It’s easy to understand how an independent optometrist could become bitter and twisted about the industry they operate in and the public they serve.
While many customers love the idea of visiting an exclusive optical store to receive a ‘free’, albeit high-quality eye examination, less are as passionate about paying the price for the premium quality designed specs displayed in the window.
Instead, they ask for the script, record the catalogue number of their preferred frame, and walk the details down the road to an optical discounter – or increasingly, hop online to order their new glasses or contact lenses at a cheaper price.
The optometrists we spoke to have all witnessed this trend over the past three or so years, so what are they doing about it?
not all patients are at ease when they ask for their script…
Jim Papas, owner of the award-winning Melbourne optical business Eyeclarity, believes the change is occurring throughout retailing. In optometry, he says, large national campaigns promoting lower cost eyewear, new technologies and the growing presence of online optical retailers, are contributing to the shift.
“Increasingly prescriptions are becoming more mobile, and in the independent optical segment, most of these prescriptions are going to lower cost competitors or the internet,” he told mivision.
Optometrist Margaret Lam, owner of four Sydney stores under the banner The Eyecare Company believes it’s more to do with lifestyle. “Post Global Financial Crisis, people are having to put more time into work, they’re more time pressured and have less cash, so they’re shopping online. They’re buying commodities – books, clothing, groceries. Eyewear is an extension of that.”
Not so long ago, most customers would’ve been embarrassed to have their eyes tested then ask for the script. Now, it’s a different story. Ms. Lam has noticed customers in her city stores are increasingly internet savvy and happy to shop online. “Our existing customers are loyal… however customers who walk in the door to have their eyes examined for the first time are more likely to see us only for their script with the view of getting it filled online.”
Paul Clarke, the President of the International Opticians Association, has noticed a ‘moderate’ increase in the number of requests for spectacle scripts over the past few years.
“If a patient divulges they are taking their script to purchase specs elsewhere, they usually indicate it will be from a budget optical outlet rather than an online store. In contrast, requests for contact lens scripts have increased enormously and the main reason is the availability of heavily reduced deals from online stores,” said Mr. Clarke.
He said not all patients are at ease when they ask for their script. “They sometimes use the excuse that they will be traveling soon and need to take their script with them in case of an emergency or because they like to retain it for their medical records. However the occasional person has no shame when making the request. They unfeelingly inform us they are going elsewhere and it appears they hadn’t considered that might offend us.”
One of Ms. Lam’s “biggest annoyance factors” is the online retailers that advise people to ask their local optom for the script with the PD. “How do these online retailers – or the customers – think we can continue to survive when we are missing out on sales and providing services for free?” she asks.
The Issue of PDs
While an optometrist examines the patient’s eyes, it’s primarily up to the optical dispenser to determine the patient’s Pupillary Distance (PD) at the time of dispensing a pair of specs. So when that dispenser works via a web-address and never even casts eyes on the patient, who is responsible for determining the PD?
The issue has been hotly debated in a recent blog among eye care executives connected by the social media forum, Linked In. Dean Butler, formally of UK based Vision Express and now Chairman of Power Vision, was in no doubt that a PD should be given along with a prescription. “There is no doubt whatsoever that anyone who does not include the PD in a prescription risks the wrath and almost certain loss of that customer,” he blogged.
“Withholding the PD hugely upsets customers after they find out what has been done. Withholding the PD is suicidal, pure and simple. If you are concerned about losing customers to internet sellers, you will only accelerate that loss. There are far, far better ways of retaining customers. It is inconceivable to me that there would even be a debate about this.”
However in Australia, most of the optical professionals we spoke to erred towards withholding the PD, some for reasons of liability.
“In Australia there is a question mark over who is liable for eyewear which is dispensed elsewhere. There have been hearings at the Victorian Civil Administrative Tribunal (VCAT) where, for example, the optometrist had to pay for three pairs of spectacles from their prescription dispensed elsewhere at the retail price for a latent hypermetrope. Consequently, in order to limit our liability we recommend that prescriptions are provided without a PD measurement, as this should be the liability of the dispensing company,” said Mr. Papas.
Dr. Kokkinakis agrees that the dispensing optometrist should take responsibility: “We do not provide the PD because, in our opinion the PD will depend on the frame a patient chooses. Additionally, a height is required to maximise the visual result.”
While some online optical retailers provide customers with instructions to take their own PD measurement, Dr. Kokkinakis said this is not ideal. “We use an automated imaging PD system that we try and put everyone on. We advise them that this is the best way to manufacture glasses today. Taking a PD with a ruler in our practice takes us back to the 1980s and before.
“The Eye Practice tends to see complex spectacle prescriptions so archaic practice is just not good enough. I believe that if a retailer is prepared to take the profit margin on a product, they must also be prepared to take full responsibility for any warranty and measurements that are required for proper fitting,” added Mr. Kokkinakis.
