By Dr. Trevor Miranda.
Dr. Miranda contributes his thoughts and perspectives on the topic of Independent Eye Care Practice in Eye Care Business Canada. Check out all of Dr. Miranda’s articles in Independent Insights category.
The modern consumer is egocentric. By that, I mean that they generally make purchases based on what is best for them, not what is best for the retailer.
A wise Optical Owner once told me that I wasn’t magic! How dare he dash my dreams of one day becoming a magician?! “You can’t make people buy from you.” He continued, “people will buy if they think it’s in their best interest to buy from you, so go ahead and take your shot by making your pitch.”
The Current Reality
Today’s contact lens consumer is bombarded with online offers to purchase contact lenses directly. Clearly Contacts and other online retailers invest heavily to attract your contact lens patient into their online channel. At Kits, the online retailer’s fastest growing retail segment is a contact lens subscription that is taking your patient out of your purchasing channel for an average of 10 years (extrapolated based on European stats). Canadian studies have shown that a contact lens patient makes 2.9 purchases per year. Is this consumer using their friendly neighbourhood ECP, a convenient Big Box store, or online retailer to fulfill these purchases? Another industry statistic shows that less than 25% of patients in an optometrist office purchase annual supplies of contact lenses and the redemption rate of massive consumer rebates is less than 50%.
Contact Lens Pricing Strategies:
The Annual Supply: Many contact lens companies offer rebates and train our teams to recommend annual supplies of contact lenses. This allows the consumer to tap into “the lowest price after rebate.” There are quite a few flaws in this strategy:
- Most patients do not require or want to buy an annual supply of contacts.
- Rebates are a hassle factor and are not universally redeemed. The sticker price is artificially high and can be a shock and disincentive to purchase, rebates also require the patient to do some math to figure out if it is a “good deal” or not.
- Many Optometrists are compensated on a percentage of gross sales basis. The inflated price is overly expensive to the clinic owners, as that initial higher dollar amount paid potentially reduces overall profitability to the clinic.
- The rebates change, often quarterly, and the office staff needs to constantly update price quote sheets to keep up to date pricing.
- Pricing is often tiered so smaller purchase increments are not competitively priced
Per Box Pricing: The easiest way for a consumer to understand and compare pricing is on a per box basis. It is challenging for ECPs to flat price per box because of better incentives to sell larger amounts resulting in better pricing to the owners and thus better profit margins. There are, however, ways to implement this strategy in a way that is staff and consumer friendly:
- Negotiate with your Contact Lens Manufacturers for instant rebates or no rebates with better wholesale pricing on the lenses.
- Consider a small contact lens inventory where you buy “smartly” in increments that give you the best pricing and thus enabling flat per box pricing without reducing your margins.
Subscription: Studies have shown that many Canadians view contact lenses as an unaffordable luxury purchase. The sticker price keeps them from taking the plunge into full time contact lens wear. The world has moved to subscription: Services such as Netflix, gym memberships, wine clubs and, I have even heard of subscription toilet paper, are now the norm and accepted by the modern-day consumer. This allows contacts lens purchases to be considerd as “sunk costs” thus making available money to purchase other items such as sunglasses or mulitple pairs of glasses. Here are some advantages of subscription contact lenses:
- Affordable consistent monthly payments that reduce sticker shock
- The ability to consolidate a receipt to tap into insurance coverage
- Auto-preparation for rebate submissions.
- “Stickiness factor” – On average a patient stays on contact lens subscriptions for 9.9 years in Europe.
Web Stores: The pandemic drove many ECPs to develop an e-commerce strategy. While allowing the convenience of shopping at your clinic/store 24/7 is great, it has also led to some unintended consequences for some offices. Here are some e-commerce tips:
- Your online store offering should mirror your in-office offering. If you offer a sale online ensure you promote it in store.
- Inform your current patients of this convenience. Unless you spend money to elevate your search ranking, the bigger online players will appear first.. You might be unwittingly pushing your patient to be crawled by bots on the internet and potentially taken out of your channels by Clearly and other online players.
- Make it easy to navigate and order online.
- Offer direct to patient delivery. Many manufacturers are still offering free delivery.
The Secret Sauce:
Keys to Successful Contact lens Sales:
The doctors and ECPs need to approve the wearing of fitted contact lenses. Let the patient know that you have great pricing on contact lenses before the hand off to the optician or dispenser. A confident word from the doctor that buying from your practice really goes a long way and is in the best interest of the patient.
- Ensure that per box pricing is competitive. Be aware that patients will Google the brand and immediately compare pricing from online retailers.
- Consider fitting brands that are ECP exclusive or “channel protected”
- Partner with manufacturers that give you the best margins while also making future purchases from your office more likely.
- Everyone approved for contact lenses should leave with a contact lens quote even if they are determined to buy from another source. The quote should include a per box price and a per month subscription price.
Good luck prescribing contact lenses and retaining your patients!
DR. TREVOR MIRANDA
Dr. Miranda is a partner in a multi-doctor, five-location practice on Vancouver Island.
He is a strong advocate for true Independent Optometry.
As a serial entrepreneur, Trevor is constantly testing different patient care and business models at his various locations. Many of these have turned out to be quite successful, to the point where many of his colleagues have adopted them into their own practices.