CooperVision contact lens technology was the subject of a recent segment on The Balancing Act, a daily morning show that, according to their web site, “…brings cutting-edge ideas to today’s on-the-go, modern woman to help balance and enrich her life every day.”
The segment covered the features and benefits of both Biofinity Energys® and clariti® 1 day contact lenses from both the patient and practitioner points of view. Watch it here.
Article by Andy Tabrizipour / Gazal Eyewear
Tip #2 – Balancing the Inventory Ratio for Your Practice
In the last article we learned how to setup our new inventory by carefully selecting the right eyewear brands. If you missed that article you can see it by clicking here. Today, we will dig a little deeper and discover what is grow patient awareness that we have the best boutique in town to buy eyeglasses from. Through the 3 steps below we will reveal our most popular eyewear brand and make sure that brand is helping us attract more customers and generate top revenue.
3 Basic Math Tips
Because every boutique is different and caters to different clients it’s vital to understand what our patients truly want, like, and actually buy from us. Your demographics change often, cities grow, and tastes can change. We should all adapt a little to that changing environment each day.
Now as crazy as our lives are it’s easy for us to think that “I am way too busy with day to day activities to add a new task to my day.” However, this could not be further from the truth. Success comes from careful planning, setting obtainable goals and a clear way to reach them. We can actually reduce headache and financial strain by understanding all of the strong and weak points in our everyday practice. We will keep the examples short and concise and we can always expand on them later. Let’s get started and take a look at 3 simple ways to analyze frame sales.
Turn Ratio – How popular a brand is in OUR practice and how quickly it sells.
Capture Rate – How many patients that come in are actually making a glasses purchase.
ROI – How much profit are we actually making here?
The Turn Ratio formula helps us identify which brands are most popular amongst customers in our demographics. For every pair of glasses we have on the board how many did we actually sell?
Example – Let’s say we carry 3 brands;
Brand X, Brand Y (Our personal favorite), & Brand Z
We decide to buy 50 frames to have on the board for each brand at the beginning of the year and by the end of the year we sum up all the sales and see how we did. We have 10 frames left from Brand X, 20 frames from Brand Y, and 30 frames from Brand Z. Assuming that we did not replenish any frames, then Brand X was our most popular brand.
Turn Ratio = Total Sales / AVG Frames in Stock.
Brand X’s Ratio tells us that for every pair of glasses we have on the board 0.80 are purchased by customers. This calculation will change depending on how much and how often we replenish the inventory. If we sell frames right off the board it complicates the formula further as well as lowers the capture rate. It is recommended to keep our most popular styles & colors the board at all times.
This calculation shows us, what percentage of patients that visit you buy glasses. There are many reasons why someone chooses to buy. Whether it is because they only wear contact lenses, they did not see the color or style they want, they want to shop around, etc. However, this calculation lets you know how well you are currently doing at capturing patients that come in.
The Math: The Total Number of Patients that Buy Glasses Divided by the Total Number of Patients that come through the door.
Let’s say in 2019 of May 500 patients enter your boutique. There are 500 opportunities to capture an eyewear sale. If 100 of those 500 people purchase glasses. Then your capture rate would be calculated as
100 / 500 = 0.20 or 20%
Return on Investment (ROI)
This calculation tells us how much profit we are making from each frame sale and lets us know the earning potential we could have. This is calculated by taking the initial cost the frame from the final sales price of a frame. I cannot tell you how many times I spoke with a practice owner that had absolutely no idea how much or even if they are making any profit off the glasses sales. I am not saying that making money should be your #1 goal, but it should at least be on the list.
Brand X AVG Cost is $15 and retail is $30. $30 – 15 = $15 profit
Brand Y AVG Cost is $9 and retail is $19 $19 – 9 = $10 profit
Brand Z AVG Cost is $25 and retail is $45. $45 – 25 = $20 profit
The example above shows that the Brand Z is the most profitable per transaction. This example does not include factors such as insurance discounts, buying groups, sales, promotions, or marketing discounts.
Putting it together:
All these formulas tell just a portion of a bigger picture, when you put them altogether you can really see what brand is generating the most income for you and saving you tons of headache. For example we now can figure out the total profit each brand has driven based on the sales for the year.
Brand X Sold 40 frames at $15 profit each = $600
Brand Y Sold 30 frames at $10 profit each = $300
Brand Z Sold 20 frames at $20 profit each = $400
This example shows that Brand X generated the most profit. It also shows us that even though we sold less of Brand Z than Brand Y, Brand Z was still a more profitable Brand. This is the true power of familiarizing yourself with these formulas because of the bigger picture.
