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Bounce back: Grow your practice regardless of the competition (Proceedings)


Competition between veterinarians and veterinary practices has never been more intense, nor have so many opportunities been available to become successful. That may seem like a paradox but many practices are becoming more successful in the face of more and more competition. More 2 person practices are able to reach the $1,500,000 level than ever before.

Competition between veterinarians and veterinary practices has never been more intense, nor have so many opportunities been available to become successful. That may seem like a paradox but many practices are becoming more successful in the face of more and more competition. More 2 person practices are able to reach the $1,500,000 level than ever before.

One of the major reasons that some practices have been so successful is that they are constantly changing to meet the needs of their clients. The old ways of doing business using the old service methods do not work well today. Consumers today are not looking for businesses that are open limited hours, selling outdated products and services and operating in worn out facilities in out-of-the way locations.

The changing landscape

Consumer buying habits have changed greatly due to the current life style of most families. More families today are single parent families with limited free time. In those families which are dual parent families, both members work full-time and again have limited free time outside the regular work day. Ten years ago, industry consultants were forecasting 35 hour work weeks. However, the work week for most people has expanded to about 45 hours per week; not contracted. In addition, more professional couples are deciding that children are not compatible with a career, so pets are becoming substitutes.

These changes in family life result in less time being available to obtain veterinary services during the typical 9:00 a.m. to 6:00 p.m. Monday through Friday work week. The changes in work force demographics and the changes in consumer habits (constant search for value) have changed the way businesses must do business. Main Street USA is not like it was in the 1960's. Prior to 1960, the larger successful retail stores were J.C. Penney, Sears, Roebuck and Company and Montgomery Ward. Most small towns had one or more of these stores.

In the 1960's, a new breed of retail store started to develop as K-Mart, Target, and Wal-Mart stores came into town. These "new breed" stores were different as they extended hours of business and promoted their products based on quality and value. "Money back" guarantees were made to assure the consumer that the products would perform as advertised. Other features of these "new breed" retail stores were their convenient locations, large inventories, and competitive prices.

As an example, between 1962 and 1980, Wal-Mart opened 276 stores but between 1980 and 1990, 1,000 stores were opened. Today Wal-Mart has over 8,900 facilities world wide. The concept of large format stores offering everything at a volume price, 7 days-a-week, in a convenient location really caught on. In Wal-Mart's search to listen to the needs of the new consumer, Wal-Mart Super Centers were opened. These larger stores carry all of the regular Wal-Mart items but in addition have groceries, fast-food (i.e., McDonald's), 1 hour photographic service, 1 hour eye glasses service, cleaners, bakery, and fresh flowers. This is truly a one-stop shopping experience in a convenient location in a bright and clean facility, using well trained staff. By 2009, Wal-Mart had 2,746 Super Centers open with more opening all the time.

The "new breed" stores were joined in the 1980's by new competition as the "Category Killer" stores opened. These stores use the Wal-Mart approach to business (convenient location, extended hours, inventory at rock-bottom prices) but specialize in one category of products and services. Examples of the Category Killers are: Walgreens (Drugs); Toys "R" Us (Toys); Home Depot (Home Supplies); Best Buy (Electronics) and PetSmart (Pet Items).

Finally in the 1990's, the Factory Outlet Malls were developed. Approximately 525 Outlet malls are in business with a gross income of $20 billion. The Outlet Malls are offering another type of shopping experience for the consumer but the effect they may have on the new breed stores and category killer stores will require more time.

Why are the new breed stores (Wal-Mart, K-Mart, Target) successful? What messages can Veterinary medicine gain from their success? First, we must accept the fact that consumers' buying habits and needs continue to change. Secondly, change in consumers' habits affects the habits of Veterinary clients.

Consumers today are generally looking for the following eight things: 1) value (Sears provides 63¢ of product value for every dollar spend while Wal-Mart provides 80¢ of product value), 2) wide choice of products, 3) new facilities and items, 4) convenient location, 5) long business hours, 6) one-stop shopping, 7) no hassles (long lines, out-of-stock, difficult return policies) and 8) friendly, personal, knowledgeable people to help you in a clean, bright environment. These eight consumer needs are being met by the new breed stores and people are flocking to them.

