What You Need to Know to Improve Your Optical
Answers to the 5 questions that are key to a more profitable dispensary.
By Arthur De Gennaro

As a consultant to ophthalmology practices, specializing in building dispensary profitability, I find that almost all the practices I work with have similar concerns about their optical operations. In this article, I'll list the five questions I encounter most frequently -- and how I answer them:

1. "Based on what I've been reading recently, my dispensary is seriously under-performing. Can you help me to find out why?"

To get an idea of what the specific problems are, I need to know how much management information the practice regularly gathers on its dispensary and, more importantly, how they respond to it when they see it.

The one statistic I'm most interested in is the practice's capture rate (the percentage of patients who purchase from the practice's dispensary). This is a number the practice should be tracking and know by heart. If the practice doesn't keep this figure, or isn't familiar with it, I know that the practice hasn't focused enough on dispensary issues and/or the dispensary isn't important enough within the practice's culture for it to keep up with its most important success indicators.

Let's say we learn that the practice's capture rate is only half the national average of 60%. This clearly indicates that the practice has serious problems getting its patients to visit the dispensary, or to purchase once they've visited. This practice needs to provide sales training to its opticians and rethink the way each patient's visual lifestyle is viewed by the doctors and ophthalmic technicians during the examination process. It also needs to analyze its hand-off procedures.

Because a practice's capture rate is so important, let's look at the top three things that affect it:

Doctor recommendations. Practices in which the doctor recommends specific, appropriate eyewear to patients have much more successful dispensaries. There's no question that the strength of the doctor's recommendation carries an enormous amount of weight with most patients. Why not take the initiative to educate your patients about the different types of eyewear that you have available and how they can benefit from them. It only takes a few minutes, and patients appreciate the extra service and the expertise you can offer.

Hand-offs. Most of the potential dispensary patients that are lost somehow disappear between the doctor's examination room and the dispensary. The most effective way to encourage them to at least see what the dispensary has to offer is for you to personally walk the patient to the dispensary and introduce him to the optician. Sometimes this doesn't work in practice due to time constraints, building design, or an issue that demands your immediate attention, but do it when you can.

Another approach is for one of the opticians to come to the examination lane and be introduced to the patient while the patient is still in the chair. There are other hand-off procedures, some more aggressive than others. Each practice needs to decide for itself which one feels most comfortable.

Selling performance. In most sales organizations, it's acknowledged that salesmanship is a learned skill. Some people have a natural feel for selling, but those instincts must be honed through training and lots of supervised practice. Yet very few opticians have ever been formally sales trained. This makes no sense, as opticians sell all day long.

One reason for this lack of sales training: Many opticians still prefer to see themselves as professionals and they believe that engaging in anything that looks like selling is unprofessional. Nothing could be further from the truth. In fact, an optician who hasn't been formally sales trained is more likely to offend a patient than someone who's been trained. Why? Because a trained salesperson has learned how to gently probe for a patient's needs and wants, and knows how to make appropriate recommendations. It's the unprofessional salesperson who must push products on patients. As a result, those opticians who haven't been trained and fear being seen as "pushy" won't even try to sell.

2. Why do I need a good computer software program for my dispensary?

This is the question I'm asked most often these days. In fact, at a recent ophthalmology conference, more than 20% of those who attended my lecture, which was on this very subject, stayed after class to ask detailed questions. Why? Because according to the top three vendors of dispensary-specific software, less than 10% of dispensaries located in ophthalmology practices are computerized.

That's not to say that there's not a lot of interest. I believe interest in computerizing is at an all-time high. Let's look at some of the main reasons for computerizing:

Inventory control. The vast majority of prospective clients say their prime reason for wanting to computerize is inventory control. This will come as no surprise to any practice administrator or managing partner who has had to struggle with fluctuating inventory valuations, out-of-control cost of goods sold, or the inability to build and manage a frame collection that can generate maximum profitability.

