PREMIUM PRACTICE TODAY: What Sets Us Apart?

PREMIUM-PRACTICE-TODAY-What-Sets-Us-Apart

One of these things is not like the others.

Since the dawn of refractive surgery, ophthalmic surgeons who depended at least partially on out-of-pocket payments had to establish fair yet competitive pricing and have a system in place to ensure timely compensation. As the business of performing elective ophthalmic surgery evolves, cataract and refractive surgeons can look to cosmetic surgeons, aesthetic dermatologists, maxillofacial surgeons, and others to learn how to flourish in the self-pay environment…

 

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Groupon for Surgery: A Bad Idea

Like many of you, I get a daily Groupon e-mail and will often take a look and see what special deal is being offered.   I admit to being intrigued by the upcoming Tomato Battle taking place in my town next weekend (modeled after the annual rite in Bunyol, Spain), but I’ll leave it up to a few thousand others to enjoy that event.

 

While I have serious reservations about the longevity of the business model (which were confirmed by Groupon’s recent financial reporting), this type of offering has struck a nerve with deal-seeking consumers whose spending patterns have been permanently altered by the economic battering of the past few years.  For consumers, Groupon (and its cousins on Living Social, Schwaggle and the hundreds of other deal sites) can be an enticing way to try or buy something for the first time.

 

For providers – and I am speaking directly to those of you who market your services – Groupon can be a risky proposition for the business.  There are countless examples in the media of the restaurant or bakery being overwhelmed by Groupon redeemers.  They simply didn’t have or plan capacity to meet demand.   In some ways, that’s a high quality problem for a business owner.     And for providers of annuity-type, non-surgical medical services, such as facial aesthetics (eg, Botox, teeth whitening), enticing a first-timer with a good deal makes sense.   What I am concerned for are those services that are in the “once-in-a-lifetime” category, such as LASIK.

 

Grouponing LASIK is a bad idea for one simple reason: No opportunity for repeat business!   You’ve given away the farm to someone who will only pay you one time.  And if it’s word-of-mouth you are hoping for, you need to recognize that what you are doing is stimulating consumers to talk about the great deal they got on LASIK instead of talking about the miraculous improvement in their vision.

 

I could dive right in to economic principles to support my assertion, but choose to limit them to their punch lines:

 

Don’t treat LASIK like a commoditized good.  There’s no “supply” of LASIK that risks becoming obsolete on the shelf  (such as last season’s trendy sweater) or spoiled (like those gourmet cupcakes).

 

Discounts don’t work to increase demand for LASIK.   Historical trends over 15 years demonstrate an inelasticity of demand, as decreasing prices have correlated with decreasing demand for the procedure.

For  a “one time” procedure, all a discount does is lure a person who has been actively considering the procedure; he or she would eventually have a sufficient trigger and pay the going rate.  The LASIK example illustrates how providers mistakenly believe they can attract the much larger market of spectacle and contact lens wearers; history has shown they aren’t motivated by low price.

 

My view is that demand for LASIK is going to improve steadily over the next few years.  See my commentary “Is LASIK Dead?” to learn more.  (Thank You Note: I’m gratified to see this was the most widely read article in the August 2011 issue of Cataract and Refractive Surgery Today).

 

Doing a few hundred extra LASIK cases at half the price does little to boost the bottom line.   But it does a lot of damage to the long-term pricing integrity of that provider and continues to foster the myth that LASIK is a commodity and can be had for cheap.

 

In short, leave the grouponing to repeat-visit offerings where the goal is to stimulate a trial or sample purchase, and don’t undermine your long-term brand or market position by using groupon as a promotional tactic.  The risk of backfire is much higher than any possible short-term reward.

Ideas in Action: Babysitter Knows Best

December 2008

Babysitter Knows Best

You are What You Charge For

Figuring it out

 

In the world of commerce, there is a perplexing problem unique to those in the business of providing services (as opposed to tangible goods) to customers: how to value the specific service you offer. It’s tricky, because the temptation is to try to compete with similar providers on the basis of price, subscribing to the age-old adage “may the lowest bidder win.” While this might feel good to the customer (at least temporarily), it has the opposite effect on the provider. Most of what I hear from providers amounts to seller’s remorse: “I gave it away to get the business.” As a result, the service provider typically feels cheapened and compromised.

 

Babysitter Knows Best

For a moment, let’s visit a specific service provider that those of us with young children need from time- to-time: the babysitter.

Many of us recall as children those special occasions when time was spent with a babysitter while our parents went out for the evening. A generation later, my wife and I are probably even more dependent on this specific service to give us a few hours of much needed “R and R” away from our posts. As the person responsible for paying for this service upon our return, what typically happens next is a stroke of service provider genius: When I ask a new babysitter, “how much do we owe you?”, my question is answered by a shy glance to the kitchen floor and a gentle, “oh, whatever you think is appropriate.”

This vignette illustrates several aspects about defining value for services. The sitter doesn’t want to undervalue her services and therefore allows the customer to decide (an interesting strategy, indeed!). Mom and Dad are painfully aware of the difficulty in finding a trustworthy person to be with the kids (note to my mother-in-law: this only happens when Gram and Papa aren’t available). We don’t want to offend this precious resource, so we pay more than the going rate, especially if we sense it’s been a fun experience for our kids. We are also investing in futures, wanting to be at the top of this sitter’s client list when we will again need her sitting services.

 

You are What You Charge For

So, what value do you place on your services?

The answer to this question lies in the maxim offered by authors Pine and Gilmore in their book The Experience Economy: “You are what you charge for.” The fees you establish for your services are a direct reflection of what you believe those services that you provide are worth. A shrink (a.k.a. psychiatrist) might further interpret that those fees are an “indication of self” — self-worth, self-esteem, or self-loathing — but I’m not going there.

