How OD driven optical pricing boosted revenue by 30%
Private ECPs have to work a lot harder nowadays for a number of reasons: there are many more competitors and threats that an OD must factor in to mitigate the challenges that come with the ever changing landscape.
Private practitioners are seemingly beset on all sides by big box competitors, online retailers, the next practice that decides to pop up down the street, ever more sophisticated shoppers, and too many others obstacles to list.
How can your optical survive, how can it remain profitable and how can you maintain your sanity? If you’re tired of spinning your wheels trying to survive, we’re going to show you how your practice can effectively implement a powerful sales strategy to compete and to thrive!
Understanding your optical opportunity
Like it or not, optical sales typically make up over 50% of your office’s revenue. Capture rate, perhaps the most critical optical metric, has dropped from an industry average of mid 60% to now right around 50%. This represents a pretty huge decline that will only get worse without intervention.
More often than not, an OD will throw an optician into the optical but without a gameplan, without goals, without any specific direction. How do other retail businesses survive? What do Geico, Warby Parker, McDonalds, Progressive, all have in common? In a word: strategy.
At our practice, Brilliant Eyes Vision Center, we have developed a sales strategy that has proven successful and efficient. More than that, it’s easy to implement and transferable to every office. Lens options, treatments, add-ons and other products are strategic and driven by the doctor Bundle everything, even contact lenses.
For recommended lens options to be truly successful, they have to be executed as something more than a haphazard verbal handoff to the optician. Think about how your recommendations can be embedded throughout the office flow and how they apply to every transaction.
Circling back to Warby Parker, Progressive, McDonalds: each of those organizations have distinct and effective bundling strategies that work for their customers and their businesses.
The last time you went to McDonalds, did you order a large fry, 2 cheeseburgers, a large drink a-la-carte or did you order a number 2? The former would be more expensive for you as the consumer, it isn’t in line with the company’s bundling strategy, and it complicates the process for the staff.
Do you think Warby Parker associates ask “do you want polycarbonate?” or “do you want anti-reflective coating?” Spoiler alert: they do not.
Strategic product selection
So how do you start building your OD driven pricing and recommendation process? It starts long before the patient even walks in the door of your practice. Start by sitting down and analyzing which products work for your practice, which products work with vision insurances and which products are best for your patients.
When we did this at our practice, we chose to limit progressive options to three excellent lens designs ranked good, better, and best. With today’s lens technology, it doesn't make much sense to offer 10 progressive options, when the differences from one to the other are hard to describe, and most well fit digital progressives will work for the vast majority of your patients.
Since implementing this strategy years ago, the incidence of patient issues is far outweighed by the number of patients that love the quality of our lenses and how easy our prices are to understand.
This same strategy is effective with Anti Reflective Coatings. A typical patient doesn’t know the difference from one ARC to another, so why confuse the process?
Even the engineers that you’re probably thinking about as you read this would benefit from your limited selection; your team will know these lenses and treatments inside out and be able to speak confidently about them. Consider how many times a patient comes to your office with a progressive lens brand and anti-reflective coating in mind.
We use a standard AR, a premium AR and a premium blue light AR. Our options are priced with our profit margins in mind and with our per exam revenue hovering around $500. Because our lens options are driven by the doctor, our opticians dispense only those lenses that we’ve decided will optimize our outcomes.
At every step, we keep the patient, the practice, and profitability in mind. After all, we cannot continue to help patients if we’re running our business on razor thin margins or worse.
The Benefits of bundling
Bundled pricing, part two of this approach, pulls the OD driven sales strategy together. Without part one, part two wouldn’t succeed and vice versa. Our practice has successfully sold exclusively bundles for the last four years and we’ve seen our revenue grow by 30%!
To give you some ideas of how our bundles work, here’s a look at our “Trendsetter” bundle: our best progressive, our premium blue light A/R, a frame and lens warranty, polished lenses, and a lens cleaner kit.
For additional context, our “Basic” bundle is the least expensive of our 3 packages but is far from basic: it includes a tier 2 progressive and a tier 2 A/R both of which offer our patients the clarity they deserve.
Bundled pricing is a proven sales strategy and has driven success in our practice and others. It is, however, made much more complicated by the many insurance plans that make it almost impossible to create bundles that take the many varied benefits into account.
We developed Paradeyem, our proprietary software specifically to address the complexities of vision insurances and still benefit from our OD driven pricing and bundling approach. With the tool, we can benefit from the tried and true sales strategy of bundling no matter which vision insurance a patient may have and so can you!
Whether you use Paradeyem or not, you should consider building an OD driven pricing strategy and bundling your products. Doing so will generate more revenue, allow you to dispense higher quality products, improve customer satisfaction, simplify your sales process, decrease your remakes, and perhaps most importantly: increase your capture rate.
Of course, there are other approaches you can take to improve your optical dispensary results like merchandising, strategic frame buying, careful marketing and so on; but this two part strategy builds on much of what you’re already doing and makes your practice stronger.