Recession Busters: Proactive Laboratory Owners Gear Up For 2009
Posted Apr 28, 2011, Published 2009-01-01
Confronted with daily reports of a declining economy and mired in the unpredictability of what it means for their businesses, it's not surprising that some laboratory owners are postponing plans for fee increases, capital expenditure purchases or remodeling projects.
What stands out, though, is what they are doing: developing well-thought-out, proactive strategies that will put them in the best position to withstand the inevitable challenges that lie ahead.
For many laboratory owners, this includes implementing new promotional efforts or expanding target markets in order to keep a steady stream of cases coming in the door. "Our clients are all still sending us work, just less of it. So in order for us to succeed in these economic conditions, we need new customers, and it may take twice as many clients as before to maintain our regular workload," says Mark Mattheiss, Brooks Dental Lab, Pensacola, Florida.
While some are banking on tried-and-true marketing efforts to garner the best results, others are shaking things up a bit. For example, John Wilson, Sunrise Dental Laboratory, Yucaipa, California, is scaling back his direct mail campaigns to invest in a part-time sales representative. "Since the economy is so rocky, clients are looking much more closely at the bottom line of their invoices, so I have to show a measurable difference in service to justify my fees," says Wilson. "It's a significant expense for us, but an outside sales representative can do so much more than a direct mail campaign to highlight our service efforts."
Also taking a new approach is Mark Jackson, owner of Precision Ceramics Dental Laboratory, Montclair, California, which has been largely a mail-order lab for more than 15 years. Because of the economy, the potential threat of offshore outsourcing and the now-confirmed rumor that his shipping company, DHL, is discontinuing U.S. service at the end of this month, Jackson is refocusing on his local market before he feels a business slowdown. "We had been warned of the DHL meltdown and were being hammered by fuel surcharges and rising shipping costs. We passed these costs along to our clients, but there was some complaining and I suspected that dentists might start looking for local solutions to their laboratory needs," says Jackson. "I knew we had better spread our eggs around a little bit. In fact, we picked up four new accounts in three days last week right here in town."
Laboratories are also concentrating on getting more business from current clients, knowing that cross-selling to those dentists with whom they already have a relationship can result in the biggest bang for their buck. For full service laboratories, the strategy is obvious: getting customers who send work to only one department to cross over into another. But even smaller labs can use this strategy with specialty restorations. "I'm spending more time with clients emphasizing our sleep apnea devices because it's an untapped area in many of their practices. The steady growth is helping my bottom line," says Joseph Ribbens, Dentek Dental Studio, Inc., Green Bay, Wisconsin.
Laboratory owners who are boosting their promotional efforts are banking on the fact that many of their competitors may do just the opposite: slash their marketing budgets to control costs. "I think a lot of small laboratories may just tighten their belts, so we have a good opportunity to gain some new accounts outside of our immediate market," says Larry Shields, owner, Shields Dental Laboratory, Whitehall, Michigan, who is targeting general dentists and removable prosthodontists with a newly designed brochure. "We're highlighting our partial framework services--in this economy, I think more patients will be opting for removable appliances versus a fixed bridge or implants--and then we'll follow up with information on our full denture and bite splint services."
Investing in new systems and products right now may seem risky to some, but many laboratory owners say it's worth the potential rewards. For example, Dan Gealy, who has owned a crown and bridge lab for 18 years, plans to begin offering partial denture services since he has some background in that specialty. "I'm purchasing just one system and it will cost us up front but I know I can get some of that work from my current customers and perhaps bring in some new clients as well," says Gealy, owner of 12-employee Personal Dental Laboratory in Conyers, Georgia.
In an effort to give price-wary dentists and their patients more options, some laboratory owners are offering more economical alternatives to their regular work, for example, by offering less expensive alloys or different tiers of their existing work. Randy Harrison, Harrison Dental Studio, West Saint Paul, Minnesota, says he's gotten frustrated over the years because some clients send their specialty cases to him but won't pay his fees for their bread-and-butter work. Now he's marketing a full-contour, pressed ceramic crown and the reduced labor costs allow him to charge a fee that is more pleasing to price-sensitive dentists. "Even at a lower price than our regular layered all-ceramic restoration, we make a good profit," says Harrison. "Plus it has helped attract new clients that otherwise would not have sent us work because of our fees and even has led some of them to try our other services, too."
Service is always a solution
The bleaker the economic picture, the more people want to do business with companies they trust. But for those dentists who may be tempted by a price-cutting competitor, you need to remind them constantly about why their loyalty should be with you. "My specific strategy in this economy is to bend over backwards. I'm agreeing to short turnarounds, saying 'yes' to the emergency cases, and dropping everything for that last-minute pick-up or custom shade," says Beth Kotewa, owner of River City Dental Studio, Essexville, Michigan. "Everything I do is to show the dental offices they can't get that service from offshore or out-of-town labs that may offer a $30 savings."
Doug Egts, owner of Esthetic Dental Creations, says the economy has spurred him to implement the customer loyalty program he has been considering for a few years. As of December, he awards clients 3% of their monthly volume in "Creation Credit Points." Doctors can then use each point for a dollar off future lab work or 50 cents in cash back. "My hope is that we'll get the clients who aren't sending us all of their work to fully come on board, and also to keep doctors from looking elsewhere," says Egts, owner of the Rawson, Ohio lab. "I just want to give my customers a little more in this tough economy."
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