At Vision West, “PDs are never included unless requested,” said Mr. Clarke who added that this, along with the issue of accurately establishing a fitting height may not be a concern for online stores for much longer. “While this currently limits the dispensing of many types of lenses, a solution for measuring online heights may be just around the corner. Eyecare providers can now download an iPad app to assist in measuring monocular PDs and heights. I can’t think of any reason that this technology wouldn’t be adapted by online stores to gather that information.”
Despite the pros and cons of supplying PDs, Mr. Butler believes it’s a matter of keeping the customer happy in the hope that, despite the lost sale to a discounter or online optical store, that customer will come back. “If you do not mind the huge risk in NOT putting the PD on the Rx, then go ahead and leave it off. Your customers who WANT to buy on the internet will go elsewhere for their next eye exam. You will lose that customer forever and they will be likely to bad-mouth you. That is my main point. I am talking about customer retention,” he said.
Hauling in the Scripts
So how can you dissuade your customers from taking their scripts elsewhere?
Mr. Clarke said talking the matter through with the customer is the best approach as they are often prepared to listen to advice. “While it’s easy to simply hand over the script upon request, it makes better business sense to at least have a go at retaining the patient,” said Mr. Clarke.
“Our staff are instructed to inform the patient that a cheaper price often means sacrifices with the quality of the product. If the message is delivered clearly and professionally, the customer will often not stray.
“When we do hand a script over, it includes details of the brand and type of lens that the optometrist recommended to the patient during the eye examination. The patient is instructed to ensure that the optical provider they go to honours that recommendation,” said Mr. Clarke.
At The Eyecare Company, Ms. Lam and her team hand over the full script, including PD, upon request, but they ask the customer why they want it.
“I talk them through the risks of buying online. I price up the same frames and lenses if they purchase the same product from us and discuss the difference in warranty, guarantees and after sales service we provide versus an internet company.
“A lot of companies have thousands of frames on their website but they don’t actually carry them in stock. They only begin to source a frame when it’s been ordered – it’s called drop-shipping and what it means is that the frames you order could be authentic or they could be fakes – it depends on what the retailer can find at the time and at the price.”
“We keep a pair of fake Ray Bans, bought online, in our Pitt Street (Sydney) store to demonstrate the point. They have all the markings and look exactly like an authentic frame. However when we tested them using our UV lens meter, we discovered they had no UV protection what-so-ever – they were dangerous,” she said.
Business consultant, Mark Overton says clear and regular communication is essential in the fight for customer retention. “Consumers are bombarded with daily messages from optical retailers on television, in direct mail, print and outdoor advertising,” he said. “Those big players are doing a lot of persuading and that makes it easy for consumers to forget their loyalty to an independent optometrist.
“So you need to work on your communication, talk to patients about what you’re recommending and why – explain what the difference is between the frame you’re suggesting and the two for one offer down the road, or the cheaper frames they’ve seen online. Educate them on the quality of the lenses you’re offering and the value of the after sales service you provide. Consumers are much more informed these days and they expect to receive relevant information about their product choices.”
Never-the-less, for some, the extra value an optom provides is never enough and they will insist on recording model numbers and purchasing online. To counter this, some stores have taken to covering the brand and model of each frame with a sticker. Others limit their stock to that supplied by manufacturers without an online presence. These two plans may work in the short term but over time, you can only imagine that stickers will be peeled by persistent customers and eyewear distributors will realise they can’t survive without an online presence. Strategies that improve customer retention will have greater longevity.
At Eyeclarity Mr. Papas developed the ‘myeyes’ software kiosk five years ago to “engage and educate customers while also providing a more compelling experience and offer,” he said.
The software, which automates the dispensing process, has earned Eyeclarity a number of Australian innovation awards; The 2011 BRW AMP Retailer of the Year award in the category Best Use of Technology in Retail, the Victorian Government’s Business Hero Award and Australian Retail Innovator for 2011 by the Australian Retailer’s Association.
While the kiosks have improved Eyeclarity’s retail sales efficiency, he said most importantly, they’ve contributed to prescription retention in a highly competitive environment.
“Customers who walk in to get a prescription tend to buy glasses or contact lenses at the store rather than heading off to a low cost competitor – or going online – because they can instantly see that we have the solution that meets their needs.”
To Charge or Not to Charge
Traditionally, most optoms have been happy to offer basic eye examinations under the Medicare scheme because the sale of glasses has subsidised the true cost of the service. Now, with changing buying habits, some are looking for alternative ways to recoup their costs.
Emmanuel Calligeros from Eyecee in Sydney’s inner city suburb of Newtown is concerned. He said that with just 15 per cent of most practice’s gross revenue coming from consultations, 85 per cent of revenue risks being eroded by discounters and online retailers selling spectacles, sunglasses and contact lenses.
“Having put so much emphasis on earning revenue through product sales rather than eye care services, many of us in the optical profession are very worried about the impact of online retailers and discounters on our business viability,” he said.
