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Play offense in the pharmaceutical marketplace


Consultant Fritz Wood explains how and why it’s essential to the health of veterinary practices.

Don’t blame Betty White. Don’t throw your hands up in despair. Stop playing defense and start playing the pharmaceutical sales game by your rules. Fritz Wood, CPA, CFP, says veterinarians must play offense to realize their revenue potential and gain home field advantage over retail pharmacies.

“I’m sick of playing defense against Betty White and the PetMed advertisement,” Wood says. “I’m ready to play offense.”

Wood says the notion that veterinary clinics can’t compete with big-box retail pharmacies is a big misconception--for clients and veterinarians. “A lot of (veterinarians) have decided to throw up their hands and complain.” For some, it seems like the only option.

The rules of the game have changed quickly and dramatically. Medications are no longer exclusive to veterinarians, big-box stores discount prices, and the weak economy makes client compliance for things like heartworm prevention a hard pill to swallow. Despite all that, Wood says clinics can do a better job of selling products--to stay healthy financially, they must. “Generally speaking, products sales are at least 25 to 30 percent of your business and businesses aren’t in a position to give up and lose a quarter or a third of their business,” Wood says. “The only alternative is they have to defend their business--even grow it.”

To take an offensive stance on pharmaceutical sales, veterinary practices must first answer the question, “Why should I buy this product from you?” The answer could be convenience; value; trust; expertise; access; cost--to find your answer, start with a game plan.

Establish a standard of care

First, establish a medical protocol and standard of care. Get the entire staff on board and on message. “This is not driven by selling more doses,” Wood says. Be specific and declarative. “We believe dogs need and deserve (heartworm) prevention every 30 days.”

Then develop a strategy of implementation. What role does every staff member play to ensure patients are getting the products they need; clients are compliant; and the practice meets the needs of both. For example, collect and compile clients’ purchase history in their files.

Before every appointment the receptionist should be aware of the client’s history and have confident talking points and/or scripts to open dialogue according to the situation. Has the client purchased with the clinic before? If not, where do they? If they don’t purchase at all, the veterinary tech or doctor should be alerted for a discussion on compliance. If they are due for a refill, the receptionist can make them aware and discuss the benefits of buying at the clinic.

Develop a system to easily alert the doctor or technicians that a discussion on products and compliance is needed. Wood says the message of care, compliance and value can and should continue throughout the visit--from start to finish, a procedure to communicate the message must be in place. He says status quo has 60 to 80 percent of clients leaving the clinic without a needed product.

That’s why every team member must be involved--the veterinarian can’t do it alone. “You have to look at each of those touch points and ask, ‘What do we want to happen here.’” Woods thinks conversations on products usually happen randomly, not intentionally. A recommendation and compliance cannot be achieved with one suggestion. “It has to be reinforced probably multiple times, by multiple people, probably by multiple media,” he says.

Pricing and promotion

Find a way to be competitive and tell everyone. For example, a six pack of Frontline may be $70 at Costco; $76 at PetMed Express; and $80 at a clinic. But, at the clinic, the veterinarian will give two free packs with every six pack. Do the math. “Unbeknownst to the veterinarian, he’s a couple dollars cheaper than Costco. I would heavily promote that,” Wood says.

He suggests breaking down the numbers. “I would want to be competitive on a price per day or price per dose basis after having factored in any free doses I get.” Traditionally, pharmaceutical markups have been 100 percent. “By and large, that is a thing of the past,” Wood says. Pharmaceuticals set at 70 to 80 percent still achieves a high profit margin and may get the price within striking distance of the big box stores. “Factor in some free doses and typically, they’re cheaper than those other places.”

Wood says losing a little on markup is not nearly as important as losing the sale. “If I lost that sale I lose all the future sales. I’m pretty unwilling to lose that product sale because of price,” he says. “What I don’t want is that client buying product somewhere else or an inferior product. If you lose that sale--think of the lifetime of that pet.”