If consumers are delighted by the way new breed stores provide services, then veterinary medicine should be aware of these and keep our practice services focused on similar issues. Veterinary practices can excel through special attention to: 1) value (improve client perception of quality care), 2) remodel and improve facilities regularly, 3) extend hours of operation, 4) provide one-stop shopping as much as possible, 5) have a "no hassle" environment, and 6) provide individualized personal services (one client at a time). Large format stores and corporate practices will have difficulty providing individualized personal service and will not be able to react as quickly to new client needs as smaller practices.

To be successful in practice today, you must be willing to change and to understand the changes which affect veterinary medicine and your practice. Several sources of information are available and can be used to remain current. The American Veterinary Medical Association's (AVMA) Marketing Department and Information Management Department publishes veterinary services information on a regular basis. The understanding and use of the AVMA's NCVEI on-line benchmarking information will provide "real time" data on Veterinary fees by region. Other national organizations also provide information, publications, and seminars (American Animal Hospital Association, North American Veterinary Conference, Central Veterinary Conference, Southwest Veterinary Symposium and Western Veterinary Conference) to keep veterinarians current on the changes in client needs. Regular publications are available on management and marketing topics through Veterinary Economics, AAHA Trends, Veterinary Forum, Veterinary Practice News, and the Journal of the American Veterinary Medical Association. Electronic data is available 24/7 via www.VIN.com.

Chages in society directly affect veterinary clients. As the number of pets increases and the number of practicing veterinarians increase, the competition continues to increase. The percentage of female veterinarians in the profession continues to increase as does the sensitivity of client needs. As veterinary competition continues to increase in intensity and client needs change, the profession can not continue to do business as in the past. New or modified approaches to practice must be found and used.

Strategies for survival

The following ten survival strategies are presented and discussed to keep practices on the leading edge of the change curve. The ten areas are: 1) Focus completely on satisfying the client, 2) study success of others, 3) gather and analyze management information regularly, 4) improve marketing skills, 5) increase the client's perception of value, 6) position the practice uniquely, 7) eliminate waste, 8) find something to improve every day, 9) embrace change with a positive attitude and 10) pull the trigger to get started.

As we review these ten survival strategies, you should be thinking about specific applications to your practice. The first strategy is to focus on client satisfaction. The only asset with lasting value in your practice is the client. Facilities, equipment, supplies and drugs wear out and stop functioning. Clients, however, continue to return to the practice and build value. Therefore, we must know our clients as individuals and know what they want and need. Consumer retail buying habits have been evaluated and found that 30 percent shop 8:00 a.m. to 5:00 p.m., Monday through Friday; 30 percent shop 5:00 p.m. to 9:00 p.m., Monday through Friday; and 40 percent shop on Saturday and Sunday. Therefore, if the traditional business hours are observed (8:00 am to 5:00 pm) then only 30 percent of the consumers will be served. Available time and shopping patterns have changed and continue to change. Do you know what your clients really want and when they want it? You must ask the client to find the specific answers.

The second strategy is to study the success of others. Some key areas which are common to successful practices are: 1) full use of computerization, 2) Qualified veterinary staff to veterinarian ratio of at least 4:1, 3) written mission statement and specific goals, 4) commitment to regular staff meetings, and 5) strong commitment to continuous improvement, to name a few.

The third strategy is to gather and analyze management information. Some practice owners are still getting financial statements quarterly and often do not understand the numbers. Reviewing patient numbers, gross income, average transaction fee, net income, and expenses when compared to month-to-date and year-to-date will provide tremendous information. The best results are expected from monthly review of financial data. Work with your C.P.A. and practice consultant or business manager to help understand this information. In addition to practice statistics; national, regional, and local information concerning the profession should be reviewed and digested. The use of NCVEI.org web site will provide regional fee data. Special attention should be given to monthly or quarterly cost of living fee adjustments for non-shopped fees and computer controlled inventory management.

