It’s Time to Talk ROI
When other investments are failing, dentists should consider investing in a sure thing - their own practices
By Laura Thill
Depending on your point of view, the first months of 2009 could be characterized as a time for either catching your breath or holding it. Falling home values, tightening credit and diminishing investments have affected First Impressions readers as well as their families, neighbors and customers. It begs the question, what’s the formula for success in the year ahead? The answer could lie in that old adage, "The best defense is a strong offense." But that offense must be extremely well-thought-out.
It’s true that the success of FI readers depends on how their dental customers react to the current economic climate. If dentists retreat, FI readers may have to step back as well. However, if dentists plunge forward despite a tough market, their sales reps will do the same.
But the question is, "Can sales reps affect their customers’ response to the economic slowdown?" Perhaps an even bigger question is, "Can the dental practitioner pull along his or her patient base, some of whom might be affected by job loss or other economic misfortune?" Perhaps the most important question of all is this one: "How can the sales rep stay close to his or her customers and help them weather the current economic storm, and emerge from it stronger than ever?" Regardless of the answers, one thing is certain: 2009 will be a test for the selling skills of FI readers.
Recession-resistant, maybe
In some senses, dentistry may be recession-resistant. But that doesn’t mean practitioners aren’t facing serious challenges.
"The current economic conditions will pose significant challenges for all of us in the dental industry," says Michael Sesemann, DDS, Nebraska Institute of Cosmetic Dentistry in Omaha. "There could be a reduction of ‘want-based’ dentistry, and some areas will be more affected than others." Sesemann is president-elect and an accredited fellow in the American Academy of Cosmetic Dentistry.
Omaha is a city with a diverse economic climate, and as such, it may fare better than others, he says. "But even with those safeguards, we will feel the change because of the losses sustained in our community. Just last week, I had two patients tell me that they were going to close their businesses because of the lack of holiday traffic in the retail sector. You watch them leave the operatory and you can’t help but wonder whether changing conditions will allow them to return for their six-month re-care appointment or not."
Today’s economic situation is one of those events that reminds dentists that they are, indeed, running a business, says Sesemann. The last such event was Sept. 11, he says. "That experience proved to me that I should never abandon my ability to run my practice under varying economic and social conditions. Our offerings had to be diverse. However, that did not mean that we had to abandon the efforts toward serving our community by providing comprehensive esthetic dentistry for those who wanted it. As a business, we needed to be flexible."
Practices that rely exclusively on elective dentistry, such as cosmetic procedures, however, will feel the effect of an economic downturn more acutely than those that do not, as patients delay such procedures to attend to more essential needs in their lives, says Sesemann.
"As small-business people, dentists need to respond to a variety of factors and forces in the market place, and an economic recession is no exception," he says. "This is a time to solidify our relationship with our patients, spending time with them in ways that build the value for them coming to our offices. The uniqueness of the time does not mean that ordinary treatment planning for want-based dentistry is eliminated. It is just done with the understanding that we will revisit the information when the time is right. On the other hand, in a tight labor market, [cosmetic dentists] are at the forefront of helping people look their best so they can project that confidence to potential employers. Indeed, cosmetic work may be not only warranted, but a good investment as well.
"If there is additional time in the office for the dentist and the staff due to scheduling laxity, it may be time to invest in valuable continuing education that the office was too busy to indulge in when things were busy," he says. "Learning and installing new technology so that it is up and running when the economy turns can be a strategic opportunity that needs to be taken advantage of. Though it may be difficult to think of the future, the dentist’s vendors can help them see the validity of thinking ahead."
Indeed, in tough times, sales reps have an opportunity to stand shoulder to shoulder with their customers. "When times are good, it is easy to let our systems run the everyday interactions of attaining goods," says Sesemann. "What will be needed in the times ahead will be a concerted effort for us to know that we are all in this together and that we want all of us to survive this difficult period. That will require more than letting our systems do the work. We are going to have to go deeper into the relationships we have fostered, trust one another, be honest and work together so that we can prevail …. Someday, when we’re out of this mess, we will be the better for it and we will be more than grateful for the people who helped us along the way."
Cascading effect
Lori Paulson, vice president of marketing and dental programs for National Distribution & Contracting (NDC) in Nashville, Tenn., shares a simple but telling story from one of her company’s distributor members in the Southeast. "He’s having a tough time because the dentists are having a tough time, because the patients are having a tough time." NDC represents the American Dental Cooperative and United Dental Dealers.
"The concern for the dental professional in 2009 will be ensuring that the patient receives the proper dental treatment given his or her ability to pay," says Paulson.
Specialists face the most serious challenges. Patients who might have gotten a root canal 12 months ago are now telling their dentist to simply pull the tooth, because it’s cheaper. And orthodontists are finding that while many parents will continue to scrape together the money to get braces for their kids, they’re putting off getting braces for themselves.
General practitioners have some options, says Paulson. "Perhaps it’s targeting different markets or different patient bases, expanding their geography, or reaching out a little bit more. Maybe it’s doing a focused marketing effort [targeting] school-age children. But with specialists, you are limited in what you can do, unless that specialist is going to change that direction."