The options to recoup costs are limited, but they are there. Optometry is one of few capped medical services in Australia – even optometrists working outside the national Medicare agreement can only ever charge an additional 15 per cent on top of the Medicare schedule fee for a basic eye examination.
Jim Kokkinakis from the Sydney based optometry clinic, The Eye Practice, is one of the few optometrists who has chosen to operate outside the Medicare fee structure. He charges customers a full service fee for eye examinations and believes the issue of whether the cost of eye examinations is subsidised by product purchases is beginning to be addressed.
“Already its causing structural changes within the industry… the positive side to this is it will force the industry to improve its offer and customer service,” he said.
In the United Kingdom, Shelly Bansal, the President of the British Contact Lens Association and owner of two independent optometry practices has changed his business model. In July 2011, he told mivision that his customers now pay an annual fee, direct debited from their account each month. The fee covers two eye health checks during the year and entitles the customer to only pay cost plus tax for a regular supply of contact lenses and spectacles.
“We’ve changed the balance – so instead of having labour charged at a nominal fee and charging a high cost for products, we’ve turned it around.”
Mr. Bansal says online and discount suppliers of spectacles and contact lenses are unable to compete with his business model.
“They haven’t got a margin to work with – because I’m working at cost price.” Best of all, he said, “patients buying contact lenses all the time love it because their costs are evened out.”
At Eyecee, Mr. Calligeros said he will continue to provide eye examinations under the Medicare system “because consumers want and expect it” but he does charge for additional services such as retinal photography and most of his patients are happy to pay. “They appreciate the time and expertise I put into their eye care as well as the technology I’ve invested in to provide those services. Those who don’t value the services and baulk at paying are not the long term customers we are looking to attract.”
According to Jared Slater, National Professional Services Manager, at the Optometrists Association of Australia (OAA), it is up to individual eye care professionals to choose how they bill patients for the provision of optometric services.
“Optometrists in Australia who participate in Medicare by signing the Common Form of Undertaking agree not to charge fees which exceed the Medicare Schedule fee for any service to which the undertaking and a Medicare item apply, except in the case of Item 10907 and domiciliary visits.
“The Undertaking also obliges optometrists to ensure patients are informed that they are entitled to a copy of their spectacle prescription, and that they are free to have the prescribed spectacles dispensed by any person of their choice.” He added that the OAA supports this clear delineation between the professional service and the supply of optical appliances.
Wherever your business sits, the options are there to fight back against the continued advance of online and discounted retailing – its up to you to decide how you will halt the shift script and retain your revenue.
|A Small Window of Opportunity|
1. Be Prepared
Top 10 Tips to Stop the Script Shift
Australian online sales are currently running at AUD$13.6b and are forecast to grow by 13 to 20 per cent year on year. This trend is guaranteed to impact the optical industry so according to Mr. Clarke, eye care professionals need to act now to build loyalty before the presence of online eyewear retailers multiplies. “Waning customer loyalty is partially generational and partially attitudinal. “I don’t think people are moving away from loyalty en masse; it still occurs to a large extent… but loyalty is most likely earned by providing outstanding service. Using discounted prices as a means of gaining patient loyalty is unrealistic considering budget-minded people are by nature the most disloyal of all.”
Dr. Kokkinakis agrees that discounting is not the way forward, “Once the global economy settles (and this could take quite a while), confidence will return and the independents will come back stronger than ever. We know from the hour glass economy that at least 50 per cent of consumers will prefer to purchase premium products and ultimately the AUD$39 offers will be rejected,” he said.
Colab Design’s Peter Smith who for over 25 years has worked with industry stalwarts such as Safilo and Sunshades, believes now is the perfect time to expand your offering and make your store a destination. “If an independent relies solely on eye tests and complete glasses for their revenue, then they will more than likely disappear.
“Sunglasses are that ‘extra’ and ‘easy’ sale that has helped the revenue of all independents in Europe for years. When half of your shop display is sunglasses (as is the case in Europe) then the consumer realises you are in fact a destination to view and purchase sunglasses, particularly in summer,” he said.
The time to act is now. “Right now we have a small window of opportunity to build greater loyalty with our customers before they are swayed towards online spectacle retailers,” said Mr. Clarke. “The current lack of sophistication with online spectacle stores provides some protection for our businesses because they can’t duplicate the experience a customer has when physically trying on and comparing spectacle frames.”
Additionally, he recommends creating your own online retail presence. “Storefront businesses almost definitely need to invest in online sales technology if they are going to continue to exist,” he said.
“It’s something that The Eyecare Company is already on to. “We’re about to launch a website that showcases our products, however we know that we can’t compete on price with online eyewear retailers who can sometimes be sourcing fake product or grey imports,” said Ms Lam.
“Our idea is to provide customers with the opportunity to shop 24/7, yet the assurance that they’ll receive genuine product, backed up by after-sales service – and that they can come in and try, touch and feel the frames before they make their final purchase decision.”
It makes perfect sense, and no doubt heralds exciting new potential for the eyewear profession to vastly expand our horizons.