Happy New Year everybody.
Our family recently returned from a fantastic ski vacation in Beaver Creek Colorado where I was also able to meet personally with client/periodontist Dr. Ryan Jenkins of Littleton, CO. He was having the same issues that many of us face: a drop in GP referrals, and wanting to know what to do to replace the losses. He shared with me his vision for the practice which was… “to continue offering quality service with quality products for premium pricing“. But, due to the fact that his GP referrals were declining, he asked if he should “consider” joining a handful of insurance networks for the time being.
If you have a vision for your practice, then EVERYTHING you do should align with that vision. Going into “network” with insurance companies did NOT align with his vision so different recommendations were given during our meeting together.
The Death of the Middle
Unfortunately, the middle class is being methodically and thoroughly destroyed. Many businesses that caters to the middle such as: Olive Garden, Red Lobster, Men’s Wearhouse & J.C. Penney will continue to suffer. A recent study stated that over 40% of all current low to middle income jobs will be erased by automation by 2020.
Why is this important to know? In order to set your vision and pricing strategies for future practice growth, it critical that we understand what can happen if we position ourselves within the cheapest category.
There are really two ways to address this issue. One is to drop prices like some of the dental chains (see ad below) do and become known as the “cheapest” option out there. If you think your practice can sustain this strategy and don’t mind handling huge volumes of cattle ( I mean patients), by all means go for it.
The other way is to move up, selling to fewer patients but at much higher prices – and more important, higher margins, to better qualified patients.
An orthodontist, consultant and good friend of mine, Dr. Donna Galante, recently noted that an increased number of practices in her area were in discount wars with each other with Invisalign. Her response to this – again raise her fees, make her the most expensive – and her practice has nearly doubled year to year as she continues opening additional offices.
It has NEVER been more critical to brilliantly manage your price and positioning strategy. One fantastic book about just this topic is from my marketing mentor, Dan Kennedy: No B.S. Guide to Price Strategy.
Here’s a view of the many pearls you’ll receive when you read Dan’s book:
Most business owners know NOT to put out ONLY one price for products or services yet they continue to do so even though they are not satisfying what their customers want.
Wealth Fact: Premium Options
No less than 5% – often to as high as 20% – of consumers will always opt for the “better” or premium option because of who they are as much or more than because of the offer you make them. They just have to do it.
As you know, most consultants tell you to raise your fees each year, yet many of us are hesitant to do so, right? Instead, figure out a way to add a premium choice to it. Basically create several different options to choose from.
You may know people who only want to buy the BEST (heck, you may even be one of these folks). They want this because of WHO they are. When they book their airline seats, they would NEVER consider sitting in the back of the plane, only the best (First Class) for them. In my hometown, we have one of those automatic drive through car wash businesses that have three different wash packages to choose from. People that want the best may not completely understand what the top package includes but will always choose it.
Bottom Line: You should NEVER put out an offer without options or tiered pricing because when you do you are leaving somewhere between 5% to 20% of the consumers behind who only want to buy the premium option.
So…How Do I Do It Jeff?
Listen, let’s don’t make this difficult, we don’t have to reinvent the wheel here. Creating a premium can be as simple as offering the next level up service you already offer or offer a product (sonicare tooth brush) that complements the lower priced service. Be creative and bundle your products with your services. Some of our clients are even offering different warranties with their services (ie one year implant warranties = $X, three year = $Y, etc.)
It’s up to you to figure out how to get people spending more than they thought they would and still be happy. 🙂
P.S. Do you want to become THE Expert in your town? Check out my new 6 week online course guaranteed to make you the AUTHORITY in your area. If you want to continue to prosper and NOT have to rely 100% on GPs for patients, then make 2018 the time to make that change.