Although most dentists retain access to financing for equipment acquisitions, some ADC and UDD members are finding that some doctors, particularly solo practitioners, are reluctant to access it. "They can’t separate their personal finances from their business finances," says Paulson. "They are very hesitant to invest in their business when they see what’s happening to their personal finances.
"Dealers say, ‘Doctor, your personal stocks may be declining, but invest in a sure thing - invest in your business,’" says Paulson. "That’s a great approach for a dealer. But the panic that, unfortunately, is in our culture right now is causing a lot of hesitation on the part of dentists."
Reps should stay clued into what’s happening in their local economies, says Paulson. Perhaps a business is relocating there, in which case the dentist could rev up a marketing campaign targeting its employees. Or perhaps a new factory is opening up 20 miles away, in which case the dentist could consider opening a satellite office. Reps who keep their customers apprised of such events can enhance their value to the practitioners, says Paulson.
Of course, in today’s economy, news of impending layoffs might overshadow that of new openings, says Paulson. But even layoffs present a silver lining, as employees may seek to get dental care prior to losing their insurance.
There’s no doubt that dental dealers face serious challenges in the months ahead, says Paulson. But they aren’t powerless. For one, they can join forces with other dealers in organizations such as NDC. Second, they can and must remain nimble. That’s a particular advantage of independents, she adds. As family businesses, they can work extra hard, put off raises and do whatever is called for to ride out the economic storm.
Leadership needed
A tough economy, such as the one we find ourselves in today, calls for exceptional leadership, says Hugh Flax, DDS, Atlanta Aesthetic and Laser Dentistry in Atlanta, Ga., and vice president of the American Academy of Cosmetic Dentistry. "We have a lot of very talented people in dentistry," he says. "They have to keep defining for their staff what inspires them. They have to help their staff keep their focus. At the same time, they have to continue doing treatment planning. They have to continue offering continuing education, which feeds the mind. And they must be real with their staff and patients. They have to communicate even more than before."
In adverse times, dentists have to work hard to maintain an upbeat mood in the office, says Flax. That kind of atmosphere motivates staff and brings patients back again and again. "We have patients come in and say, ‘I really like being here; do I have to go back to work?’ We like to kid around, and we call our office an escape from reality. That’s very helpful to a lot of people. They feel understood. It’s a safe place to go."
Atlanta Aesthetic and Laser Dentistry has improved its Web site (www.flaxdental.com) to make it more interactive. "Instead of shoving information down people’s throats, we try to put material on the Web site that people will find interesting, that they can interact with, and that makes them want to do more," says Flax. "This is not a time to cut costs or staff, if possible," he adds. In fact, his practice added two staff members in 2008. "I realize that if we’re going to provide better service to people, we have to be as responsive as we can.
"People are coming in with differing situations, with job issues, with budget issues," he continues. "More than ever before, we need to listen and read between the lines of the things they’re sharing with us. If we’re going to provide services for them, we try to create a context around that. [We tell them,] ‘Maybe now is not the time to have a luxury item or procedure, but don’t compromise your health or longevity.’ And we try to come up with better solutions for people, and more than ever, we try to be very timely in the way we do it."
To maintain an upbeat, exciting atmosphere, dentists and their staff need buy-in from their suppliers, says Flax. "We have to support them, and at the same time, they have to support us," he says. Flax asks that his distributors put themselves in his shoes. That means they should provide more than simply products. One rep recently passed along an article that Flax, in turn, was able to share with his staff. "I’m always looking for great things to share with them," he says.
"We’re lucky to be in the industry we’re in, and I’ve always felt the relationships I’ve had with labs and my distributors and so forth are really key. They make me look good, and I can make them look good."
Focus on ROI
Dentistry has traditionally been recession-resistant, notes Carey Lyons, president, Dental Specialty Products, Englewood, N.J., and chairman of the Dental Trade Alliance, Arlington, Va. Industrywide patient billings have never fallen. That trend will probably continue in 2009, barring a calamitous rise (higher than 10 percent) in unemployment, he predicts. Even so, FI readers should brace themselves for a slowdown.
Patients are delaying purchasing dental services, says Lyons. "They’re not going to their appointments. They’re in a delay mode to see what happens to their company, their job, their insurance. People have put the brakes on many things. If the dentist says, ‘You need a bridge or an implant,’ the patient is saying, ‘Can you just put in a temporary one? Can you hold me over for a year?’" Implants, endodontics and high-end prosthetics are getting hit the hardest, he adds.
If the economic picture doesn’t change in 2009, dentists will most likely delay acquiring major capital equipment, says Lyons. They may resist taking on debt in order to redo their offices. That said, distributors of equipment and technologies with demonstrable ROIs will get an audience, says Lyons. Practitioners - particularly those in larger practices - will consider acquiring technologies that can offer velocity; better, faster service; reduced seating time; and lower lab fees.
