Selling Against the Chains
- By Angela Neville, Cynthia A. Parkman
- Sep 01, 2003
If your customers can buy wrist braces, blood pressure monitors and rollators in any Wal-Mart or chain drug store, why would they bother coming into an HME store to pay more and buy from you?
The answer is really about positioning: how your customers perceive your store in relation to the chains. There are several characteristics shared in common by most successful HME businesses that have become known as their community's home health care resource centers:
Display a complete product selection.
Present an attractive retail showroom.
Employ knowledgeable salespeople.
Take the time to educate customers.
Demonstrate and sell the products that best meet your customer's health care needs.
Understand the Chain Mentality
Mass market chains sell over-the-counter (OTC) products that sell themselves. They only sell the fastest-moving SKUs within any given category. And these products must be self-explanatory so customers are able to pick them up off the shelf or display and instantly understand how the product works or will benefit them.
Chains focus on turns and profit margins, quality is not usually a concern. And educated salespeople are an unnecessary expense. Sales-per-facing (or per square foot) is the name of the game.
HME's know their competitors; they visit all of the mass marketers and chain drugs stores in their sales territory on a regular, periodic basis. |
Products such as home medical equipment do not always fit into this OTC mold. Many products must be taken out of the box to be demonstrated for a customer. For example, customers usually want to sit in a lift chair that is plugged in and try it out before they buy one. Other products need more explanation such as a consumer brochure or product selection guide. Most HME products are not one-size-fits-all because many styles and sizes are available to better meet the end-user's personal needs.
Name vs. Medical Brand
Chains usually sell advertised name brands or their own private labels. Unfortunately, HMEs quickly discover that selling the same brand is a no-win situation for them. First, the chains sell these name brands for retail price points that are often less than what HMEs pay wholesale for the same products. And second, chains work on such low margins due to their high-volume sales that HMEs cannot afford to sell for anywhere near the same retail pricing.
Successful HMEs know their competitors; they visit all of the mass marketers and chain drugs stores in their sales territory on a regular, periodic basis. They tabulate what brands are sold in which chains and at what price points (see chart). Then they decide which competitive products to carry so as not to compete head-to-head.
These HME brands are often what we consider medical grade products; they are a higher quality than the mass market brands. For example, HMEs often opt to sell FLA over Futuro in orthopedic supports and Tena over Depends in incontinence. These brands offer a complete product selection within their respective category.
Trained salespeople then help customers to determine which product best suits their particular needs and values. They qualify customers to learn as much as possible about the end-users medical needs and then demonstrate the most appropriate product options. As a result of this service and education, customers are willing to pay more. They perceive they are benefiting more by receiving the best available product for their condition according to the HME expert salesperson who is educating them.
Switch & Sell
Another option to avoid competing with the chains is to switch your customers from the chain's brand to a private label or generic that is only available at your store. Many HMEs will carry the leading brands as loss leaders simply to get these customers into their stores and then switch them over to their own exclusive label.
Getting customers to change brands is not easy, because most people are creatures of habit. Customers need to perceive (even if they never actually receive) a strong personal benefit before changing, such as financial savings, physical comfort, reduced stress or superior performance.
One of the best proven methods for changing a customer's purchasing habits is to let them try out the product in question. Vendors of disposable products such as incontinence will usually provide free samples for customers to try for themselves. Other product vendors will provide showroom samples to facilitate demonstrating their product benefits for customers.
Once a customer has tried this alternative brand product, then they can see for themselves if it is as good as or better than the current brand they buy. Switching them to this house brand is invaluable. You now have a loyal customer who returns to your store to buy your own brand on a regular basis. And more importantly, you have at least doubled your profit margins by not having to be competitive when selling this exclusive label.
Educate Before You Sell
Here is a true story from one of my recent seminars:
A customer asked to see an HMEs selection of canes. The manager stepped through all of the different options, including wood and aluminum, folding, handle styles and designer colors. After 20 minutes, the customer said thanks, but they really wanted to buy a scooter, so could she please show him scooters now? The manager was dumfounded and confused. She asked why had the customer asked about canes in the first place?
His answer: I want to buy my scooter from someone who cares about me and not just about making a profit. You are the third store I have visited, asking about canes to see how I would be treated. The other two just pointed at the cane display. You were the only person to spend time and educate me. So from now on, I will come back here to buy all of my home care products from you.
Teach your salespeople: We are in the business of educating people about HME and how our products and services will maintain or improve the quality of their daily lives.
Chains only sell a product at a price. We in HME educate our customers and show them all of the available products that might be of help to them. Then our knowledgeable salespeople offer a recommendation, which is usually what the customer buys.
Customers need to perceive (even if they never actually receive) a strong personal benefit before changing, such as financial savings, physical comfort, reduced stress or superior performance. |
Note:Today 80 percent of purchasing decisions among baby boomers are made within the retail store. These customers usually do not know what they are going to buy before they enter. And boomers have become the predominant HME customers as more are becoming caregivers for their aging parents.
Another means to educate your customers is by providing consumer education materials. Most vendors provide this support literature, but few HMEs bother to utilize these great sales tools. Examples include consumer brochures, laminated product selection guides, shelf talkers, point-of-purchase displays and video tapes. Many retail HMEs have TV monitors and a video library for customers to sit (on lift chairs) and watch.
When selling against the chains, remember to stock a complete selection that include medical grade, generic or your own private label brands. Then educate your customers why your selection is the best for them. The end result is that you will be cultivating and securing loyal customers for life.
This article originally appeared in the September 2003 issue of HME Business.
About the Authors
Cynthia A. Parkman is a lecturer in nursing leadership and management as well as case management, at California State University, Sacramento, and partner in CAP Kay Consultants, offering online care management and complementary therapy education and resources at www.nodoctor.com. Parkman is co-developer of the CSUS Regional and Continuing Education Case Management Certificate program and is a published author of case management, leadership, patient advocacy, and CAM therapies. Parkman authors several feature columns on CAM therapy trends for case management and managed care journals. She is co-researcher on CAM therapy inclusion within nursing school curricula in the United States and she is a member of CMSA, ANA, and American Holistic Nurses Association.