In my last article (3 Reasons Stocking Contact Lenses Might be Right for Your Patients), I discussed why stocking lenses is right for your patients. Customers love the speed and convenience of stocked lenses, and by eliminating the middle-man in lens delivery, you can create a better customer experience. A better customer experience equals a better branding and marketing opportunity for your practice.
Stocking lenses are profitable in two ways
Typically you’ll see profitability increase both directly and indirectly when selling stock lenses.
Directly, you get a much better price on your cost of goods, lowering them by as much as 10-15%, if not more. You’ll typically also increase your growth rebates from the manufacturer, also increasing profitability.
Indirectly, you experience the benefit of selling more contacts overall—because you are focused on it as a practice and also you can be more competitive with your prices or deliver an improved experience. As a result, you’ll encourage more purchases and make more sales. While the second part is more difficult to quantify, the first part is easy. There are few places where you can park your money and make a 10+% return in six months or less. If you facilitate a seamless customer journey, you’ll be more profitable in no time.
However, while stocking lenses can come with challenges, I’m here to assure you that with the right system in place, they are easy to overcome.
What are some of the barriers to stocking lenses?
- Cash Flow
At first, stocking lenses can be an expensive endeavor. Dropping $5,000 on a supply of lenses can be an intimidating prospect. Sure, you recoup that investment over time—but the cash flow becomes a little more complicated because it doesn’t quite match patient volume in the same way as exam fees or glasses sales do.
- Real Estate
You need to have storage space for lenses. That’s simple enough with monthly replacement lenses, but it’s more difficult with daily lenses as they take up more space.
New lenses come to market routinely; what do you do with your supply of stock lenses if you want to move away from fitting a particular lens or brand?
Finally, stocking lenses simply doesn’t make sense for every doctor’s practice. In our consulting, we find many practices using all four lens manufacturers to almost equal degrees. Many don’t realize this and are eager to change and consolidate to two or three manufacturers. However, some like to maintain a relationship with all four—which you can’t do if you’re interested in stocking lenses.
So, how do you address these challenges?
How to handle the cash flow situation
Many stocking deals only require 100 boxes. That’s only 12.5 annual supplies of dailies—so if you sell to two of those patients per week, you’ll turn over your stock in six weeks. Many vendors also offer free shipping on six boxes of daily lenses, meaning your patient can leave your office with two boxes while shipping the remaining 6. This gives you more flexibility to keep a lower stockpile of daily lens boxes. Also many vendors will give you 60 or even 90 day terms for your stock purchase, helping smooth out the cash flow.
Where can you find real estate for stocked lenses?
A question we often hear is “do lenses need to be displayed for patients?” Our response is often “not really.” If a display is done well, patients will think it looks nice—but there isn’t really any magic to pulling a box of lenses out of a stack. If anything, it can make your staff look confused or ill-equipped if they can’t find the correct lenses immediately. In fact, if you display lenses at checkout, patients may feel like you’re biased because you only tell them about the brands you sell at your practice. However, if the lenses come from a storage area, patients won’t be able to tell that you don’t carry other brands.
My best advice for lens storage is to make them easily accessible and organized for staff, but not necessarily visible to patients.
What if your fitting practices change?
Luckily this challenge is fairly minimized if you work with a distributor. You can often exchange some stock for credit towards another stock if needed. As long as you’re committed to stocking lenses of some kind, it’s fairly easy to shift your inventory. If you pick a good partner and a good lens, you’ll only have to adjust fitting practices every few years, which allows you to prepare in advance.
How many manufacturers do you need?
Picking a good partner brings me to my last point. A lot of doctors cost themselves bargaining power and profitability by being too diversified. This can happen for various reasons. Many doctors can get excited about a new lens product and fit their patients until the next new lens. Some are too busy to make it a habit of refitting patients into better technology and diversification happens gradually.
Regardless, we often find the accounts we work with for Profit Assist are too diversified. Depending on the size of your practice, committing to two main lens manufacturers can significantly decrease your cost of goods, while also increasing your growth rebates by thousands of dollars per year. This is the key to stocking lenses successfully.
Three steps to getting started
- Choose a Primary Vendor
If you haven’t already, analyze your contact lens business and decide on your primary vendor. It doesn’t mean that you can’t work with others, but it’s important to identify one you do 30-40% of your business with and are committed to those lenses for at least a year.
- Stock a Daily Lens
As mentioned in my previous article, patients with daily lenses are even more motivated to get their contact lenses before they run out. Therefore, you’re offering them more convenience with same-day service. Choose your favorite and make a commitment.
- Communicate with Your Staff
As is true with all things in your practice, it is important to tell your staff what you’re doing and why. Explain your plan to start stocking lenses and share the benefits of the new model: less phone calls asking where contacts are, less checking in and verifying contacts, no wait time, more competitive prices, no shipping costs, etc. Choose the advantages that are most meaningful to your practice and team.
Stock lens and staff management systems
Setting up a system to manage your stock is key to making your success smooth and easy. Start by giving someone in your office the responsibility of checking lens expiration dates monthly and stock levels weekly. Depending on your practice’s size, location, and rep availability, you can also have your reps help assist.
With regards to reps – communicate your intentions to stock and sell these lenses successfully. You want them to partner with you so you can be profitable together. When you engage these reps well, you’ll get some great energy and attention from them.
Make sure your staff knows what you’ve stocked and to treat those orders differently. Simply having staff keep a written running tally of the number of boxes sold for two weeks should be enough to change their behavior by reminding them to go pull those lenses. It’s a lot easier than going three weeks after stocking lenses only to discover that (oops) everyone forgot.
Profit by stocking lenses
Stocking lenses is a great opportunity to boost your profitability. It lowers your cost of goods, improves your delivery speed, and sets you apart from online offers. It helps consolidate your lens portfolio in a way that strengthens your practice and increases growth rebates from the manufacturers. If you take time to assess your processes and start stocking lenses with a firm plan in place, you’ll see the financial upside in no time.