Thoughts on the current market outlook

 

The following is a business support post I published a while ago, I have updated it with reference to some of the most recent changes in hearing instrument provision industry.

In my position at the day job, I am constantly out and about in our market place meeting with hearing aid Dispensers and audiological practice owners and discussing the ongoing business outlook. The overwhelming response is that business is harder this year than it was last year, when you discuss it in a more in-depth way several things become clear. Our market place and our customers have changed, not only has our marketplace and customers changed but some of the larger players within our market are changing as well. They are becoming better at what they do, better at dealing with Patients and better at retaining them.

We also have a new competing pressure in the mainstreaming of direct sales via manufacturer channels and the corresponding price pressure. Whilst this new turn of events is mainly a feature within the USA, it will probably extend across the world, the internet has shrunk our world for ever. This particular challenge may well lead to a complete change in our business model over the next several years.

You will need to change with the changing reality if you want to continue to compete. New business models may well have to be deployed, models based on service provision as opposed to product provision. Ancillary revenue strategies will also be key in this possible new reality. With a view to my ongoing discussions, these are the points I consistently hear:

  • New Customers are few and far between
  • Any new Customers are better educated pertaining to Hearing Instruments
  • Any new Customers are more aware of ongoing care required
  • Any new Customers are shopping around for price
  • Price sensitivity is a major issue
  • There is a perceived massive reduction on ROI on traditional marketing
  • 60 to 70%, and perhaps more in certain practices, of business written at present, is return business
  • A large part of what is termed new business written is in fact Patient referral business

I think the preceding points are representative of the industry outlook in Ireland, from my discussions with owner Dispensers across the world, but particularly in the USA, it appears that this situation is in fact relatively representative of the industry worldwide. I would like to address these perceptions because I do not necessarily believe they are exactly true as stated.

With reference to the new customers, from manufacturers figures worldwide, there has been little or no drop in units sold internationally. However, there has been a drop in average sales price per unit, this may or may not be weighted by sales to public health services(traditionally much cheaper units sold at volume). In other words, there actually appears to be the same amount of new business been written year on year and in some markets there has been an increase in units sold.

New customers being better educated, this appears to be borne out by the figures and indeed by my conversations with Dispensers. For the first time, Patient expectations and levels of technology for the most part are aligned. By that I mean, we are managing Patient expectations better, the information that they view on the internet and receive from others is also in line with what current technology can deliver. Hearing instruments from most manufacturers are approaching a sadolin moment (they do exactly what they say on the tin!).

Confidence in low end and mid end technology to meet lifestyle requirements is at an all time high, that combined with the present economic conditions is in fact pushing average sales price down. This is not necessarily a bad thing, as perception of hearing instruments and their ability to assist with loss changes so will the volume of units sold. Don’t necessarily think about the units that are sold, think about the large proportion of people with loss who do not purchase. The people who purchase hearing aids are only at the most 10% of the people who may be assisted with hearing instruments. That is a huge un-tapped market, whilst the reasons for this are multiple and complex, perceptions of hearing instrument efficacy plays a part.

New customers being aware of ongoing care needs, again this is not a bad thing for our industry. If you in fact give a comprehensive care package with your hearing instrument sale, you have nothing to fear. If you don’t, you better start thinking about giving one! Alternatively you may look at this an opportunity to increase unit volume and ancillary revenue. Perhaps if you run a parallel pricing scheme. One pricing scheme that includes hearing instrument price and ongoing care package and another that just includes hearing instrument price with a separate payment structure for aftercare packages, or indeed aftercare visits. You can even mix these up offering the hearing instrument and two years care or the hearing instrument and three years care etc.

New customers shopping around for price, this is a common reality in all spheres of business. I think you should pitch your price to your market segment, with an eye to your competitors. By that I mean, if you are a boutique practice that deals with high technology consumers and your practice setting reflects this, well then by extrapolation your prices can also represent this within reason. However, if you are working out of the boot of your car or in clinics in less than salubrious conditions, your prices also need to reflect this.

A perceived massive reduction on ROI on traditional marketing, I have heard this consistently and assumed it to be correct. However, I have over time concluded an interesting idea, it came from the term itself, “traditional marketing”. The adverts that are being run are exactly the same as has always been run, there is no real change in the content or overall feel of the adverts that are being run. Our demographic is increasingly sophisticated, we know this to be true, then we pitch to them with the same adverts, through the same channels that we have always done. Does anything about the last statement seem odd to you? Change up your advertising, change your layout, try a new pitch, investigate all of the media channels available. Use eye catching visual humour in your advertising where possible, use eye catching visuals all of the time.

Return business, it does appear that the key to ongoing success and even growth is return business. Practices that I service who have traditionally high percentages of return business are doing very well at the minute. If your practice does not retain Patients, you need to sit down and honestly ask yourself why? Then you quickly need to deal with the issues, it will not affect your business levels short time, however in the medium to long term it will stabilise your business income.

Patient referral business, I am afraid this is an extension of my last paragraph, if your Patient won’t return to you for another set of hearing instruments, why would they refer their friends? So in short, what can we take from the above, what action points can you take?

Although things are hard, there are still customers out there, in order to get your share of the market you need to think on your feet. You need to consider all media channels for marketing and you also need to consider new elements in your practice as marketing avenues. You need to consider every Patient as a long term investment and a marketing vehicle in their own right, and you need to do it today.

Design your practice it’s business model and practice procedures around this concept, if you have traditionally done that, well done! You are doing relatively well already, if you have not, start now. Your business will feel the effects of that change in the medium to long term.  

This work is licensed under a Creative Commons license.

About Geoffrey Cooling

my name is Geoffrey Cooling and I am the author here at Just Audiology Stuff. I have been involved in the Hearing Healthcare Profession for several years now. I initially worked as a Hearing Healthcare Professional for a large national retailer in Ireland. After several years in Practice I was approached to work for a manufacturer, where I was employed for five years. I am now the Co Founder of a business called Audiology Engine. We design websites, undertake content marketing and generally look after everything digital for audiological practices. I am also a contributor to many hearing profession periodicals and websites. I have written two commercially available books, The Little Book of Hearing Aids which is written for hearing aid consumers and Audiology Marketing in a Digital World which is written for Audiology Practice Owners. They are both available in Paperback and Kindle versions on Amazon. I also write for consumers on the website Hearing Aid Know, which is a website with the mission of demystifying hearing aids, their types and their technology. I have a great interest in commercial strategy as it applies to Healthcare in general and specifically to Hearing Healthcare. I also have a great interest in the psychology of sales and human interaction. I have been involved with social media for some time, both personally and professionally. I find the engagement and discourse on some social media channels fascinating. I instituted social media strategy for the company I worked for as an experiment. That experiment soon spread throughout the company and I am proud to say that the company is probably one of the most active in the industry. I would like to point out that all views, opinions and thoughts here are mine own. Unless of course they have been planted by the pod people, you just can’t take your eyes off the pod people. Those views do not necessarily reflect upon any views or opinions held by my employer, if I ever get another one. I think that our industry is in the middle of a time of huge change, I think that the change will be forced by both internal and external pressure. I think that private Independent Healthcare Practices will have to be smart and lithe of feet in order to meet these changes. I hope that some of my blatherings are of benefit to those Practices, Independent Hearing Healthcare Practices need to survive. I believe that if that occurs it will be of real benefit to Patients. I hope that I, and my writings will play a small part in their continued success.

Let me know what you think