Another way to now analyze the data is to project for next year’s sales. This can help us calculate the need for additional hires, calculate how much we can afford in pay raises, and other sections like marketing budgets.
The Frame Wrap Up
In this article we discovered 3 simple math formulas to help us identify which brand move quickly and generate profit. The next and final article in this series will show us how to drive numbers and improve marketing. Thank you for taking the time out to read this article and feel free to reach out with any questions!
Article by Andy Tabrizipour / Gazal Eyewear
With all the constant changes creating a successful business in the eye care can be tricky. One of the biggest components to success is frame inventory purchases. Not planning out your inventory lineup can be detrimental by reducing sales and increasing debt. You can create an eye-popping display, make your patients happy, & improve profits all through inventory setup. Each Optical practice has different ideas on what frame inventory they should stock to make their business more successful. Some of us focus on just the numbers while many of us will go for what they like or the “hippest “frames. Neither of these approaches are wrong but limiting your focus can leave a lot of risk to business success. There are many ways to “beef up” what you may or may not stock to not only make your customers happier, but attract new types of patients, and improve your bank account.
How to Choose the Right Eyewear Brand Mix
Having a balanced inventory mix is always difficult because many of us cannot predict fashion trends, or just have never had exposure to a unique brand that speaks to us on a personal level. Keep it simple and remember that there are products that are just going to move no matter what. There are the patients that only want black or tortoise frames and then the consumers that want only color. Obviously, if you stock just black frames you will miss out on a ton of sales and new patients. Many practices are now so excited about all the new colors and unique designs that they forget to stock a few standard colors and shapes. Keep a good blend of standard colors and make sure you balance it out with some fun shapes and colors. Just because you do not like round frames doesn’t mean it won’t sell well. Round frames may not fly off your boards, but its good to have the right ratio in stock.
Identifying Different Eyewear Types:
- Fashion Eyewear Brands: These are big eyewear brand names such as Gucci, Chanel, Tom Ford, Coach, etc. Easily recognizable and they usually make multiple products such as clothing, jewelry, & other accessories.
Contrary to what many believe these brands are not crucial to success. I am not picking on fashion brands but many believe that they have to have these brands in order to succeed but this could not be further from the truth. Big brands may drive a few patients a year into the door just because you stock them but may not be enough to justify the thought that one single brand is going to keep you in business. You could very easily stock your store with brands that are not very popular and focus on marketing your boutique in different ways. If you want the marketing behind big names, keep in mind that these products are popular which means that they are easily obtainable almost anywhere. The high level of competition especially from much larger companies will drive down ROI. Patients can buy these products anywhere, which means there is no reason for them to come back next year. Another problem that can arise with fashion brands is changing trends. One year a brand maybe super popular, but the next year it may completely lose that hype. Now you are stuck with a lot of inventory that is hard to move. It is okay to have a few of these lines but going too deep can cause lots of trouble down the road when the trends change.
- Comfort/Tech Brands: Eyewear lines that have unique designs that focus on comfort & durability such as Lindberg, Silhoutte, Starck, Innotec, Blackfin, etc
These brands may or may not follow the fashion trends but their own particular style. The customer following behind these brands are very strong and loyal. Tech brands have or will solve an issue for your customer, which creates instant loyalty to the brand but more importantly you. Having at least one brand that fits into this category really separates you from the competition and drives patients that return year after year.
- Insurance / Door Savers Brands:
These eyewear brands are the most basic and lowest priced available, and it is the price that attracts customers to it. Unless your main goal is to have the best prices in town, and you want to focus on quantity not quality, I would not buy too heavy in this department. Many make the mistake that they need more of this category and most just “will not spend” more than their insurance allowance. There is a big difference between what someone can spend and what they are willing to spend on eyewear. With lower pricing comes lower profit margins which will in turn create a need to constantly increase the quantity that needs to be sold.
It is good to have at least one brand in this section so you can capture patients that fit into this category. You never know what they will buy next year. It is also very helpful to have these brands side by side to your luxury brands so you have the opportunity to educate the consumer on the difference and “why” the other eyewear brands are worth more.
- Unique & Independent Label Brands: These are brands that your patients will connect with on a more personal level. They are unique, and not something that every optical shop in town is offering.
