We spend a lot of time at GPN talking about important KPIs (Key Performance Indicators) that you should be aware of and monitoring in your practice. I want to point out that all KPIs are a direct result of our revenues and behaviors in our practices. That may not be as obvious as it seems. If you pause for a moment to think about it, you can realize or re-acknowledge that we look at KPIs in order to help us pinpoint those areas where behaviors, whether sales techniques, prescribing language, merchandising decisions, or [fill in the blank], need to change or improve. That means we have the ability to change our KPIs, by modifying our daily routines. We’re not just at the mercy of forces outside our control. We can know what is happening, and that knowing gives us power.
We’re diving into optical KPIs in this article with a couple of key frame metrics. We’re looking at number of frames sold, and average frame sale. When we put those two together, we get a third Key Performance Indicator that is an especially important part of our revenue recipe – frame revenue.
Before we start, let’s take a moment to discuss what we mean by “frame sale” amount. There are a few ways to measure this, so it’s important to define it clearly. For our purposes – which is our standard approach in EDGEPro – we measure frame sales as the “amount spent out-of-pocket by the patient” on a frame purchase. We’ve chosen this as our standard or default method because that’s the part of the sale revenue we can directly influence at the time of purchase, so it’s a clear indicator of whether our sales and merchandising techniques are effective. (For a full explanation of other measurement / pricing options, visit our article here.) Let’s fire up our Frames Report in EDGEPro and take a look.
Number of frames sold is a pretty straightforward measurement. How many frames did you sell? This includes plano sunglass frames, and the ever-present $0 frames. (Quick definition here: $0 frame sale means the patient chose a frame that was 100% covered by their vision plan, costing them nothing out-of-pocket.) The only frames we don’t count are the patient-owned frames – “just put new lenses in my old frames, please.”
Count up your frame sales and track that number from week to week. You’d do well also to couple your frame count with a frame capture rate to get the complete picture, relative to the number of exams performed.
Average frame price tells us how much our patients are spending, on average, out of pocket. That’s a key piece of information. Do some research on what other providers in your area are seeing from patient sales by visiting EDGEPro Rankings, and checking the optical stats. The drop-down will provide you with the option to look at national rankings or regional.
Keep in mind that not every practice has the same demographic or patient base, so what’s perfect for you may be higher or lower than others in your area. (However, this doesn’t mean you should be afraid to make adjustments and do a little experimenting with your markup or merchandising strategies!)
Do the math. Your Frame Revenue is these two numbers multiplied together. Simple and direct. Change either number, and you change your revenue. Let’s look at an example. In the screenshot above, our practice sold 210 frames in April, with an average (out-of-pocket) amount of $150.38.
210 x $150.38 = $31,579.80
Number of frames sold x Average Frame Sale = Total Frame Revenue
There are a couple of other questions we need to ask when we’re looking at these Key Performance Indicators:
- Is our average frame sale amount higher or lower than the same period last year?
- Is our average frame sale amount higher or lower than the previous month or quarter?
- How is our average frame sale amount behaving over longer periods?
You can also drill-down into the “by staff” option in the Frames Report to see which of your staff are setting the bar high, and which team members need to up their game.
Now that you’ve got your basic formula, you can answer a new question. What would the result be if I added $5 to my average frame sale amount? You have the figures, just run the math:
210 x $155.38 = $32, 629.80
$32,529.80 (proposed amount) – $31,579.80 (real amount) = $1050
If you want a real eye-opener, run those numbers for a full year instead of a single month. This sort of theoretical pricing, along with a solid understanding of what other practices are doing in your area, can give you some serious ammunition when you consider your pricing and markup. You can also look at some theoretical improvements by bumping up the number of frames sold. Remember to couple that number with your capture rate.
EDGEPro tip: Making small changes to boost revenue and productivity in these marginal amounts is a process we call “incremental improvements.” It is a phenomenally effective way to elevate your practice performance over time.
These two KPIs, number of frames sold and average frame amount can easily drive as much as 25% of a practice’s revenue. Remember, knowing is power! Keep track of this Key Performance Indicator as part of your regular routine. Work with your team members to fine-tune their sales techniques. Perhaps even consider bringing in one of your frame reps to help them get a handle on how to discuss the benefits of a particular frame line or material with patients. Consider the possibility of product-specific incentives and watch what happens next! (Hint, you’ll be able to track it in EDGEPro!)