Weathering the Economic Storm

By Julie Bos
Economic downturns require extraordinary leadership. They require brutal honesty. They require action. If your lab is feeling the effects of the current recession (and who isn’t?) don’t despair. First of all, remember that you’re not alone. And most importantly, find the courage and creativity to take proactive steps to improve business today—while poising it for growth when the economic climate improves.

What steps, you ask? We sought the advice of four different optical labs—each of which provided insights, tips and practical strategies on surviving the economic storm. Our contributors were Brondstater Optical America, Inwood, W.Va.; Harbor Optical, Traverse City, Mich.; Interstate Optical, Mansfield, Ohio; and Precision San Diego, San Diego, Calif. Here’s what they had to say:

BRONDSTATER OPTICAL AMERICA

What They’ve Witnessed:

According to Susie Lesher, vice president of sales, business is definitely different today—with the lab processing fewer jobs. Fortunately, the lab remains confident in its client relationships—and optimistic about the future.

“We’re adapting by first realizing that our market will respond upward eventually—and I believe it will be sooner than most people think,” she said. “Thankfully, Brandstater Optical America takes a highly personalized and consultative role in working with our clients and that—together with our reputation of being highly performance-driven—has provided us with strong customer loyalty.”

How They’re Adapting:

Specifically, Brondstater is partnering with lens manufactures to provide the best products on the market at reasonable prices.

“We try hard to stay away from SPIFs and short-term goodies to entice purchases of certain products,” said Lesher. “Instead, we offer everyday fair prices and put our money into equipment and quality. This allows us to have the resources to serve needs with an emphasis on individual attention that’s critical to our lab’s success.”

“We’re also focusing on diversifying,” she added. “Offering a variety of manufacturers’ products gives us an edge over some competitors; and it’s nice not being ‘married’ to one particular manufacturer.”

In coming months, the lab will continue bringing new inventive products to its customers, while also focusing on partnerships and synergies that are both positive and productive.

Tips for Success:

Focus on a brighter future. The challenging economy won’t last forever.

•Consider expanding your territory.

•Concentrate on what you do best and stay with it.

•Don’t try to compete on price or lock in promotions. Concentrate instead on quality and service.

•Build a reputation of being client-focused and performance driven.

•Delight customers with product knowledge and extensive lens choices. Guide them to making the right decisions.

HARBOR OPTICAL

What They’ve Witnessed:

Harbor Optical has also witnessed some changes since the onset of the recession. This lab has seen a ten to fifteen percent slowdown in ECP offices, an increase in lens-only orders, and earlier this year, a temporary (two-month) decline in the sale of premium products, such as Transitions and AR coatings.

“The good news is that our premium products have since increased to their previous levels, and due to new customers and some successful initiatives, we’re actually ahead of last year—which makes us feel very fortunate,” said Geff Heidbrink, president.

How They’re Adapting:

“Our main initiatives this year have been to work closer with our ECPs to help them become more profitable by prescribing premium products, reducing re-makes and increasing staff training,” said Heidbrink. “In addition, we’ve paid down a great deal of our debt, spent more time cross-training our people and doing more work with less staff,” he added. “We’ve always watched our spending and continue to look at where we can do better. Plus, we’ve made some small changes in our sales territories so our reps can work their territory more efficiently—to drive less and get home on more nights.”

Tips for Success:

Work smart. If business declines, don’t be quick to cut your prices. It’s virtually impossible to make it up. Once you get back to your previous volume, you’ll be working harder and making less.

Don’t focus on the doom and gloom. Be careful not to let all the negativity become a self-fulfilling prophecy. Fortunately, the optical industry has been somewhat insulated from the recession and has not suffered as badly as many other types of businesses.

Focus on what you do best. As business author Tom Peters says, “stick to the knitting.” That means stick to what you do best—grinding quality products in a timely fashion and charging a fair price.

INTERSTATE OPTICAL

What They’ve Witnessed:

“For us, the challenging economy has caused us to really focus on many areas that we should have been focusing on all along,” said John R. Art, president. “When things are humming along fine, with sales increases every year, many efficiency items fall through the cracks. As long as the bottom line is good—no worries! With the threat of soft sales and pricing pressure, we pulled everyone together and talked.”

How They’re Adapting:

“One of the best areas we found to save, was with our employees,” said Art. “When we communicated the situation, it was amazing how everyone pitched in to do their part. From offering to take time off without pay during slow periods, to coming up with creative cost-savings ideas, our people demonstrated their true value. We spent time going through every line on our expense side of our financials and reviewing what we could do, if anything, to minimize or eliminate costs.”

“As an Essilor Partner Lab, we are also fortunate to be able to benefit from several economies of scale through their coordination of sourcing for all Partner Labs,” he said. “As a result, we found less expensive (and often better performing) options for many of our lab supplies used in production.”

The lab’s partnership with Essilor also uncovered additional areas of savings—including cell phone discounts, equipment service agreements, credit card processing fees and savings on shipping costs. In addition, Interstate Optical carefully evaluated its need for new equipment and delayed as many capital expenditures as possible.

“We’re running more lean from an employee count, and relying on overtime for peak volume periods—plus we’re limiting raises,” explained Art. “We’ve also evaluated each of our lens vendors to make sure we’re getting the best products from the best vendors.”

“While the obvious solution to a challenging economy is to look for areas to cut expenses, we chose to take an aggressive stance with our marketing efforts,” he said. “As a result we’ve continued to spend on customer-related benefits like co-ops and promotions at the same percentage of sales as before.”

Tips for Success:

Evaluate each area of business. Strive to gain efficiencies without sacrificing service or quality.

•Refine your purchasing procedures. Make sure all purchases are researched in advance, sourced from the right vendor and checked after the fact for correct pricing.

•Review your shipping costs. See if your vendors will bill under your shipping accounts, thus taking advantage of better rates.

•Don’t scrimp on marketing efforts. This spending is critical to maintaining sales increases from year-to-year.

PRECISION SAN DIEGO

What They’ve Witnessed:

“We’ve seen a greater use of patients’ old frames with new lens orders—plus an increased interest in lower-priced progressives and AR coatings,” said Mark Becker, president/CEO. “Many of the larger lab competitors have lowered prices and requested that ECPs sign contracts to secure volume. Plus, many vision plans have lowered benefits to the ECPs, which is driving greater interest towards value-priced products and specialty sales.”

How They’re Adapting:

Despite the changing marketplace, Precision San Diego is finding success by focusing on a number of specific initiatives. Among them: expanding product and service offerings; providing a better environment for employees; adding new lens products and in-house AR coating; increasing volume discounts and patient satisfaction programs; and partnering with key vendors to develop practice enhancement programs for ECPs who are interested in short and long-term growth.

“In addition, we consolidated shipping to two key couriers and redesigned our sales market to focus on an area that we can service in a quick time period,” said Becker. “In the coming months, we also plan to add new sales and marketing resources, open our in-house AR coating center, and develop a competitive value-branded AR coating.”

Tips for Success:

Knowledge is power. Know your company’s limitations, perceived strengths, your market, your employees and customers.

•Stay close to your competition. Piece together their current tactics to try and understand their long-term strategy and how this might impact your lab.

•Quiz your top ECPs. This can help you better understand what they need. Ask them what your business needs to add to or modify—and how you can better help them build their business.

•Prospect, prospect, prospect.

CURRENT ISSUE


Lab Talk-February/March 2018