Independent eyewear lines are usually the hardest brands to get on your shelf because you need to have some street credit (other luxury brands on the shevles) to get these brands to even consider opening up your account. Wholesale pricing can be similar to the other brand types from super basic to ultra-luxury, but the ROI is usually there. These are highly recommended to have in your shop and to make up a good percentage for multiple reasons. Have unique products and services differentiates you from big box retailers, online websites, and local competition. It also gives your patients another reason to visit you year after year to see what is new from their new favorite brand. If you are able obtain some of these rare finds, then you are in luck. Be sure to ask the rep what the best sellers are, exchange rate, warranty, and any additional questions you may have. Do not be afraid to ask and stock the top sellers from the rep, they should know their brand pretty well and what moves.
I am sure you are now wondering how much or what ratio of each of these brands I should stock, & how can I find them? You may also be saying that my patients won’t spend that much money on eyeglasses. The saying “If you build it they will come” has a lot of truth here. If you stock mostly bargain priced frames, each year that you are open you will attract more and more patients looking for bargain deals. However, if you stock more moderately priced frames you can start to build up a customer base that is interested in those products and are not price conscious. It comes down to the simple question. “What kind of practice do you want to be?”
Answers to these important question and more will be all part of the next section of this article, Tip# 2 “Balancing the Inventory Ratio for your Eye Boutique”
Most optometry schools focus on developing competent clinicians—not savvy business owners. Many eye care professionals who make the leap into running their own practices must learn as they go.
Even after years in practice, eye care professionals must navigate advances in technology and shifts in consumer behavior to maintain success and continued growth. CooperVision’s Best Practices initiative recognizes eye care practices who have managed to do just that.
Three 2019 Best Practices honorees who are being recognized as prosperous business owners agreed to share their secrets to effective practice management.
What mindset makes a practitioner a successful practice owner?
Sorrenson: It’s the ability to look in the mirror when things go wrong, and out the window when things go right. The mirror enables you to recognize the errors of your own ways and fix them. It’s easy to blame everybody else for our challenges, but it’s what we can control that counts. Looking out the window means giving credit to your staff and others who helped create that success.
Patel: Knowing that the only constant is change. Listening to staff members, particularly those who have been in eye care for a while. And remembering that what is best for the patient is best for your practice.
What is the single greatest decision you ever made for your practice?
Briggs: Taking on a partner. Partnerships can be challenging because if they go wrong, they’re hard to undo. But I brought on a younger practitioner to give him the opportunity and we have grown together.
Patel: The investment in two-hour weekly staff meetings. We dedicate that two hours to checking the temperature of our practice—updates, training, process improvement, leadership, and more. It’s expensive to close production for two hours every week, but we’ve been doing it for 15 years now and it’s invaluable.
What do you know now about practice management that you wish you had known when you started?
Sorrenson: Everyone always says to put patients first, but I believe staff comes first. Systems are second. Then you can focus on patients. You can’t provide the best care to your patients if you don’t have effective staff and systems in place.
What is the key to staying competitive in today’s marketplace?
Sorrenson: Service. We can’t compete on price, but we can shine in service. You have to show patients why your practice is better than anywhere else, from the moment they walk in to the moment they walk out. Reinforce this with your staff over and over, because they are critical to service.
Briggs: In contact lenses, annual supply sales are key to our profitability. We keep a large inventory and have found that added level of convenience—enabling patients to walk out the door with their lenses same day—makes us exceptionally competitive. Rebates are also important to keep costs very attractive to our patients.
How do you handle challenges with staff?
Patel: We’re fortunate to have an office manager who will bring attention to the issue one-on-one with the employee. She’ll explain how the challenge is impacting the practice and our mission, then take the time to understand the root cause of the issue and work together to figure out how to fix it.
Sorrenson: We use a What / Why / Forward-Focused method. Identify the problem (e.g. you’ve been late five times over the last two weeks); explain why it’s a problem (e.g. we really need you, your teammates are losing respect); and look forward (e.g. what can we do to make sure you aren’t late anymore). This approach has really helped us, as it helps work through the process together and shows our hearts are in the right place. We want this to work, and we care.
What practice management advice would you give to a peer who strives to open his/her own practice?
Briggs: It’s critical to pick a great location. Back in my day, I plotted where all of the current optometry practices were located, and I identified a gap that was not being served.
Sorrenson: Perfection is the enemy of success. If you wait until things are perfect to open your doors, or to add an associate, or anything else—you’re hurting your growth. You don’t have to be perfect; you only have to be great.
4 Keys to Better Practice Management
Invest in staff meetings. All three doctors leverage regular, thorough staff meetings to discuss process improvements, reinforce the practice’s vision and mission. They believe this time with their staff is invaluable to the success of their practices.
