To my fellow members:
Unfortunately, I cannot attend this year’s VCA Executive Summit due to a conflict. I provide this letter directed at the leadership of VCA member companies and ask for your consideration of its content.
If you do not know me or of me, please allow me to introduce myself and my firm. Cleinman Performance Partners is the leading business development consultancy for larger optometry practices and the vendors who serve them. Our firm is comprised of over 30 professionals passionately dedicated to assisting our chosen clients to both recognize, and realize, all of their possibilities. From our headquarters in Oneonta, NY and with associates spread throughout North America, we provide a broad range of business development services including strategic planning, organizational development, financial management, education and transaction support. We have been doing so for 25 years and our client roster is a “Who’s Who” of North America’s strongest and most successful eyecare leaders. Our success as a consultancy is built upon my unique history of entrepreneurial activities in the industry, beginning in 1972. I have launched 26 companies and divisions of companies, most within the eyecare industry (so far). I have led organizations in the frame, lens processing, contact lens distribution, vision plan, publishing, buying group and consulting segments. Along the way, among other activities, I have been the founder of the first national optometry buying group (Co-Optics of America-1979), an early entry in the vision plan space (the predecessor to today’s Block Vision-1985), one of the first in-office lens innovators (Innotech-1992) and the first wisdom sharing network for optometrists (Cleinman Performance Network-2000). Firms that I have launched have earned millions for the investors who backed them. I share this information to humbly establish a platform for my observations as a student of our great industry, in which I have spent my entire career.
Today, I write this letter to ask my fellow industry leaders to consider what I believe to be a serious and systemic problem. A problem that is destroying our industry brand. A problem that robs us all of potential and possibilities and a problem that dramatically and negatively impacts the perception of every American about our industry’s offerings. I call your attention to the over-use of discounting as a marketing tool.
Discount. According to Webster’s the word has many meanings. But generally, when we think of the word as it relates to our industry, it’s “to offer for sale at a reduced price.” In both the retail and the B2B world, a discount generally is provided in exchange for something of value to the provider. For instance, a discount is used to move out merchandise (Inventory Reduction Sales), to entice a certain class of purchaser (Senior Citizens Discounts), to drive business to slow periods (“Blue Plate” Specials) or to increase volume (Frequent Buyer Discounts).
Our industry seems to live and breathe on discounting. Back in the late 1970s, with the advent of the first national buying group, I harnessed our industry’s standard discounting mechanics. That first discounting program for optometrists allowed members to purchase product at the deepest available discount; without meeting the standard volume requirements. But those discounts came with trade-offs. In exchange for the waived volume requirements were offsetting vendor benefits. For example, sold was sold; frames purchased at discount could not be returned. Orders were consolidated; members made a single phone call and placed all of their orders. The firm, in turn, consolidated those orders for transmittal to the supplier, thereby reducing the supplier’s costs. And all purchases were backed by bank guarantees; eliminating the vendor’s credit risk. Well, as these kinds of things often evolve in a competitive environment, most of those vendor benefits went largely by the wayside and today, buying groups are much different. In reality, for the most part, today few really get a discount…because virtually everyone gets a discount.
While not unique to our industry, today’s retailers and professionals have become conditioned to asking for discounts. It’s a way of life. SOP. Indeed, I believe that the number one searched word among ECPs is “free.” It seems that the most important question asked is “what’s my price?” So it stands to reason that this perspective would pass to retailing with pervasive discounting messages dominated by BOGO and other egregious crimes of brand development.
This situation was driven home to me several years ago when there appeared a television sitcom that had a scene set in an optometry office. The most dominate visual was a big sign saying “50% off.” How sad for our industry.
Does our industry lack marketing savvy? What else could possibly be the reason that everywhere we look, the word “discount” or the act of “discounting” prevails? Have we no creativity? Why is it that, with all the amazing technology that our industry delivers, we can’t convince the consumer to purchase our products and services without enormous discounting? Why is it that discounts prevail in an industry that delivers services and products to allay the number three most dominant fear in healthcare, loss of vision? Why do American consumers spend 50% more per capita on shoes than they do on our industry’s products and services? Why don’t we have the confidence to communicate our products and services with pride and not just price? As the saying goes, “in the absence of anything else, price prevails.” As an industry, we have so much to offer. But we’re not effectively communicating our offerings.
When our only significant industry offerings are at discount, what message do we send to the consumer?
For many years, these price oriented messages have been going out to our customers and patients. As a result, I believe that we have been very successful, as an industry, in changing the consumer’s definition of “discount.” They now think of “discount” differently from that first mentioned in this letter to that of another on Webster’s list.
Discount…”to disregard.”
I challenge our industry’s leaders to guide and assist your retail and professional partners to improving their marketing messages. We must look beyond discounting and find new ways of communicating and delivering value. We owe it to ourselves and to our universal “brand” to do that.
The walk of 1000 miles starts with a single step. What will you do different tomorrow?
Thank you for your consideration. Enjoy the meeting.
Great post and I heartily agree with the majority. I do think that eyecare professionals, should run a ‘sale board’ at the end of every year to get rid of old merchandise and NOT return. Or have an ongoing ‘Sale’ board to move merchandise. That is the business of retail.
