An average of 43 percent of the gross revenue collected for a practice comes from the sale of eyeglasses within your office. Frames make up half of that profit. Better said, $1 out of every $5 in profit made by your practice is generated by an eyeglass frame alone. That’s about equal to lenses and higher than revenue generated by contact lenses.
In most practices, the person in charge of the frames on the frame board has not been formally trained on how to best manage this important part of the practice. Frame companies have great resources to educate your opticians and help you manage your frame boards effectively. They are ready and willing to provide support through consultative services.
As patients enter your practice, within 15 seconds they ask and answer this one question in their heads: “Can I find what I need here?” So, start here yourself. Go to the entrance of your practice, look around, and ask yourself: “Can I find what I need here?”
Do you utilize visual merchandising tools within your optical set?
The magic of visual merchandising is that most patients enter your office with the intention of purchasing from you. You are already at an advantage. Effective visual merchandising guides patients through their shopping journey and helps them make a purchase from you. At the same time, ineffective visual merchandising causes more than 80 percent of people to have difficulty finding what they need, increasing the chances of them making a purchase from somewhere else.
Here are some effective visual merchandising tactics:
Practices often divide frames into men’s, women’s, and unisex. All the men’s frames are typically on one frame board, and the women’s are on another. Compare that to a visual merchandising approach that tells a story: All the men’s, women’s, and unisex Prada frames are showcased on one frame board with a large campaign image from Prada featured in the middle.
There are a couple of advantages to this approach. First, the appearance of a celebrity wearing a particular brand, for example, can trigger an emotional response in a consumer and influence a purchase. Second, showcasing all Prada frames on one board creates the appearance of a more robust offering of Prada frames than if you broke them up into the separate categories of men’s, women’s, and unisex. This makes it more likely that the person standing in your doorway will answer, “Yes!” to the question: “Can I find what I need here?”
Are your frames showcased in the most efficient and effective way?
Your optical should be a treasure hunt for the patient, drawing them in to discover more. Your goal is to guide patients from one product to the next, so the first step should be to establish which products should sit next to each other. It is also important to create gaps between products to keep patients’ attention. Strong product categories and key brands should be positioned in prime locations. Your frame representatives can help you (or refer you to someone within their company) to plan this first step.
There are a few rules about displaying frames that you should know: Present frames from light to dark colors. This is true no matter how you are displaying frames, such as top to bottom, left to right, or front to back. Separate frames by materials, such as plastic versus metal. Display different colors of the same models of frames together.
The POP (point-of-purchase) images should match the displays. For example, images of the sun should be located with sunglasses. It may sound simple, but if you don’t follow this rule, it confuses the patient. Another rule is to keep your frame company logos updated because they can change. A patient who is loyal to a particular brand may see an outdated logo and think you may not be carrying the latest models.
This is how your frames should be displayed on the typical frame board:
Do you change the look of your optical at least two times per year?
Consider Mrs. Smith entering your optical. She’s excited about this step because she wants new glasses. She’s been looking forward to this ever since she made the appointment. Now, at the door to your optical, she looks around. It looks the same as it did last year . . . and the year before. In fact, it has looked the same for the last 10 years. She thinks, “I’ve seen everything here. I’ll go look somewhere else.”
Patients entering your optical expect newness. Newness supports the idea that you have the latest styles of eyewear. Refreshing the look in your optical helps patients answer, “Yes!” to the question: “Can I find what I need here?”
There are many ways to change the look in your optical. You can rotate where things are located on the floor. You can organize around lifestyle, or your décor can reflect the seasons. You can even tap into your frame vendors for ideas. The key is to give your space a fresh look on a regular basis.
Changing the look of your optical should start even before you enter the store, with the windows, which are the very first impression anyone has of your optical. Be sure to change the look of your windows as often if not more so than the interior.
Is every frame on the frame board pulling its own weight?
