The secret of successfully merchandising your showroom and promoting your retail home health care (HHC) business is uncovered by asking whether your customers eat prunes or dried plums.
Imagine two identical boxes, both containing the same product (prunes) and same brand from the same manufacturer. The difference is in their packaging. Those differences— demographic merchandising, advertising and marketing—can affect the sales and success of each product.
Retail demographics—
Baby boomers don’t eat those disgusting prunes that their parents’ and grandparents’ generations lived on. (And become more like their parents? No way!) These boomers are health-conscious, eat dried fruit and purchase dried plums.
Someone in corporate America came up with the brilliant inspiration to reinvent prunes as dried plums, and now every supermarket and health food store is selling dried plums to boomers—and they’re buying them!
Of course, your salespeople cannot ask your customers whether they eat prunes or dried plums. However, an understanding of demographics can be the key to our industry’s current transition.
Traditionally, the HME industry was based upon insurance-driven Medicare reimbursements for medical necessity. Seniors were both the customers and end users, and they were satisfied with their Medicare entitlements, as they did not have to pay for most of their DME.
Today the home care market is a retail-oriented cash business that focuses on lifestyle products for independence and comfort. Seniors might still use the majority of products and supplies, but their adult children (boomers and caregivers) are now our customers. These boomers prefer to pay cash rather than hassle with the insurance paperwork.
Boomers vs. seniors—
If by chance you operate a home health care business and your stated mission includes meeting the total HHC needs of your customers, then you could use the above fruity distinctions to define your product mix, planogram sizes, showroom layout, sales training, referral marketing and consumer advertising. By targeting your current and potential customers to cross-sell related and impulse HHC products that meet similar needs or values, then you would generate higher sales and profits per customer.
Given the high costs of billing and audits, regulatory issues from compliance and low reimbursement rates from competitive bidding, only retail businesses have retained their comfortable gross profit margins. Our prune-eating seniors want down-and-dirty HME— just the basic chrome models.
In the good/better/best continuum of retail product mix, this means only stocking the good options. The cheaper, the better—and the higher your monthly turns. Gross sales and profits are dependent upon billing for a high volume of inexpensive HHC products and medical supplies. In contrast, boomers are more discriminating consumers, usually opting for the better/best product options that best meet their health care needs. They don’t think twice about swiping their credit cards to pay retail for upgraded products.
Winning product mix—
If your primary customers are seniors, your product mix will reflect their health care needs and their core values of functionality and frugality. Carry a full line of inexpensive, basic products—usually one vendor will supply versions of mobility, wheelchairs and bath safety products. Another basic vendor will offer inexpensive soft goods such as compression and orthopedic supports. Add a third vendor to supply inexpensive disposables for incontinence and wound care. Almost all of these products meet Medicare competitive bidding or regional third-party insurance product specifications and pricing requirements.
If your primary customers are baby boomers, your product mix can become more exciting, colorful and sophisticated. Display two or three vendors offering better/best product options in each category. Offering a broad mix enables you to meet customers’ needs while price anchoring (displaying a wide range of product options including the best, most expensive line that increases the average sale price when the customer opts for the better option).
You know who your customers are. Your goal is to provide the products that best suit their needs. Selling fewer expensive products is much easier than depending upon low-margin volume every month. Go for the dried plum crowd!
