-week
disposables). Take that amount and multiply by the number of contact lens patients in your practice Ė letís say
1,000 for round numbers. The total is your annual profit on material sales alone, without fitting fees. I think you
see my point.
Evidence that we can compete
Letís take a look at a few other industries that parallel our situation for clues to what may happen in the marketplace. Ask yourself these questions:
The answer is that people buy for various reasons. For some, price is the primary factor, but for many it isnít, even
for commodity items like milk. Letís examine some of the benefits a buyer might get from buying contact lenses through
your practice, and letís try to come up with even more benefits that we could add.
- Why do people still buy paper towels at the supermarket, when they could buy them at a warehouse club for much less?
- Why do people still buy milk at the local convenience store when it is much cheaper at the supermarket?
- Why do people still buy books at Borderís when they could come home and order the same book online at Amazon.com?
- Why do people stay at the Ritz-Carlton when there are Holiday Inns in the same town?
Of course, we can compete and win the vast majority of contact lens business! Look at all we have going for us. The
big factor is we had the buyer first! He is ours to lose! Additionally, we have a tremendous advantage in the area of
trust and authority. Letís look at other factors.
Two groups of patients
We can really separate your contact lens patients into two groups: those who visit you fairly regularly for eye exams as
recommended, and those who donít see the value in regular eye care, but still consider you as their eye doctor when they
need something. We love the first group, but both groups are valuable patients. The first group should be easy. They
are in your office, they love you, and they need more lenses. If you lose them, it must be price or some other factor
about how you do business. Weíll discuss price below, but you can make changes if needed and keep the sales from this
group. By the way, itís very important to try to dispense an annual supply to this group, so they will have no need for
interim reorders. Use manufacturer rebates and even offer your own in-office price discount on annual supplies, and make
sure your staff suggests the full year supply.
The second group is far more at risk for going elsewhere, and if you want to win that business, youíll have to be
willing to keep up with the marketplace and the competition in ways that are possible. This group would really like
to avoid the eye exam in many cases and they think they just need more lenses, and since your office will not provide
more lenses without the needed exam, they are tempted to look elsewhere.
Is it convenience?
We often hear that convenience is a major reason patients go elsewhere to buy replacement orders of contacts. Our
patients want to order more contacts in their pajamas at 2:00 AM, so they go to the Internet. Maybe so, but if we look
deeper at the convenience issue, youíll find that you can beat the competition in several ways.
Is it price?
- Convenience has many facets, so make sure you step up where you can. The fact that your office is near your
patientsí homes is an advantage if you capitalize on it. Warning: tough questions to follow.
- How easy are you to do business with Ė really? Compare your office with the business world, such as small
retail or banking. What are your hours? Any odd start and quit times, are lunch hours closed, are any half-days
closed? Do you offer Saturdays and some evenings? How is your parking? Is there plenty of it and is it close to
the entrance to your office?
- Do you have multipacks in stock in enough quantity to sell a full yearís supply? Chances are you donít and youíve
told yourself that the cost of stocking that entire inventory would be too much to bear. Having lenses in stock offers
some big advantages that most ODs overlook, and the one-time investment is surprisingly low. Do the math on stocking
eight boxes in each power from -.50 to -6.00 in your favorite brand and youíll be amazed at how cheap it is. It doesnít
get any more convenient than your staff handing the boxes to the patient at the end of an exam or when they just call up
and need more. No logging on, no shipping, no waiting.
- Promote the perks of doing business with your office, such as an emergency trial lens to hold a patient over, or
expert advice when a question arises. Patients want to do business with a practice that caters to their needs in every
way; they reason that staying on your good side will be in their best interest when they need service.
- You could set up your own e-commerce section on your practice web site by having a web designer build a shopping cart
service for you, or by contracting with one of the commercial services that does this for optometric practices via a link
that is placed on your site. This service definitely puts you on the same playing field as the large mail order vendors,
but think ahead and make sure youíre ready to promote your online ordering service to every contact lens wearer. If you
donít, no one will know it exists and usage will be low. If you do direct everyone to Internet ordering, itís only a
few clicks away to shop your competition. With the commercial services, you will also have to enter patient name and
lens data for every case, even if only a small percentage of them use the service.
Price is definitely an important factor in competing for contact lens business. My advice is to set prices
competitively, but donít try to be the lowest. By offering other benefits as described above, we donít have to be the
lowest price. The large Internet contact lens sellers list prices on their website and they are not out of the range
where independent practices can be, so they can serve as a good guide. The big box retailers can buy products so low
and can live with such low margins, independents really canít compete on price with them. If you get a patient who
really wants the lowest price, just be understanding, helpful and pleasant about it. I do not recommend changing your
prices on the spot to match a competitor; it demonstrates a lack of integrity.
Best wishes for continued success,
Neil B. Gailmard, OD, MBA, FAAO
Chief Optometric Editor, Optometric Management