Think retail. This is easy to say, but not so easy to do if you operate a traditional reimbursement-driven HME business.
Retail businesses reach out to attract and sell on a daily basis. To retail is to sell. This means selling physically in the store as well as via marketing and advertising within the respective sales territory.
Following are a few guidelines to consider when retailing HME.
- Location
Retail businesses offer physical locations that are highly visible, easy to access and convenient. They are easy to see, easy to turn into, easy to park at, easy to shop and easy to check out of and exit. Just visit any national fast food chain or drug store location to see how these components fit together.
Aside from visibility, another way to attract customers to a retail HME is to locate adjacent to or nearby a related business, such as a chain drug store, major shopping center, hospital or medical center. Any of these health-related businesses translate into a 10 to 20 percent crossover of their customers/patients into becoming your HME customers.
Retail space does cost more than industrial or commercial space. Plan accordingly by using your retail location only for selling. These activities include a showroom, customer service area front-and-center, fitting room and minimal storage. For all non-retail functions such as rental equipment, warehousing, billing and delivery, use a garage, warehouse or other location that is priced accordingly, i.e. at industrial or commercial rates.
- Showroom
A retail HME business devotes half or more of the total space to a showroom that prominently displays the product selection. Not rows of rental equipment. Not row upon row of gondolas. Simply create a wide open showroom floor that highlights a wide selection of products within each of the core categories sold.
In HME there is an interesting correlation between products and sales: The more products displayed, the higher the sales. Most retail HMEs generate $1,000/sq. ft. in annual gross sales. This means a 500-sq. ft showroom will only generate approximately $500,000 per year in gross sales, while a 1,000-sq. ft. showroom generates a minimum of $1 million per year in gross sales.
Think Brookstone, Sharper Image and department stores when designing a retail HME showroom. Display every core product fully loaded, with every accessory that you carry. Display related and add-on products adjacent to these core products. Create room sets such as bedrooms, bathrooms and living rooms to demonstrate visually how HME products are utilized together to help improve the end-user's daily quality of life.
- Product Selection
The key to successful sales, turns and profits is matching the categories with your customer demographics. There is no “one-size-fits-all” for an HME showroom. Given the high costs of retail space and large inventories, HME companies can no longer afford to carry every product. Stock the products your loyal customers buy on a repeated basis, and any other products that might also appeal to their same needs or values.
For example, baby boomers who buy diabetic supplies on a monthly basis would also buy diabetic shoes, socks, skin care, compression stockings and orthopedic supports. Female seniors who buy incontinence products also may need mobility and bathroom safety products. Patients needing a hospital bed or oxygen set-up will also need mobility and bath safety products plus ADLs.
Given that the front third of a retail store generates 80 percent of the sales and profits, analyze your customers and markets before merchandising. Then, allot the largest areas to your core HME categories that meet the home health care needs of your primary customers and patients.
- Just-in-Time Inventory
Do people know what you sell?
Take a lesson from Wal-Mart: Just replenish what you sell! You do not need a 1,000-sq. ft. warehouse stocked to the ceiling, with all of your marketing and advertising monies tied up in old inventory. Use the distributor's warehouse as your own. Every product has a carrying cost attached, and the longer it sits in your warehouse, the more it costs you.
Don't forget your front showroom windows!
Whether you order direct from vendors or from distributors, the inventory goal is what is called “high service levels.” This usually means next-day delivery to replenish your sold products. Do not think that distributors cost too much to take advantage of this service. Although products might cost a few percent more to purchase, they will turn almost twice as fast by always being in stock.
Retail businesses cannot afford to be out-of-stock of their most popular sellers. Why? When a customer cannot find the product for which they are searching, they will go elsewhere to shop. If they find — and buy — the product easily at your competitors, then the next time they need an HME product, where do you think they will go? So not only do you lose a sale but a potential lifetime customer as well.
