You’d probably be inclined to help your client. You could give him a break on a wellness exam or throw in a few extra radiographs. But money is just as tight for you as it is for your clients. So can you afford to discount your services? Read on to discover some differing points of view on this divisive question of discounts, and then decide what will work best in your practice.
3 REASONS WHY DISCOUNTS WORK
In a bad economy, make sure your phone never stops ringing. For some practices, that means offering discounts. Dr. Jim Guenther, a Veterinary Economics Editorial Advisory Board member and management consultant with Strategic Veterinary Solutions in Asheville, N.C., says offering discounts can make your veterinary practice more profitable. Here’s why.
1. They lead to more work. It’s not uncommon for equine practitioners to provide a couple of unexpected services during a visit. Dr. Guenther calls this the “While you’re here” factor. If you can schedule an appointment for one service by offering a discount, you’re creating an opportunity to provide other services—and bring in more revenue to offset the discount.
2. They build client loyalty. In this economy, a lot of equine practitioners are desperate to simply get the door swinging, Dr. Guenther says. Almost every equine veterinarian has been faced with a client who says, “You can have my business if you’ll give me a discount.” While you can’t give your services away for free, you can strategically build client loyalty. “Discounting is sort of like a marketing ploy,” Dr. Guenther says. “You’re trying to bond clients to your practice.” Use discounts to get clients in the door, then keep them coming back with exemplary service.
3. They bring out the best in clients. The average client may be willing to pay for a wellness exam or a round of vaccinations, but what about a fecal exam or dental work? Bundling services at a discounted rate generates revenue while turning ordinary clients into A-listers. More importantly, your patients will get a more well-rounded mix of medical services.
3 WAYS TO MAKE DISCOUNTS WORK
Once you’ve decided to offer discounts, it’s time to put your ideas into practice. Here are a few steps to take when instituting a discount program.
1. Set goals. Creating a plan of action is perhaps the most important step in developing a discount program. First, aim for short-term discounts—if you find yourself constantly giving discounts, clients might be coming to you because you’re not pricing your services properly. Consider offering discounts with expiration dates or running a vaccine clinic once a year. Next, put in writing the numbers you’d like to hit with your discount program. Perhaps you’d like to see a set number of clients, generate a certain amount of revenue, or perform a predetermined number of wellness exams. Create a timeline for hitting these goals and evaluate your progress at the end. If you fail to meet your goals, either revamp the program or lower your expectations.
2. Aim for volume work. By offering a discount on just one service, you’re essentially telling clients that you overpriced the service to begin with, says Dr. Guenther. Spring is a great time to offer bundled discounts, whether through a vaccine clinic or starting patients on a wellness program. Think like a department store, Dr. Guenther says: You can afford to discount your services if you’re selling them in bulk.
3. Collect up-front. A lot of practitioners will give a discount, then bill the client. “If you’re going to give the discount, doesn’t it make sense to ask for payment up-front?” Dr. Guenther says. Offering delayed billing to clients ties up money instead of generating revenue. So be firm in collecting the money up-front, and communicate with clients so that they understand this give-and-take.
3 DRAWBACKS TO DISCOUNTS
Discounts don’t always work. In fact, instead of attracting new clients or generating revenue, discounts can hurt your practice’s bottom line. Dr. Kathleen Anderson, practitioner at Equine Veterinary Care in Elkton, Md., shows why offering discounts isn’t the best strategy.
1. They give clients the upper hand. Discounts turn the veterinary profession into a bartering system, Dr. Anderson says. When you cut deals with clients, they assume that they can either negotiate on everything, or that you’ve been getting overcharging them for past services. Rather than feeling appreciative, clients often try to take advantage of your generosity.
2. Discounts put too much focus on money. Sure, you can’t run a practice without making money. But for most of you, veterinary medicine is about meeting the needs of animals while building relationships with clients. These relationships can lead to word-of-mouth referrals. But what are these clients telling their friends? If they spread the word about your low prices and hefty discounts, you’ll likely attract clients interested in cutting costs—even if it means providing less-than-ideal medical care for their horses. But if clients rave about your customer service and medical knowledge, you’ll attract A-list clients in no time.
3. Revenue will suffer. In this recession, veterinary practice owners think they have no choice but to discount services. After all, people are struggling, and many clients genuinely need a price break. But decreasing your own net income in order to support your client base is an ineffective business strategy, says Dr. Anderson. “By giving these discounts, you’re doing your practice a disservice,” she says. “As a long-term strategy, it’s destined to fail.” If you’re concerned about keeping clients, analyze the market to determine the fairness of your prices, or consider offering a short-term discount—like a six-month special on dental work. Just don’t go overboard with your price cuts.
3 ALTERNATIVE STRATEGIES
OK, so discounts aren’t for your practice. You can still attract new clients and provide the best medicine to your patients. Here’s how.
1. Offer pet insurance. Most clients are generally prepared to pay routine costs relating to horse ownership, like vaccines or wellness exams. But what happens when a horse needs major surgery? Pet insurance gives clients the option to space out payments over a certain period, giving the horse the care it needs. And you collect the money up-front—minus a fee to the insurance company—rather than waiting weeks or months for the client to cover the bill.
2. Step up your service. Make sure you and your team members present a stellar image of your practice. Train receptionists on proper phone etiquette. Provide clients with health certificates and medical records and communicate openly with them about their horses’ condition. And use the medical skills you’ve acquired over the years to administer top-notch care to patients. Taking these steps will make your practice indispensable to clients and generate word-of-mouth referrals.
3. Discuss the possibility of relinquishment. Let’s face it: Not everyone is cut out to be a horse owner. As a business owner, you should be compassionate to clients who are struggling through difficult economic times, but you must also be vigilant in your concern for your patients’ health. “Sometimes we do our clients a disservice when we allow them to own a horse when they literally do not have the means to care for it properly,” Anderson says. “If this becomes the obvious problem, we can help them find a new or temporary home for their horses.”
Whether you discount your services or hold prices firm, it’s important to stay on top of your practice’s finances. Analyze revenues regularly and monitor industry fees to make sure you’re offering clients the best service at a fair price. Whether you decide to offer discounts or keep prices steady, keep in mind that, no matter how bad the economy gets, your patients need you. Do what you can to make sure you’re there for them.