The fourth strategy is to improve your marketing skills. A quick review can be obtained by reviewing the six "P's" of marketing: 1) price, 2) product (service), 3) place, 4) promotion, 5) people, and 6) positioning of the practice.

The fifth strategy is to change the value perception of the client. Successful practices must be competitive on "shopped" fees (examinations, vaccinations, elective surgery). Clients make decisions about the costs of all services based on the cost of the shopped items. If the shopped items are reasonably priced, then it will be assumed that all other fees are also reasonable. All non-shopped fees should be increased by the consumer price index (CPI) multiplied by a factor of 3 on a monthly basis. As an example, if the consumer price index is 4%, then the annual medical CPI index would be 12 ( 4 X 3 = 12 ). The annual rate of 12% would be applied on a monthly basis of 1%. These fee increases will result in odd numbered fees (not whole number fees; $25.00 vs. $25.32) which will provide the perception of cost containment down to the last penny. Monthly adjustments of fees is only possible through computer management.

The sixth strategy is to position the practice in a unique niche. The niche areas could be by species (cat, dog, exotics, equine) diagnostics (endoscope, ultrasound, digital radiology, CT, MRI, laboratory support), full service (medical, retail, boarding, grooming), behavior counseling or specific breeds. Do your marketing research and learn what your clients want and what your competitors do not have. Then communicate to your clients why you are better than other practices by using all professional and support staff members on the team.

Strategy number 7 is to eliminate waste. Expenses should be tracked monthly and listed in descending order from the most expensive category down to the least expensive category. Controls should be applied to areas that are out of control. Concentrating control over the most expensive areas will produce the greatest results (i.e. personnel ). The control of expenses is most important during periods of recession.

However, most practices will be able to improve their net income by expanding gross income rather than trying to reduce expenses. Another area to concentrate on in order to eliminate waste is by improving inventory turnover. Inventory turnover rate should approach 10 to 12 turns per year to operate on O.P.M. (other people's money). Computer monitoring (re-order points, re-order quantity, inventory turns) will provide efficient monitoring. One staff member should be assigned to monitor and order all inventory items.

Survival strategy number 8 is to improve something everyday. The Japanese use "Kaizen" which is continuous improvement involving everyone. This approach is very effective because suggestions are continually sought from staff, clients, friends, colleagues, consultants, publications, seminars, and family. Specific ideas are then carefully implemented one at a time. Improvement on a regular basis allows the practice to provide what the client really wants and provides services in an efficient manner.

Strategy number 9 is to embrace change with a positive attitude. Change is now a constant happening. The older we get, the most difficult change becomes. However, change continues and our options are to accept it as positively as possible or reject change and become outdated. Scientific knowledge is doubling at an estimated rate of 20 months. The key to survival is to accept change in a positive way and be able to quickly adapt. Resisting change will only allow your practice to become more susceptible to increasing competition.

The tenth and last survival strategy is to "pull the trigger." You must get started now. Listening, reading, and being exposed to the above nine strategies will not help at all until you execute change. It is better to try something and fail than to not change at all. If the first try does not produce the desired results, modify the approach and try again.

Learn by doing and modify the approach when necessary.

Accepting and understanding the challenges (threats) affecting your practice and following the list of ten survival strategies will allow a marketing plan to be developed. The marketing plan is the road map needed to connect your vision of what "should be" to the reality of what "can be." Without a marketing plan, the possibility of success is greatly decreased. A specific plan allows focusing on the important issues and following them to completion.

Developing a marketing plan

As the outline is being developed for the specific marketing plan, the following seven questions should be asked. First, what business are you in? The answer to this question needs to be as specific as possible. Every practice will be a little different as one practice may provide full-service to all species while another may only provide medical services to one species. Some practices are focused on pharmacy and retail sales, while others refer clients to a retail pharmacy.

Secondly, who are your clients? This will require a review of current client demographic information. The typical small animal practice will have a general client profile of: female, aged 30-50, employed, with some college training. The American Veterinary Medical Association regularly updates client profiles.