I also think that a discount on 2nd pair sales is important. It increases the 2nd pair sale rate which is dismal in our industry. I also think packaging is crucial, UV, AR, SC are important. You can price them separately, but statistically you will dispense all the coatings if you package them… all better for the patient and the ECP bottom line.
ECP’s are in the retail business too. There is NOT one retailer that does not discount something at one time or another. You have to move product, NOT return it.. all of that costs the vendors, which in turn cost ECP and then the consumer.. who then goes online to shop. .it is cycle.. that noone wins.
In my opinion, as it relates to our industry, discounting at retail is a lazy marketer’s approach to moving merchandise. It supports the age-old adage that “in the absence of anything else, price prevails.” I’m not suggesting that one shouldn’t use promotion. What I am suggesting is that we can deliver far more value with a bit of creativity. As one, “for instance,” every vision care provider (until Texas and Maryland passed a law against it) is required to give to plan participants as much as a 30% discount for a second pair sale. How impactful is this? The results speak the truth.
But what if a promotion was put in place for a spa day, or dinner for two, or a make-over? My bet is the perceived value is higher and the cost to the retailer lower. But, as long as Provider Contracts require that 30% discount, our industry cannot be creative and thus, cannot build perceived value.
This is an absurd comment from someone who orchestrated discounting through a buying group but then only for the chosen. The industry like many others can substitute creative marketing by concentrating on consumer benefits which may include value discounting, and benefits grounded in other real differences.
Al your commentary here is neither real nor sensible though it may be heartfelt.
Mr. Friewald is right, I was the founder of the first national buying group for optometrists, which focused on assisting private practitioners in competing with the chains. I’m very proud of the fact that, at age 23, I was a pioneer in this segment of the industry. What my friend Bernie fails to disclose is that he’s the president and a founder of Advanced Digital Eyewear, who is Blue Cross/Blue Shield of California’s exclusive internet purveyor of eyewear. According to a press release issued by Mr. Friewald’s firm; ?Our objective is to provide affordably-priced state-of-the-art eyewear directly to members of vision care insurance plans and to all consumers through websjites that are co-branded with managed care, public and private corporations.?
Said another way, Mr. Friewald has a commercial interest in his position, which I do not. I only seek the improved health of our industry and an improved perception of our industry’s overall brand.
Al, you have a point, whether it is a promo with a spa day.. at what level do you call a spade a spade, promotion or discount.. it is all semantics. The bottom line is consumers want a ‘deal’, however that deal is worded. Have a spa day, send flowers.. what you want is to 1.) Keep the patient coming back 2.) Reward loyalty, 3.) Appeal to the ‘deal’ and bottom line grow your business.
“It supports the age-old adage that ?in the absence of anything else, price prevails.?
Full price or discounted, people buy when they see VALUE; you know, that “anything else” you mentioned. If there’s no value, people tend not to buy regardless of price. I witnessed this first hand one time I actually walked into a dollar store. There was absolutely nothing there worth my buying, regardless of how cheap items were. I disagree, price doesn’t prevail. Any patient worth an ECP’s time will walk before they waste money.
” Every vision care provider (until Texas and Maryland passed a law against it) is required to give to plan participants as much as a 30% discount for a second pair sale. How impactful is this? ”
You consistently look at manged care as if it was created for ECP’s first when in fact they are for clients and employees of said clients or in in stand alone plans or all of the above they are for the PATIENT First. TX and MD can play around with laws all they want, ECP’s don’t HAVE to offer such discounts and in many cases people will still buy if the value is high enough. However, those same people have a vision care plan for a reason…to NOT pay what those WITHOUT a plan have to pay.
People buy managed care plans to pay $15mo. per individual or upwards of $40 per month for a family to extract a greater value. That is can they turn $180 pre-tax dollars into a $300-$800 pair of glasses.
They turn that cost into a greater VALUE.
If you and so many others don’t like managed care, then stop talking about managed care and focus solely on private pay. What really gets me about your rhetoric is you preach like the world is” happening to ECP’s” and focus very little on what’s “Happening Because of them”
It’s up to ECP’s to manage their own world not sit around complaining about what’s happening all around them. To those that do that, they have already sealed their fate through entirely their own doing.
Cathy is correct, only I’ll substitute A GREATER VALUE in place of “deal”. Sure, people want a great price, but what does that mean? It means a better than expected product and service aka EXPERIENCE than they expected. That doesn’t mean a cheaper price, it means a greater value.
Patients will pay more to get more both in terms of product and service and consider that a great deal even over “the other guys” offering that may be cheaper.
It’s not wrong for a managed care plan to negotiate with doctors to offer a 30% discount or to even require it. IMO, in TX, MD, etc. managed care co’s should just turn around and offer the client a larger benefit in spite of these laws or changes. It’s simple, make it a part of their plan buy giving them additional frame allowances or free AR for specific brands. Oh wait…..that’s already happening. Or maybe just reward ECP’s differently based on the products they dispense. Oh wait, that’s happening too.
In the end, where there’s a will there’s a way to insure the PATIENT remains the focus. If ECP’s don’t agree, then don’t accept those insurance plans. Maybe the world doesn’t need so much overlap between them all anyway. Perhaps some will indeed self select themselves off the various panels. Others just plain won’t survive.