Hearing Economics is pleased to welcome a Guest Blogger this week. Brian Taylor‘s post is a natural follow-on to posts you’ve read here in the last two weeks discussing how and why traditional practitioners will use value adds to maintain and grow their practices in the midst of the online retail onslaught.
Considering all the chatter about PSAPs, reduced barriers to entry to obtain our hearing aids through vehicles like United Health Care, and the impending shortage of audiologists, maybe now is a good time to rethink how we offer our services. You can make a good case for segmenting your market in a way in which you identify and deliver the experience of better communication, rather than a product or even a service.
Boutique hotels are a good example. They cater to a select clientele interested in style and image, rather than the product itself. It might be challenging to make hearing aids cool, but the transformative event of giving someone improved communication ability with their family and friends has never been tried on a massive scale.
Concierge or boutique medicine works in a similar way. For the privilege of having easy access to your physician, some well-heeled patients spend thousands of dollars per year. In exchange they receive a pre-determined number of office visits and a bundle of other tests and services at their disposal.
Some may recall that the hearing aid dispensing profession was founded as a home delivery, concierge service. With an iPad and calibrated sound isolation head phones very soon you will be able to conduct a full array of auditory tests in the comfort of the patient’s home without compromising accuracy.
Clay Christensen has written extensively on how industries need to unleash the power of disruptive innovation by asking a simple question, “What jobs do customers hire you to do?” You might be surprised to find that there are a significant number of people who are willing to pay for impeccable service and a transformative experience. For this segment, I would be willing to bet, you can double the price you charge for a pair of hearing aids and they would gladly pay it.
Having the audacity to double the price of your hearing aids requires some re-thinking. Rather than doubling the price of a product that is more or less a commodity, you are charging a higher price for access to your time. By more carefully segmenting your market, you can see fewer patients and make the same (and probably more) money. Since this is a blog about economics, here’s a quantitative view.
Standard Clinic: 18 units per month at $1800 each = $388,800 of annual revenue.
Boutique Audiology Spa: 5 patients per month provided 4-year service “retainer” at $7000 each = $420,000 of annual revenue
You cannot have a business-as-usual approach to practice boutique audiology. Among other things, it requires that your waiting room is a luxurious lounge; your staff provides service rivaling the Ritz Carleton and that you practice evidence-based audiology. Over the course of the retainer, it’s likely you will have to see each patient 4 to 5 hours per year. During this time your practice may need to provide innovative, value-added luxuries like massages or manicures.
Of course, transitioning from a unit-based to experience-based business is not for everyone. It requires that you turn away a lot of customers that don’t fit your business model. Some audiologists may be concerned about not providing services to the needy. Those are legitimate concerns; however, as barriers to entry continue to fall, audiologists must find ways to differentiate their offerings and generate a profit. Boutique audiology may be the ticket.
Brian Taylor, Au.D is the Director of Practice Development and Clinical Affairs for Unitron. He is also the editor of Audiology Practices and the author of Consultative Selling Skills for Audiologists published by Plural.