Strategies for Surviving Today s Optical Business. Ed De Gennaro Richmond, Virginia

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1 Strategies for Surviving Today s Optical Business Ed De Gennaro Richmond, Virginia 1

2 Ed De Gennaro Director of Professional Content & Executive Director, ORBA First Vision Media Group 2

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5 It s All About Controlling the Rx There are only so many Rx s out in the market The business that controls the flow of Rx s is the one that will be successful How will you get your share of this market? 5

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15 How may people wear ANY form of eyeglasses? 15

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17 How may people wear RX eyeglasses? 17

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27 What s the % or AR usage? What s the % of photochromic usage? 27

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29 How many pairs of eyeglasses were sold in the last 12 months (ending June 12)? 29

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31 What was the average price of a frame in the last 12 months (ending June 12)? 31

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34 How often do people buy eyeglasses? 34

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37 How many people had refractive surgery in the last 12 months (ending June 12)? 37

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41 What s the average price of a pair of plano Sunglasses In the last 12 months (ending June 12)? 41

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53 What s the average price of readers in the last 12 months (ending June 12)? 53

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56 How often do people buy OTC reading glasses in the last 12 months (ending June 12)? 56

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60 How many pairs of readers glasses did people own in the last 12 months (ending June 12)? 60

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62 Knowing Your Business Do you have a business plan (strategic plan)? Helps focus your team creates clear targets for everyone How to develop one As a team Creating professional product objectives, not sales goals Why does this work? What do you pay them for? Spiffs? Commission? Bonus? 62

63 Vision Mission Goals Docs Goals Optical Dispensary Goals Administrative Assistants Objectives Docs Objectives Optical Dispensary Objectives Administrative Assistants Strategies Docs Strategies Optical Dispensary Strategies Administrative Assistants 63

64 Objectives Objectives operationalize the goal Objectives are measurable Phrase them in action terms "Increase the level of rimless sales by 5% Reduce lateness by 25% Set a performance standard in the objective "By March 31st,... Make them as clearly understandable as possible Use as many objectives as needed 64

65 Remember. An objective has a performance standard and a date Increase sales of rimless eyewear by 15% by June 30, 2006 Decrease errors in the finishing lab to no more than 2% within the next 90 days. Improve staff morale to 90% by the end of the year. Increase sunwear sales to 20% of all eyewear sales within 180 days. 65

66 Implementation Strategies Define the procedural steps needed to implement the objective Ex. Who does what, when, how, for how long, for how much, in relation to who, etc. Develop as many implementation strategies as needed 66

67 To Ensure Success Evaluate, Refine, Adjust Start by keeping it simple 1 page is enough 1 long afternoon or day or planning is enough Appoint someone to monitor results Meet each week to review results, share ideas, etc. (chains do this EVERY DAY!) PROVIDE TRAINING! 67

68 Knowing Your Business You can t improve what you don t measure Manual system? Software system? Which is best? Benchmarks A helpful yardstick for knowing your business success Examples: AR 29% Photochromics 17% PALs 58% What are your numbers? What would you LIKE them to be? So how do you get there? 68

69 What should you measure? Gross income Net income Average sale Cost of goods by category (frames, lenses, etc.) Specific product sales percentages For the office By optician Lab costs 69

70 Business Models No doc and no referrals from docs Referrals from docs Having a doc in your office 70 Photo courtesy of Carl Zeiss Meditec

71 Rx Release Rule 40 years old and still in force Is it a dead issue in the optical world? GPO Web site, federal regulations tab PART 456 Ophthalmic Practice Rules (Eyeglass Rule): 16 CFR Part 456 Some provisions 71

72 Rx Release Rule On the ORBA Web site: The rule Sample Warning Letter to Prescriber Sample Warning Letter to Seller The Eyes Have it Get Your Prescription How to use these Hand them to patients Mail Web site Ads? Bruce s Body Shop in Richmond 72

73 Doc Pros and Cons Pros You now generate your own scripts Cons Your business reputation is now linked with the doctor Less worry about losing customers, since they are right there to capture If you re set up properly, you can accept vision care insurance You re not the majority partner any longer For some plans, that means the doc has to be a 51% owner of the business 73

74 Some Issues Linda s situation Separate door - legally separate Sharing of staff Space Who pays for the equipment? Does the doc pay rent? CHECK THE STATE OPTOMETRY REGS VERY CAREFULLY 74

75 Finding a Doc How to find a doc if you want one ORBA blog topic Newspaper Optometry colleges Contacting the state optometry association Asking local ODs Craig s List! 75

76 How to Avoid a Bad Situation Dr. is a poor refractionist Dr. is not booking enough scripts Your capture rate is really low CREATE A SOLID CONTRACT! Everyone needs to know and understand the expectations going in Build in methods to resolve disputes Build in a method to dissolve the partnership 76

77 Is it Really Worth it? You re the only one who can answer this! 77

78 Vision Care Insurance VCI was developed for optometry, not opticianry. It STILL is! VCI put optometry on the map MD vs OD fees years ago ODs did it for less Now at parity - Equal pay for equal service VCI has forced the price of eyeglasses much higher To provide the discounts required, you have to mark up your eyewear pretty high Many offices use close-outs for this market 78

79 Why Take It? To serve the consumers in your market Many locations have heavy amounts of one kind of VCI in their area Some offices specialize in lower end sales Business is business why turn it away? EyeMed webinar by Arnie Edelman VSP IOBs filing claims out-of-network 79

80 Your Own Insurance Plan? ILOV project Kirkland Opticians strategy A national plan? This would be a good project for ORBA With enough members, this is possible Similar to Rexall and IGA 80

81 Revenues Outside of Insurance Professional fees for opticianry? ODs did this over 25 years ago when CONTACTS began Optical Society of Western NYS is doing it Charges for repairs, adjustments, PDs, fitting measurements, etc. 81

82 Tracking Your Business: Knowledge IS Power, AND Money If you don t know what is selling, who it is being sold to, and where those customers came from you cannot effectively manage your practice. The basics: frames lenses add-ons referral sources 82

83 HOW do you track these things? Use practice management software (OfficeMate, EZFrame) hard numbers, either via software or hand counting Other (please specify) 29.5% RLISYS 2.6% EasyFrame 5.1% Compulink 3.8% OfficeMate 9.0% Peachtree 2.6% Microsoft XL 3.8% Quicken 1.3% Quickbooks 47.4% None 17.9% % 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% Source: ORBA, 2010

84 What do you need to know? And what does it tell you? Frame sales: How many vs how much is on your board? 22.1% 20.8% Number of Frames Displayed on Frame Board 16.9% 10.4% 9.1% 7.8% 5.2% 5.2% 2.6% Less than Over Source: ORBA, 2010

85 Lenses: The minimum you need to know Are you spending too much time calling too many labs? 28.2% How many optical labs did you use in 2009? 20.5% 19.2% 15.4% 16.7% or more 85 Source: ORBA, 2010

86 Thanks for attending! Ed De Gennaro Director of Professional Content & Executive Director, ORBA First Vision Media Group 86

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