Mark T. Murphy · Marketing · Feb 2009
Strategies for enhancing customer interaction
In Perception is the ONLY Reality, LMT asked technicians and dentists to match four crowns with four price tags that differed by $100, starting at $25...See more and topping out at $325. These crowns were from four different laboratories (participants in LMT's 2007 Crown Challenge and fabricated using the same prescription and duplicate models. Only 10% of the technicians and 3% of the dentists correctly matched the four crowns with the right fee. The rest were pretty evenly split at 30% getting one right, 30% getting two correct and 30% not matching any.
Let's ask the obvious question here: how in the world did those four different labs get their clients to pay those fees if the differences were not obvious? Half the technicians correctly identified the $325 crown, but only 32% of the dentists did, and they're the ones whose value perception is most critical. If a laboratory can add $100 in perceived value to the mind of the dentist without notably increasing its expenses, it could improve its operating margins significantly.
How to Upgrade Fees
The key to upgrading a lab's fee structure is less about the quality of what it does and more about the desire the lab can create for its products and services. Do not mishear me: a reasonable level of quality is a given in order to compete, but the data shows most doctors cannot tell the difference between a good crown and a great one. The time, materials and expense required to create an exceptional custom prosthesis often do not pay the same return as the perception of added value.
Many labs are already increasing the "value perception" of their products but if you or your managers aren't convinced of the role that value perception plays in a successful business, this exercise may help illustrate the point.
Take your management team to lunch at three distinctively different restaurants with different value propositions: first a McDonald's-type establishment, then an Applebee's-type establishment and finally an upscale establishment like Morton's or Ruth's Chris. At each locale, order the same basic item. Make several observations about each experience, including how you were greeted, the environment, waiter attitude and meal cost. Most likely, you will enjoy the meal at all three sites. So what accounts for the 400% price increase? The experience in each location makes the biggest difference. In a fancy restaurant, the waiter will likely be more attentive, the environment more pleasing and the product presentation more elegant.
Make It Happen
Let's translate this to the lab. A 400% increase seems ridiculous, but what about an increase of merely 80%? That's all it takes to turn a $125 crown into a $225 crown.
Here are some ideas to consider as you're looking at ways to enhance the customer's experience with your laboratory:
Customer Service Policies
We all know how important our best customers are, yet when consulting for laboratories I often observe excessive broadcasting of harsh customer rules and regulations. Building trust takes a long time and plenty of hard work. Waving rules for late payments and remakes in your customers' faces creates an impression of mistrust that's counterproductive to building lab-client relationships.
Telephone calls are often the first contact a prospective client has with the lab. What is the reception you get when you call the finest laboratories? How do you want your phones answered? Ensuring your employees practice good phone skills goes a long way towards a stellar customer experience. Some labs even have technology that allows them to know who is calling and exactly where his work is in the lab before they pick up.
Think about the perceived value of a worn-out shipping box with torn labels and stains on the outside compared to a perfectly wrapped, clean package. Custom-manufactured dental devices shouldn't be shipped in reused bubble wrap or newspaper; it cheapens what you sell. Spending an additional dollar for an upgrade to jewel cases could result in a scalable increase in operating income. Make your customers look forward to your packages.
What would happen if your CE offerings helped the dentist succeed, grow and prosper? If all of your clients grew 10% next year, so would you. And if they perceive your laboratory as helping them grow, they won't be likely to terminate your relationship any time soon. When assessing the cost and return on investment of continuing education, make sure you evaluate them as a marketing expense that comes back in the form of additional casework from existing clients and the opportunity to acquire new clients.