Note: Automated inventory control software systems are vital in operating any profitable retail business. Depending upon the cost and size and turn of a product, stock two or three units and then automatically reorder when you are down to your last piece. Scan the new products into your system when they are delivered, then have your point-of-sale system automatically generate a reorder list from daily sales.
- Controlling the Sale
Every day, customers walk into HME stores to rent wheelchairs, beds and oxygen for their loved ones. They are asked what insurance the patient uses, the billing intake is processed and the products delivered, so the customers depart satisfied.
But this is not retail.
In a retail HME business, customer service representatives view every Medicare and Medicaid patient as a retail sales opportunity. Instead of asking which insurance company covers the patient, they qualify the customer by asking a few probing questions, such as:
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Who is the end-user?
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What is their medical condition?
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Do they have any special health care needs?
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Do they have any special lifestyle concerns?
With every rental wheelchair, the customer is asked questions concerning the end-user's daily needs to determine if they need related products. These include ramps, cushions (from egg crate to gel), trays, backpacks, pouches, oxygen tank holders, cane holders, urine collection systems and auto lifts. The result is that every rental — whether for wheelchair, bed or oxygen system — generates from $200 to $600 in cash, add-on sales.
Sell high. If someone wants a walker, start by demonstrating rollators first, rolling walkers second. In retail, over half of customers find a personal benefit they prefer in an upgraded product. If a senior still insists on their Medicare entitlement, use an ABN to offer them a discount on the upgraded product they liked.
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- Marketing & Advertising
A retail business can rarely rest on its laurels and assume customers will continue to patronize their store — a “build-it-and-they-will-come” mentality.
How are retail businesses successful in marketing and advertising? Frequency and repetition is the key. Never stop delivering your branded message:
- Your name and logo;
- Your specialty;
- Your reputation; and
- Your location.
Find the medium that will work best for advertising by asking your current customers about their preferences. What newspaper do they read? Which television show and/or station is their favorite? Which radio station do they listen to? Then advertise as often as possible to build your brand.
Note: Booking daily spots on radio and TV is not necessarily the best option to produce results. If you know the station that your customers listen to or watch, advertise as often as possible within a two- or three-day period to ensure that you do not miss them.
But the best advertising is often free publicity that results from a good marketing program. Here are a few recommended guerilla marketing activities that work:
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Hold quarterly open houses.
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Sponsor monthly support group meetings.
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Host booths at health fairs, county fairs and other community events.
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Host health care programs on local public access cable TV.
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Visit assisted living centers on a monthly basis with lemonade and cookies and HME to show-and-sell your core categories.
Retail means ongoing marketing and sales. Hesitate and you lose. Examine your competition and then self-examine your own business. Where do you excel in location, showroom, product and/or service?
Take this advantage and run with it — and don't look back!
Jack Evans, president of Global Media Marketing, Malibu, Calif., is a home health care educator and marketing specialist who works with HME providers, pharmacists, distributors and manufacturers to develop both business-to-business and business-to-consumer marketing and advertising programs. His retail HHC programs include showroom design, demographic merchandising, product and sales training, marketing and advertising. Evans can be reached at 310/457-7333 or at www.retailhomecare.com.
Do people know what you sell?
- Is your sign visible from the street?
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Do you have “medical equipment,” “home care products” or some other variation of HME in large, easy-to-read letters? Note: In new retail businesses, what you do/sell is more important in attracting new customers than what the company name is or what your logo looks like.
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Do you have HME paintings, drawings, photographs or actual products on the front of your building that will instantly tell potential customers what products you sell?
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Do you have enough parking spaces reserved for your customers?
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Do you have a handicap parking space adjacent to your front or rear door?
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Do you have automatic front doors, or at least an extra-wide entry door?
Don't forget your front showroom windows!
- Your windows are silent salespeople that sell 24/7 for you.
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Rotate product on a monthly basis at minimum.
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Use risers and halogen lighting to make products more visible.
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Use mannequins to display orthopedic supports and compression stockings.
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Use electric timers to display lift chairs rising and reclining.
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Display big-ticket products such as lift chairs, scooters, transport chairs and rollators.
