Pay attention to your optical’s often-ignored areas to maximize its potential and give patients a satisfactory buying experience.
JAY BINKOWITZ, ASTORIA, N.Y.
The old saying is “retail is detail,” yet many of us ignore this adage then wonder why we struggle to be successful.
All too often I am asked questions that relate to the profitability (or, in many cases, lack of profitability) from our opticals along with understanding how to manage them as an independent business within our business. The answers, which I explain here, are the largely ignored “details” that drive the success of the “retail” side of the practice.
If you expect as much as 50% of our revenue to come from the optical — revenue that is sorely needed — you can’t pass the baton to folks who, though well meaning and hardworking, do not have the real experience and expertise to reach your profit potential.
To support the goal of profitability, offer your optical staff bonuses and raises that tie into measurable results. Rather than using the “gross revenue” number to ascertain how they are performing, examine net profitability of the optical. To do so, compare total net revenue for frame and spectacle lenses against the actual net cost of goods for the same products. This includes dispensing and material payments from vision plans and should be tracked monthly. This strategy also provides motivation to staff rather than offering raises just because they are nice and well meaning.
In addition, give your optical managers the proper training and support. One way is to allocate a budget for your managers to participate in courses and workshops. In addition to industry events, they can take business management education classes to learn things such as how to read a P&L statement and understanding material cost of goods.
With many resources for this today, your managers should know the difference between making a high dollar sale vs. a high profit sale and real inventory and manufacturing philosophies, rather than using “I think this will work” or “this is how I have been doing it for 20 years” philosophies.
Support your frames by making sure you have a selection/collection for each brand. Buying only 10 or 15 frames of a brand is not a collection and does not build trust and confidence for our consumers. Think about your shopping experiences: Do you purchase from the business that has only two or three items from your favorite brand or the place that has 25 or 30? One establishment treats your favorite brand like an afterthought; the other takes it very seriously.
If you do not feel confident buying 25 to 30 frame styles from one brand, then don’t buy the brand. Use the “less is more” philosophy: It is better to stock 30 frame styles from 20 brands vs. 15 styles from 40. Using this philosophy, your turnover rate, your relationships with your vendors and your patient perception will improve.
Presentation of product is an art. When you shop, most businesses deliver visual messages that cause you to walk where you do.
Rather than buying those cutesy 99-cent hanging decorations and plastics plants that make nice dust houses, ask your brand reps for their help, which could include branded displays and themes that support the value of the product.
Another way to improve your merchandising is to find a local store that creates signs. Professionally branded plaques and signage properly support both your brand and product. These signs are typically displayed on the counter or on the wall, but are not part of the frame display on the wall.
Also, we can become numb to the “junk” that is all over our practice. Our labs should look more like a nice kitchen you would be proud to show anyone rather than a garage. Between visual clutter and stuff it’s no wonder patients never really get the message of quality & service we claim to provide.
Here are the key places to start when cleaning up your optical area:
► Old brochures. Many of us have old brochures from 20 different vendors scattered throughout the optical. Find one place to keep a few of these brochures throw out the others. You and your staff may need to use these when you are talking with your patients. Having them everywhere is just visual clutter.
► Taped, ripped and handwritten signs. Replace them with professionally made signs in nice frames. It is not as expensive or hard to do as you may think and well worth the time.
► Boxes. These can easily be overlooked throughout the office but should be removed from optical floors.
► Lab trays. If you’re going to put your patients’ $600 glasses in lab trays, you need to clean or replace those you currently have. Line them with nice felt, and respect the products you are selling.
If you haven’t refreshed your optical in the last five years, you are 10 years behind those that did. If you haven’t completely changed the optical in the last 10 to 15 years, you are not providing your patients with the experience they want today, so you cannot compete with online and big box retailers that provide the right messages. It’s all about the look and feel, as consumers don’t want that old eye doctor optical feeling.
While a detailed explanation of pricing would run too long to include here, several tips can help increase your profits.
First things first, you need to remember that you are allowed to make money selling frames. When setting a price strategy to do so, you must determine fair market value. This is basically whatever a consumer is willing to pay. For example, rather than using a “3x mark up” for a frame that wholesales for $60 to set the price of at $180, try testing fair market value and set it at $239. Wait four to six weeks and see how you do. You can always lower the price later, but why do so if the frame sells at that price? Don’t feel guilty about deriving a profit.
Start tomorrow with a test: Raise all your frame prices $10. Patients aren’t going to come in and say, “I know you raised all your prices $10,” and you will see an increase in profit. While you can’t stop patients from wanting to pay less, you can still find ways to make more of a profit.
Never align yourself with one set markup strategy, such as 2.5x or 3x wholesale, and just assume it will work all the time, and don’t markup based on MSRP. Rather, always keep fair market value in mind.
Approach toward patients
Ignore the “patient push-back” myth, a false notion many of us create from the moment a patient arrives. Push-back is the patient pushing back against any type of higher costs — in this case, typically those costs that are over and above his/her vision plan allowance. It starts from “hello” and builds to the time when we say “your out of pocket will be…” followed by an itemization of every feature of the lenses, which can kill a sale.
One example of a simpler way of explaining fees and services: “Mrs. Jones, the list price of your new digital lenses with non-glare protection along with transition lenses, scratch and UV protection, along with polished edges to make sure they look nice and are in a thin and light material is $600, and our package price is $500. However, you have a great plan, and they will only cost you $250.” When it comes to bundling, consumers love when you subtract, not add.
Change your mindset
Many of us still do not take our opticals seriously enough. If you’re willing to spend tens of thousands of dollars on equipment, the thought of spending money for opticals should not come with great reservations and procrastination. There are great opportunities for strong optical growth and profitability, but only if you don’t treat it like an outcast. OM
Mr. Binkowitz is the president of GPN, an optometric consulting company. He has had extensive experience in retail operations, merchandising and marketing. E-mail him at firstname.lastname@example.org or visit him at www.gatewaypn.com, or send comments to email@example.com.