In a recent lecture, LASIK surgeon Steven Dell challenged colleagues on their pricing for refractive surgery: “Do you know what plastic surgeons charge for a ‘buttock lift’?” Curious to find out, I have learned that surgeon fees for this procedure average $3,700. If you add in the hospital fees, the cost to a consumer for having their derriere put back in place exceeds that of having their unaided vision restored.

You heard it right: we (meaning the entire marketplace) place greater value on the appearance of our backside than on our ability to see the world without corrective lenses. If you the cosmetic aspects of both procedures, one can sum it up as this: people are willing to pay more for how they sit than how they see. In my humble opinion, something’s wrong with that equation!

 

Figuring it out

It can be tough work to re-evaluate how you determined your fees in the first place, but that’s where the solution to this problem resides. Observe the world around you and you may notice what I’ve found to be true: It’s not about the money unless you make it about the money. The more common and generic your offering, the easier it is to compare on the basis of price alone. Conversely, the more unique and customized your offering, the harder it is to compare and the more valuable it becomes.

For a good example of this, check out the January 2007 issue of Cataract and Refractive Surgery Today and my column called The Secret Success of Starbucks. (hint: it’s not about the coffee).

Until next time, Happy Holidays! And enjoy that peppermint mocha!

 

Shareef Mahdavi
President, SM2 Consulting

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How Perceptions of Money and Pricing Influence Demand for Refractive Surgery

How Perceptions of Money and Pricing Influence Demand for Refractive Surgery

The realm of elective medicine has created a unique opportunity as well as placed a significant burden on the ophthalmic surgeon who performs refractive surgery. Collecting money directly for a medical procedure requires the refractive practice to be skilled in retail as well as clinical care…

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Ideas In Action: Pianos, Ice Cream and You

April 2007

Pianos, Ice Cream and You

The big “E”

The Fine Print

 

You might not have put this together, but Steinway (the legendary piano maker) and Cold Stone (the fast growing ice cream chain) have a lot more in common than many realize. Both have some unique approaches to satisfying customers and building their business brands. Both have built their reputations without advertising (one over the past 150 years, the during the past 5).

 

Pianos, Ice Cream and You

When you buy a Steinway, one of the benefits is that the company arranges a concert by a pianist in your home. You pick the date, give them the guest list, and they take care of the rest. You enjoy a neat experience and get to impress your guests. And you know who ends up becoming a future Steinway customer? The guests! Now, that’s clever marketing!

When you go to Cold Stone, an ice cream cone easily runs five bucks or more. Flavor sampling is encouraged, and you get to customize your order with goodies that get mixed in before your eyes on a cold slab of granite. The teenage scoopers sing for tips. It’s a brief performance dubbed “eatertainment” that has people standing in long lines on hot nights. Again, very clever marketing.

What these two examples have in common is something we should all pay attention to, namely the customer experience. Whether we’re dealing in high-end pianos or passion fruit sorbet, the path to differentiating our offering and commanding premium prices is through the delivery of over-the-top experiences to our customers.

 

The big “E”

Welcome to debut of Ideas in Action, a newsletter designed to stimulate your thinking and help you continuously improve the experience you offer your customers. The inspiration for doing this comes from 20 years of marketing and sales experience with medical technology, specifically ones that are so good that customers (meaning the doctor’s patients) are willing to pay for them with their own money rather than wait for somebody else (meaning insurance) to pick up the tab.

My firm, SM2 Consulting, works with leading manufacturers and providers in ophthalmic, dental, and cosmetic/aesthetic specialties. During the past 5 years, we have published numerous articles and reports (available in the Library of our just-launched website), most of which apply across the board to the effort involved the business and marketing of elective procedures. What I’ve learned while doing the research and writing is that when it comes to the marketing of services, the ultimate form of marketing occurs when the service you deliver exceeds the expectations in such a way that your customer feels compelled to tell everyone they know about it and continue doing so for a long time. We have passed by the era in marketing when you could create the right “mix” of traditional concepts – positioning, promotion, pricing, packaging, and all the other “P”s – in order to be successful.Those “P”s are still around, but they are taking a back seat to the big “E” of marketing called experience.

My goal is to discover and highlight for you great role models of products, services and companies that know how to deliver an enhanced customer experience.

We’ve got some good things planned going forward, so stay tuned. I’ll be discussing pricing (you won’t believe how much a buttocks lift actually costs!), a whole new approach to the sales of cell phones, and an interview with The Experience Economy author Jim Gilmore. In the meantime, I have finally published the long- awaited Top Ten Marketing Mistakes made by refractive surgeons, which is now available for you to download at the SM2 website. It should be a good conversation starter at your next staff meeting. For those of you who got this “magically”, I was the magician who added you from my rolodex. I hope you will let your friends and colleagues know about the newsletter and the site.

Summer starts today. That means swimming, BBQ, and, of course, Cold Stone. Enjoy!

 

The Fine Print

I call this a “newsletter” but it’s really more of a “fire starter,” intended to spark thoughts and ideas for readers to more creatively solve their own marketing challenges. It is intended to be more raw and “straight from the gut” (thank you Jack Welch) than what happens in my monthly column in CRSToday. I’ll do my best to issue this newsletter when I have something to say which I think adds value to your efforts to improve the level of customer experience in your practice or business.

We won’t sell or rent your e-mail address or name. If you are bored and don’t want to receive this, you check out at anytime. I hope the opposite happens and that this is good enough stuff that you will forward to your friends and colleagues so they can join in. Feedback is good! If you want to comment on something here, send a note to me at the address below.

 

Shareef Mahdavi
President, SM2 Consulting

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