Manufacturers should develop turnkey programs that help their distributors communicate to their dental customers the ROI of the equipment and technologies they’re carrying. Manufacturers should also figure out ways to help with financing. "If there are three $100,000 items on the market, which one does the dentist choose?" asks Lyons. "If I were the manufacturer, I’d make sure I had programs that make it easy for them to choose me. I have to be the guy who really understands the throughput and ROI of what I’m producing, and I need to make sure I give my distributor representatives the tools to work in this environment."
"If I’m a sales rep, I’m looking at, ‘How do I become more of a business consultant to my customers?’ and ‘How can I help them market their services and become more productive, and strategically add services that will improve their practice in a slower economy?’" he says. "It’s a different mindset. You can be a widget salesman or a consultative seller. But if you’re going to continue selling high-cost widgets, you’re going to lose."
Financing
Obtaining financing will definitely be an issue for FI readers’ customers in 2009, says Greg Einhorn, vice president, Group Financial Services, Hilton Head, S.C., which underwrites an in-house financing program for NDC. "We believe it is cyclical," he says. "We believe the market will improve and the economy will improve. But you can’t deny where we are right now."
Today’s environment finds lenders taking a closer look at potential borrowers, says Einhorn. "Everybody is being more careful. There is a real reason for that. There are higher-than-usual delinquencies. The economy slows down a bit, and more than the usual number of doctors have trouble making their payments."
Creditors with exposure in non-healthcare markets as well as healthcare are particularly skittish about extending credit. "The real estate implosion affected a lot of players," says Einhorn. Today, lenders range "from companies that have all but dropped off of lending money to dentists, to those who are just a little bit more cautious," he adds. "We’d fall into that ‘little bit more cautious’ range."
In today’s environment, sales reps should bring the financing company into a prospective big-ticket sale as soon as possible, says Einhorn. "That couldn’t be more true now, because how the doctor pays for that purchase is so critical to the sale."
Customer relevancy
The key opportunity - and necessity - for dental distributors today is to remain relevant to their customers, says Tim Sullivan, president, Henry Schein Dental, West Allis, Wis. That company’s dental customers, like those of all suppliers, are facing cancellations and fewer appointments. "Even if the patient is in the seat and the dentist sees something that needs more significant work, the patient may choose to postpone the procedure," says Sullivan.
The economy is also affecting the discretionary spending of dental practitioners, particularly for high-end equipment. "Sales of consumables reflect patient flow trends through the practice, so we have seen some recent fluctuation there," he says. "And the tendency of some dentists is to postpone the purchase of higher-ticket technology-driven equipment when faced with this economic uncertainty. Our perspective, however, is that these technology tools are essential to streamlining practice efficiency and profitability, and they enable dentists to continue to provide quality care to their patients. Through Henry Schein Financial Services, we are working to ensure that our customers have financing options available today."
Still, says Sullivan, some customers are reluctant and are simply trying to reduce their monthly expenses. When faced with such a challenge, he advises that sales reps ask dentists, "Are your earnings better invested in the stock market or in your own practice?"
But perhaps the most important strategy for success in 2009 is customer relevancy, he says. "How do we become more relevant to our customers than anyone else?" he asks. "Providing solutions is the key." For the past nine years, Henry Schein’s career development training has focused on helping reps understand how a dental practice works and how they can truly be a business partner with the dentist and his or her staff.
"It means asking questions of your customers," says Sullivan. "‘What are your challenges?’ ‘Is team harmony an issue for you?’ ‘Are you having issues with case acceptance or patient cancellations?’"
"It’s being more relevant than offering 5 or 10 percent off," he continues. Even with 10 percent off, a dentist purchasing $30,000 worth of supplies might realize, at best, a $3,000 savings over the course of a year. "That isn’t going to make or break a practice," he says. "There’s so much more we can do to help them."
Sidebar:
Selling tips for 2009
Doctor, invest in a sure thing.
Invest in your business.
Stay clued in to what businesses are moving in, or which are closing down. If a new office or factory is opening up 20 miles away, maybe the dentist needs to begin marketing in that area, or open a satellite facility (Paulson). What’s more, a company that is closing might find a bunch of workers seeking dental care prior to losing their insurance.
Look for ways to be more of a business consultant. How can I help my dental customers market their services? Be more productive? Strategically add services that will improve their practices in a slow economy? (Lyons)
Be a source of information to your dental customers. And not just product information. But practice management information, or running a practice in tough economic times. (Flax)
In difficult times, it is difficult for dental practitioners to look and invest in their practices. The dentist’s vendor can help them see the validity of doing so. (Sesemann)
Let your dental customers know that you understand the challenges facing them, and that you’re in it together. (Sesemann) That will require the rep to delve deeper into his or her relationships with customers, trust his customers (and cultivate their trust in him or her), be honest and show that you and your customer can work together and prevail together.
Make yourself more relevant to your customers. (Sullivan) To do that, you need to understand how your customers’ practices work. And to do that, you need to ask questions, find out what their challenges are.
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