When the clinic’s price is more than the retail pharmacy, Wood says clients should be encouraged to buy from the clinic, but offering a prescription to be filled where it is cheaper, could still provide a positive result. “You just bought tremendous loyalty and trust,” he says. Framed correctly, it shows that the veterinarian’s top concern is that the pet receives needed treatment regardless of where the medication is purchased.

“The truth is, most people will fill on the spot.” The hassle of making another stop to get the cheaper product may not be worth it to busy clients. “When they’re standing right in front of you, that as convenient as it gets,” Wood says.

Practices have to combat the notion that the big box or online pharmacy is always cheaper. “Every single person who walks into a small business just has to assume it’s more expensive than a wholesale club.” Promotion of strategic pricing and free doses are paramount. “Nobody’s going to know that unless you tell them and you tell them over and over and over again.”

Marketing the message

The race to market share is really a race to the client. Right now, retail pharmacies may have clients’ attention because of advertising and the promise of lower prices. Make it a priority to take time to talk with clients about why they should buy their pets medications from the clinic.

“Communicate to your clients every chance you get,” Wood says. “You could be a buck lower, but people don’t even know it. (Veterinarians) have to let people know they are competitive.”

That means not only talking with clients, but actively advertising and promoting too. Wood says to make banners and signs; send emails and reminders; display products and deals--address medications when clients come through the door. And regardless of price, always keep the message about standard of care. It’s not just about selling a product; it’s about healthy pets. Wood even suggests providing videos of heartworm removal. “Show them what non-compliance looks like.”

Wood also suggests changing the language. Don’t just say, ‘Fido is due for a refill’ on client reminders. Try, ‘Prescription refills are necessary.’ “We’re planting a seed that way,” Wood says.

An effective client reminder system may be essential to increasing purchases and compliance. “If I leave the clinic today and buy a three-pack of flea control--rare is the clinic that’s going to follow up for a refill,” Wood says. “A little more than six of 10 dog owners who visit a veterinarian didn’t get a single dose at all.” He’s confident they’re not out the door to a big box retailer. “They’re not getting it at all.” There’s an opportunity for clinics to reach those clients.

If the perception is established that products at a veterinary clinic are competitively priced--even cheaper--Wood says that client mindset will expand. “Once they see they’re not getting gouged there, all the veterinarian’s fees appear reasonable.” Clients may see beyond price to the value in services.

The value of veterinary expertise

The one thing a cheaper price can’t match is the value of veterinary expertise. That may be what makes pharmacy competition--according to Wood--“more emotional than actual. It drives veterinarians mad that clients are buying their products over there,” Wood says. “The fact they can buy it somewhere else is a bit of a distraction.”

The value of veterinary expertise and counsel to clients is evident Woods says in the questions pharmacy company consumer hotlines often get. Most are along the lines of ‘How do I give this product?’ ‘What if I put a dog product on my cat?’ Clients should be aware that they are without the expertise and advisement of a veterinarian at a retail or online pharmacy. Wood encourages veterinarians to make the U.S. Food and Drug Administration’s warnings regarding online pharmacies available to clients. “The FDA is saying don’t buy your drugs online.”

By buying medications at a clinic clients may not always get the cheapest price, but they should be assured they will always get the correct product, warranted, in date, stored appropriately and with access to experienced medical staff that can answer all questions Wood says.

He understands too that some veterinarians are more comfortable discussing pharmaceutical sales completely within the realm of standard of care rather than as a sales pitch. “This shouldn't even be a position as, ‘I’m selling you a product,’” Wood says. It is simply a conversation about wellness and compliance.

He says veterinarians can keep it about wellness by avoiding the feeling of retail--like having the receptionist offer the medication as a client is leaving the office. “If the doc puts the product on the table in the exam room--that’s medical.” And that translates to the client.

“You’re getting a piece of the veterinarian’s time, counsel, expertise, professional opinion,” Wood says. It’s trust. “I would call that kind of stuff piece of mind for a lot of people.”

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