Loss prevention. Lack of computerization also leaves the practice exposed to significant losses. According to one leading loss-prevention consulting firm, one of every four employees will steal from an employer, with an average amount of $1,500 per employee, per year. That money, merchandise, supplies or payroll represent hard-earned profit dollars -- dollars that, in most cases, will require the practice to generate more than two dollars of additional revenue to offset one dollar of loss.

I've always believed that if employees can steal money, which is usually watched closely, they certainly can steal inventory. The best defense is to maintain a perpetual inventory. Taking an annual inventory and calculating the cost of goods sold on a cash basis simply won't work. In fact, it's reasonable to assume that without a computerized inventory tracking system, the practice will sustain heavy losses before you ever become aware that a problem exists.

Keep in mind that theft is a crime of opportunity. The trick is to minimize the opportunity to steal. This will help keep honest people honest and discourage dishonest people sufficiently so that they will seek easier opportunities somewhere else. It also helps to keep in mind that, in more cases than not, the dishonest employee is someone who has the employer's trust and confidence.

Cash-handling procedures. One of the most vulnerable areas for loss is cash handling. Many dispensaries I visit don't use regularly accepted accounting principles to manage cash. This creates the opportunity for mischief. One very good example is the situation in which an employee writes an order for a patient and issues what looks like a valid receipt, but is instead a bogus receipt. The employee simply keeps the money for himself.

Another common ploy is an employee colluding with a friend. The friend purchases eyeglasses and is given a substantial discount without proper documentation or approval. Still another scenario occurs when the friend purchases eyewear and is then issued a full refund without ever surrendering the eyewear. In this case, the friend usually pays the optician directly some discounted price, while the practice ends up paying for the materials.

A dispensary computer system that is "point of sale" capable can prevent these scams. All orders must go through the computer to be processed. The system will price them out using the proper price list and deny any discounts that aren't authorized. Software providers say the savings in this area alone can quickly pay the cost of the entire system.

3. How many people should work in my dispensary?

Although this seems like it should be a very simple question to answer, it isn't. Of all the decisions that need to be made in a dispensary, this is the hardest and the one that needs the most experience and judgement. What makes it so difficult is that rightsizing dispensary staffing depends on some elements that aren't easily measured.

Good service means satisfied customers

Let's take one important element in the rightsizing issue, the level of individualized, personalized service you wish to offer your patients. It goes without saying that the more time each optician spends with each patient, the more opticians you'll need. This isn't simply time wasted by the opticians waiting for patients, but time that they should be spending with patients. People like to feel they are doing business with other people, not with companies or practices. This additional time should also be used to make high-quality sales presentations that result in more and higher sales.

Another element in building a superior dispensary staff is the degree of knowledge your dispensary employees will be required to have. Less than half the states in the United States require opticians to be licensed, yet a license is an important credential, requiring the individual to demonstrate a certain level of professional knowledge and competence.

In those states that don't provide for licensure, or for those individuals who are obtaining credentials on their way to licensure, the American Board of Opticianry (ABO) provides study materials and certification. In addition, this examination is recognized as the written portion of the licensure examination in some states. Opticians holding ABO certification are required to obtain continuing education hours each year.

Let's apply these service concepts to a real-world situation. You stop at a leading department store to buy a pair of shoes. Not only do you expect enough salespeople to serve you, you also expect those individuals to be knowledgeable about the footwear they show you and able to help you make informed decisions about which shoes are appropriate for your needs.

Shift for a minute to Kmart. The success formula Kmart uses doesn't provide for the same ratio of sales associates to customers, or require the same amount of training in product knowledge. If you take a pair of shoes to one of the associates and ask about the manufacturer or how the shoe was made, he probably won't be able to answer you.

If your customers expect to see knowledgeable opticians who provide a high degree of personal service, the Kmart formula probably won't work for your practice.