In the average practice, 80 percent of frame sales come from 20 percent of the frame board. It is important to analyze your frame board sales at least every six months. You need to know which frames are moving and which are just taking up space. Here’s how:
The typical frame board for adults should be 40 percent women’s frames, 30 percent men’s frames, and 30 percent unisex. This is true unless you have a specialty practice (such as a pediatric optometry practice) or are a boutique.
How many frames should be displayed? The following chart presents data from about 2,000 practices indicating the ideal number of frames as well as excessive inventory and insufficient inventory based on annual gross revenue collected.1
Looking at the data, a practice with annual gross revenue of $800,000 should ideally be displaying 750-850 frames.
Another question to ask when organizing your frame board is: What should be the distribution of the various categories of frames displayed? Start with identifying what is on your frame board now by putting every frame into one of the following three categories – traditional, contemporary, and fashion forward. You can ask your frame representatives for help. Then, compare your frames displayed to your frame sales data.
To do this analysis, put your data into a spreadsheet. Be sure to identify the frames by price point. Here’s an example of what that could look like for 800 frames.
Now that you know how many frames are being displayed in each category, by each price point, as well as how many frames you are actually selling, you have the data necessary to make an informed decision. Re-mix your displayed frames into what your frame board should look like in order to maximize your sales.
This exercise is also a great way to tell if your current strategies are working. For example, you might have a line of frames at the $700 price point in order to make the line of frames at the $600 price point more attractive. With your frames spreadsheet, you can determine whether that strategy is working for you.
What About Frame Turnover?
Your target annual turnover for frames should be a minimum of three times the number of frames in a frame line for a frame line to stay on your board. The following calculation helps illustrate this rule: You have a frame line that is displaying 24 pieces on your frame board. The calculation for a three times turnover is 3 x 24 = 72. Over a year, this frame line must sell 72 pieces to patients to stay on your frame board. If it sells fewer than 72 pieces, then it needs to be removed from the frame board and replaced with another frame line of 24 pieces that will sell at least 72 pieces over a year.
Of course, we don’t need to wait a full year to see if 72 pieces have been sold. In six months, we can check to see if half that, 36 pieces, have been sold. So, at six months, if only 15 pieces have been sold, then it’s time for that frame line to go. Likewise, at six months, if 55 pieces have been sold, that frame line can stay another six months until the next reevaluation occurs.
This pertains to entire frame lines, not individual pieces. Within a frame line, we may display the green frame in order to sell the beige frame. While we may sell only 10 green frames over the year, if we are at a six-time turn for the entire frame line, it is meeting expectations.
The most effective way to monitor your frame boards efficiently is to use a computer system that does the counting for you. There are several on the market, and your frame representatives can help you find the best one for your practice. Make sure it works well with your current practice management software.
Explore computerized frame-monitoring systems that allow you to do frame inventory in the shortest time possible. Some of the newer systems involve RFID (radio frequency identification) chips that track inventory automatically. Some can tell you how many times a frame has been moved each day. Some can even tell you if a frame is moving out of the practice illegally.
Are you receiving the best wholesale price for the frames you purchase?
In today’s world, you should never purchase at unit pricing. While this may seem obvious, it is important to remember and reinforce the fact that unit pricing is the highest price charged for a product. Buying groups and alliances can help you get better prices for the products you purchase. When your practice has a gross revenue collected over $3 million, you can often get better pricing by going directly to the manufacturer.
You are aiming for a cost of goods number as close to 25 percent of gross revenue collected as possible. The average cost of goods is around 30 percent in the typical practice. The 5 percent difference between 30 percent and 25 percent drops straight down to your bottom line. A 5 percent net profit increase in a $1 million gross revenue collected practice is $50,000, so every percentage point matters.
A common mistake people make is to be involved in too many buying groups and alliances. This strategy actually dilutes your purchasing power. A second common mistake is to not take advantage of all that the buying group or alliance offers you in discounts and rebates. At least once a year, ask your buying group or alliance to do an analysis of your practice’s purchasing trends to see where you can improve.