Manage revenue streams. Regularly review and manage the cost of goods versus practice revenue and make necessary adjustments.
Schedule time for administrative tasks. Find a weekly block of time to focus on your practice management to-do list. “The night before, make sure to pre-program how you’re going to use the time so you’re more efficient,” says Dr. Patel.
Establish system for tracking practice metrics. The only way to evaluate changes you make to your practice is to track metrics. “How do you know if you’re doing better if you don’t know where you started?” asks Dr. Sorrenson.
For ongoing updates about Best Practices, visit ECP Viewpoints℠.
During the past three years, CooperVision has shared important updates regarding the U.S. Federal Trade Commission’s review of the Contact Lens Rule. Company representatives have been actively involved in these discussions, including serving on FTC panels in Washington, educating Congressional lawmakers and agency officials, and encouraging eye care professionals to communicate their own experiences. Additionally, as a charter member of the Health Care Alliance for Patient Safety, CooperVision been instrumental in extending and elevating these conversations to the highest levels.
Recently, the FTC published proposed changes to the Contact Lens Rule, covering four principal areas:
- Patient acknowledgment of prescription receipt.
- Modifications to how robocalls are used in the verification process.
- Enhancements to the prohibition on prescription alteration.
- Allowing electronic delivery of prescriptions to patients.
You can read more and access the full notice at https://www.ftc.gov/news-events/press-releases/2019/05/ftc-seeks-additional-public-comment-proposed-changes-contact-lens
The CooperVision advocacy team is currently reviewing the proposal, in anticipation of sharing additional experiences and insights with the FTC as it seeks further public comment. Watch CooperVision’s ECPViewpoints℠ Legislative Advocacy page for more information on submitting public comments as it comes available.
CooperVision seeks your feedback as well; please email Dr.Andrews@coopervision.com. Continued partnership between industry and eye care practitioners will help promote a contact lens purchasing and wearing experience that balances access and convenience with continued safety.
The doctor-patient relationship is central to the widespread adoption of contact lenses, and voicing support for that dynamic is essential. CooperVision remains committed to advancing healthy contact lens wear for millions of consumers, and to standing side-by-side with tens of thousands of dedicated eye care professionals like you in their support of the same.
The honorees for the 2019 Best Practices program were announced in a special Facebook Live session from Vision Expo East on March 25th.
Now in its fourth year, CooperVision’s Best Practices program recognizes and celebrates practices in the U.S. that go above and beyond to find ways to differentiate themselves and deliver extraordinary care to their patients, even in the face of increasing competition.
“Best Practices is one of the many ways CooperVision partners with eye care professionals,” said Michele Andrews, OD, Senior Director of Professional and Academic Affairs, North America, CooperVision. “Year after year, we continue to be captivated by so many optometry practices. From what motivated the honorees to open their doors to the patient lives they have since impacted, from the challenges they have faced to the risks they have taken to overcome them—it is endlessly rewarding to hear their stories, and partner with these practices to share them more broadly. It is our hope that their varied experiences can help inspire other eye care professionals to perhaps try a new approach, implement meaningful changes, and find even greater success in their own practices. Congratulations to our 2019 Best Practices honorees.”
Honorees come from practices large and small, newer and well-established. This year’s honorees are:
• Azman Eye Care Specialists / Global Complex Eye Care – Timonium, Md.
• Briggs Vision Group – Dunwoody, Ga.
• Drs. Quinn, Foster & Associates – Athens, Ohio
• Lakeline Vision Source – Cedar Park, Texas
• Northeast Ohio Eye Surgeons – Kent, Stow, and Akron, Ohio
• Shoreline Optometry – Mountain View, Calif.
• Spring Hill Eyecare – Spring Hill, Tenn.
• Vancouver Vision Clinic – Vancouver, Wash.
• Vision Source of Farr West – Farr West, Utah
• West Shore Eye Care – Ludington, Mich.
The honorees will convene for the first time at the 2019 Best Practices Summit in Austin, Texas later this month. An overview of the Best Practices program was recently released on OD Wire TV. Future OD Wire TV episodes will provide an opportunity for this year’s honorees to share about their areas of interest and expertise… and what makes each of their practices a Best Practice. For ongoing updates about this year’s honorees and the group’s activities, bookmark the Best Practices category page on CooperVision’s ECP Viewpoints℠. Applications for the 2020 Best Practices program will open this fall.
Congratulations to the 2019 Best Practices honorees!