Third, what can you do to add value to your services? Some areas to consider are a more detailed physical examination, increased use of hand out material, improved client communications and providing client health seminars to name a few. The appearance of the facility (inside and out) as well as the professionalism and appearance of the staff will also provide additional value.

The fourth question is: How much money can you invest and how often? Most small businesses do not invest enough into marketing. Many large companies invest up to 10 percent of net income into their marketing efforts. Veterinary practices should attempt to invest 2 to 4 percent on an ongoing basis to include, signage, yellow pages and practice website. The new practice start-up marketing plan will be more expensive than the ongoing practice. Every practice that anticipates continuing successfully in business should have a marketing plan.

Question five is: How can you reach your clients? Improved communication networks will help here. Investing time in dog and cat shows, human society functions, pet shop liaisons, and breed clubs. Some practices can benefit from using a client newsletter, news post card, website, or e-newsletter. Increased visibility of the veterinarian in the community will also improve practice recognition (i.e., being involved in a service club, church group, Girl/Boy Scouts, etc.).

The sixth question to ask is: Who are your competitors and what strengths or weaknesses do they have? You may want to complete a "SWOT" analysis ( strengths, weaknesses, opportunities, threats ) of your practice? And finally, the seventh question is, why should someone buy from you rather than your competition? Listing your strengths and weaknesses will help formulate the appropriate answers. Formulating a marketing plan using the above seven questions and updating that plan regularly will guide the practice to success.

Low-cost marketing ideas

The following 25 low-cost ideas could be considered when developing a marketing plan. The best approach would be to only attempt one or two at a time. Once a new idea has been implemented and it is working, another idea could be considered.

      1. Invest in quality business cards for all staff members (use both sides)

      2. Create a 10 second introduction of yourself and your business (i.e., I'm Dennis McCurnin, Professor of Management at the School of Veterinary Medicine, Louisiana State University. My current focus is teaching and publishing practice management information for veterinarians and veterinary students).

      3. Network (i.e., clients, DVM's, public, community).

      4. Develop and use a logo to add consistency and continuity to the practice.

      5. Personalize all printed materials (letterhead, envelopes, statements, handouts, fee estimates).

      6. Attend continuing education meetings (use VIN)

      7. Support and become involved in professional organizations (AVMA, State VMA, local VMA, AAHA, AAEP, etc.)

      8. Hold an Annual Open House.

      9. Write publications (i.e., professional or lay).

      10. Invite someone you do business with to do business with you.

      11. Use ideas from successful people and practices.

      12. Become an expert in some area ( Special interest area )

      13. Always say "thank you".

      14. Send pet birthday cards.

      15. Use "messages on hold" in the phone system to inform clients of specific services.

      16. Provide informational seminars to clients.

      17. Offer obedience training classes to your clients ( Staff project )

      18. Develop informal partnerships: (boarding kennels, pet shops, grooming services, humane society).

      19. Produce an effective yellow page advertisement.

      20. Produce special advertising hand-outs using the computer ( Practice Brochure )

      21. Make presentations to local service clubs.

      22. Join and become active in a local service club, church, or school board.

      23. Use fee estimate sheets ( treatment plans ) which outline all services available.

      24. Provide personalized medical and pet care handouts. These can be developed using desktop publishing on the office computer.

      25. Develop a practice web-site with a client library area on it and electronic pharmacy.

Walt Disney once said, "You can dream, create, design and build the most wonderful place in the world, but it requires people to make the dream a reality." Veterinary medicine is much the same. In our vision and plan for change, we must include communication, input and support of our staff, clients, and family. Veterinary medicine is sold one client at a time. Our practice will grow if we practice and teach our staff to respect and value our clients as we respect and treat each other.

Your practice will continue to grow and prosper even in the shadow of a mega-practice if you practice with a positive attitude and provide quality services that are valued and needed by your clients. An up-to-date marketing plan is essential to allow the practice to plan and understand the road map that leads to the future. Keep current on the changing environment and don't fear change.

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