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Friday / August 19.
HomemiprofilesInsuring for Customer Retention

Insuring for Customer Retention

A customer walks in to the practice to collect her brand new Lindberg spectacles. It’s the first time she’s had progressives and, having had them adjusted, she leaves with a smile… only to collide with the elbow of a human sized bronze statue of a rabbit on the pavement. Her glasses are destroyed within minutes of being collected. She is distraught. Fortunately, her insurance covers the specs and the practice ensures another sale.

Spectacle insurance may sound like the last of all insurances a patient needs, and certainly the last thing you want to be selling. However, there are plenty of good reasons to offer patients a specific spectacle policy that covers them for accidental damage, theft and vandalism and returns them to the practice for repairs or replacement. High among them is customer retention and profitable repeat business.

According to Paul Hillier, founder of Clarity 20/20, “a specific spectacle insurance policy is a tax-deductible marketing tool that optometrists can use in place of discounting and one that will ensure patients remember you over the long-term”.

Mr. Hillier worked closely with optometrists to build Clarity 20/20 insurance for spectacles, providing “the platform” according to their identified needs.

this is about removing the discount, adding value, rewarding valued customers and adding to the bottom line of your practice

What was initially developed as a warranty product evolved into an insurance product in response to optometry feedback.

“Initially the optometrists wanted a warranty, however they soon realised that it encouraged patients to continuously return to the practice for repairs that were often undertaken at the expense of the practice. On top of that, warranties are complex and don’t offer patients the same assurance that their claim will be accepted,” said Mr. Hillier.

“What we’ve created is an insurance product that is bullet proof – it transfers risk from the patient to the insurer and it’s underwritten by Tokio Marine and Berkley RE – partners with real financial strength.”

He specified the cover benefits as including an unlimited number of repairs and one full replacement, accidental damage, vandalism, theft, frame repair, and travel cover for up to 60 days on any one trip.

Supporting Independent Practice Growth

“We wanted to develop a product that would really support independent optometrists and help them grow by building practice business. Rather than discounting to attract sales, which we see as a one-way downward spiral, they can offer an insurance programme that brings customers back within the desired two-year purchase cycle. All discounting is doing is giving away your profit, without profit you cannot grow your business or reward yourself and your employees for their effort.”

“Insurance transfers risk therefore customers tend to spend more, so this is about removing the discount, adding value, rewarding valued customers and increasing profits of your practice,” Mr. Hillier added.

He said the system is simple to administer with policy premiums falling into three different categories according to the value of the spectacles. “Some optometrists completely cover the cost of the insurance policy, which after rebates for tax and GST is very competitively priced. Others on-charge the patient. Regardless of the decision, the customer must go back to the practice to make a claim and redeem their policy payout which is paid directly to the practice not to the patient. So long as your claim fits within the product disclosure statement, it is honoured.”

Policies start with a 12-month period but can be extended to 24 for only AU$25. From an optometrist’s perspective, this provides a tangible reason to invite the patient back into the practice along with the offer of a clinical eye examination.

“As the end of the policy draws near, the optometrist sends the patient an electronic message to let them know their policy is about to end and invite them into the practice to have their spectacles checked before it does. Human nature drives almost every patient to take up the offer and it’s then that the optometrist has the opportunity to book in another eye examination and sell a new pair of spectacles.”

As the product was launched 18 months ago, Mr. Hillier said, “optometrists who were quick to latch on to Clarity 20/20 in the early days will soon be sending out their recall notices and, with an average recall rate of 80 per cent, their business will build even more”.

Children’s Eyewear a Winner

We all know children are tough on their glasses and that unfortunately, kids’ activities in playgrounds can often lead to costly spectacle damage. Such is the incidence of kids’ spectacle damage and vandalism that, according to Mr. Hillier, claims for this category make up 60–75 per cent of all those processed by Clarity 20/20.

“We have a $25 excess payable on claims for children’s glasses, simply because optometrists receive so many and we believe their costs for couriers, handling and so on deserve to be offset,” said Mr. Hillier. “This is a small expense in comparison to replacing glasses and it certainly doesn’t put parents off. In fact, we find parents and children are the best marketers for our product. Word of mouth takes over and the policies walk out the door with spectacle sales,” Mr. Hillier concluded.

For more information, contact Clarity 20/20:
E: enquiries@clarity2020.com T: 07 3067 3638 W: www.clarity2020.com

Disclaimer: the opinions expressed in this section do not necessarily reflect the opinion of Toma Publishing or its subsidiaries

Retention vs. Acquisition

Most practices spend more money on patient acquisition than they do on patient retention simply because they view it as a quick and effective way to increase revenue. However, capitalising on the experience of existing patients is an easier, more efficient way to grow revenue. This is because you have already established the relationship – your patients have expressed interest in your expertise and your products, they are engaged with your brand – there’s no need to attract, educate, and convert someone again.

Retention is a more sustainable business model that is key to growth. The proof is in the numbers according to studies done by Bain & Company,1 increasing patient retention by 5 per cent can lead to an increase in profits of 25 per cent – 95 per cent, and the likelihood of converting an existing patient into a repeat patient is 60 – 70 per cent. Conversely, the probability of converting a new lead is 5 – 20 per cent, at best.

Three reasons why patient retention is important:1

  • It is five to seven times more expensive to acquire a new patient than to keep an old one
  • It costs a company AU$234 every time they lose a patient
  • Loyal patients are worth up to 10 times as much as their first purchase.

Reference
1. www.ngdata.com/customer-retention-marketing-strategies/

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