One measurement tool you can use to determine appropriate staffing levels is the dispensary's payroll percentage. In an optimized dispensary, a payroll percentage of 18-20% of sales is reasonable, without shortchanging patient care or causing a negative working environment for the opticians. Such optimization requires operating systems that work well, as well as trained management oversight.

4. What's the ideal number of frames my dispensary should have on display?

This is another interesting question that's not easy to answer. Some issues you must consider:

• the amount of available display space the dispensary has
• the type of displays the practice wants to use (open shelves, glass cases, locked cases)
• patient volume
• the amount of cash the practice is willing to tie up in the frame collection.

As a general rule, I don't like to see a dispensary display fewer than 500 frames. This number allows patients enough choices. Keep in mind that in a collection of this size you'll need to accommodate the various lifestyle and fashion needs and wants of men, women and children for metal frames, plastic frames, sports frames, safety frames and specialty frames (such as half-eyes). You'll also need to satisfy patient desires for particular colors and sizes. And of course, there's price: you'll need to build your inventory model so that it distributes all of these categories across a measurable range of price points. So what appears to be quite a broad selection will, in the end, turn out to be just a few frame choices for each person.

Another indicator of inventory management success is the number of times you can turn over your frame inventory in a year. This statistic is an indicator of how well the collection is "moving," or selling through. You don't want to accumulate merchandise that's stale, or even discontinued. A good performance to strive for is four inventory "turns" a year.

Remember that frames are fashion merchandise and, as such, they have a lifespan. According to several of the top frame vendors in the United States, the average lifespan of a fashion frame is less than 24 months. What that means is that the frame you paid $75 for wholesale will have almost no wholesale market value within 2 years. The value of your inventory is depreciating every day. Why? Because nobody wants to wear last year's "dress." Fashion merchandise must be current to be saleable and maintain its value.

5. Can you teach my opticians how to sell?

What makes opticianry such a unique profession is that it requires a blend of technical expertise and outright salesmanship. Unfortunately, this is a rare combination in most people. Individuals who are inclined to the technical side of the profession seem to shy away from salesmanship, while those who are superb salespeople have a tendency not to seek an in-depth knowledge of the optical principles of the products they dispense.

It's been my experience that in relation to other selling professions, opticians have a more technical orientation to their work than a sales approach. Is it any wonder then that their employers see sales training as a cure for under-performing dispensaries? Sales training is one remedy for a sick dispensary that can generate a high return on investment.

Learning the right way to sell

Teaching opticians how to sell usually comes up early in our work. Everyone has had bad experiences with salespeople who were pushy. For example, if a salesperson comes within 10 feet of my wife she waves them away with, "I'm just looking," even before the salesperson has had a chance to say anything.

But if a salesperson is being pushy, he doesn't know how to sell. Good salespeople don't push. Instead, they gather lifestyle information from customers and then make appropriate recommendations. The customer then has the opportunity to make an informed decision. What patient would object to that? A salesperson would be remiss not to offer a patient all appropriate options and describe how the features, advantages and benefits of a specific product can make that patient's life more functional, more productive, more fun and fashionable.

Such training must be well thought out and optically specific in order to be effective. An optical shop dispenses numerous highly technical, expensive products. They must be presented to patients in a way that will assure patient satisfaction, while optimizing sales and gross profit.

Where can you find such training? Besides doing this work myself, there are other consulting firms that do sales training. If you prefer to use local resources instead, you might try your local library. It will have books and perhaps tapes on selling. Because the process of selling is the same in every industry, you can find the basics there. Whatever program you decide on, I urge you to be sure it includes lots of role-playing and management oversight or you risk the chance of not obtaining results, or obtaining results that don't last. 

Arthur De Gennaro is president of Arthur De Gennaro & Associates, an ophthalmic practice management consulting firm in Lexington, S.C., that specializes in dispensary profitability. He can be reached at 803-359-7887, by fax at 803-359-3996, or via e-mail at IsForU@aol.com