Don't Let the Rx Walk

Why eyeglass patients are leaving and what you can do to increase your capture rate

By Allan Barker, OD, and Gregg Stockbridge, OD, MBA

Famed college basketball coach Jim Valvano told great stories about his days at North Carolina State. One favorite was the day he asked three freshmen basketball players their plans after college. All said they were going to the NBA. Valvano responded that he was witnessing a miracle as one in 700 college basketball players make it to the NBA and he had three in his office right then.

Sometimes we feel like Coach Valvano when we talk to eyecare professionals. We recently interviewed and gathered 30 optometrists in one room and each reported that not one of their patients was sourcing materials they prescribed elsewhere. Thirty optometrists with 100 percent capture rates all in one room at the same time; that's another statistical miracle.

THE SURVEY

Being skeptical, we surveyed 200 patients who had requested their eyeglass prescription after receiving a comprehensive eye examination in an established two-doctor professional optometry practice in the Southeast. These prescription requests occurred over 118 working days during which 2,124 complete eye exams were performed. Thus, one in every 10.62 eye exams resulted in a patient asking to take their prescription elsewhere.

■ PATIENT PERCENT. According to a U.S. News & World Report survey, nine percent of customers leave a business for competitive reasons. That's exactly what we found in our survey: 200 patients equal 9.4 percent of 2,124 eye exams.

■ TOTAL REVENUE. The average eyeglass revenue for practices in which we conducted our survey is $212. Thus, 200 prescription requests represent a potential loss of $42,400, and that's not counting multiple-pair losses.

■ ANNUALIZED LOSS. When you consider that an average year consists of 280 working days, 118 working days represent 42.14 percent of a year. Thus, over a year's time, we are losing about $100,616 in this one office. This office has annual net revenue of $1,511,000, so 6.65 percent of net revenue is lost to patients seeking to fill eyeglass prescriptions elsewhere.

■ EYEGLASS REVENUE. The annual revenue for eyeglasses was $759,489. Thus, 13.24 percent of eyeglass revenue was being lost to patients asking for Rx's.

■ NATIONAL NUMBERS. One could argue that some of these patients eventually returned and have purchased their glasses at this office or that some may have never purchased eyeglasses at all. However, the 13.24 percent number—or even half that—is staggering when you multiply this by 20,000 private-practice optometrists in the U.S. The loss becomes viral with estimates running as high as $1 billion dollars annually. Yet, we had a gathering of 30 optometrists in one room who indicated they lost zero dollars. Amazing.

Have you purchased glasses from us before?

The first question we asked these patients was, “Have you purchased glasses from us before?” More than half, 55 percent, were former patients who had purchased glasses from us and we will refer to them as “PPs” or Previous Purchasers.

Another 45 percent were new patients who were either new or existing patients who have never purchased glasses from us before. We will refer to them as “NPPs” or Not Previous Purchasers.

Where do you plan to look for your next pair of eyeglasses?

This relates to where they took their prescription. Interestingly, seven percent of those who have never purchased from us before, and 16 percent of those who have, indicated that they would return to the practice for filling their eyeglass prescription.

If we think positively that these patients actually would return to us, that would improve our outlook. If seven percent of 45 percent (Previous Purchasers) and 16 percent of the 55 percent (Not Previous Purchasers) of the patients asking for their prescriptions actually returned, our loss of business ratio of 1-in-10.62 eye examinations actually improves to 1-in-12.07 exams. And, the percentage of patients walking out with their prescription goes down from 9.4 percent to 8.28 percent.

This reduces our annual loss from over $100,600 to $88,600 per year. Again, this assumes a 100 percent capture of patients who indicated they were returning. Though the few patients who return make indelible impressions, they usually represent a much smaller number than we perceive.

• WALMART. Nearly a third, 29 percent of PPs, and 18 percent of NPPs actually indicated that they were going to Walmart. In this town of 13,000 people, Walmart is the only large retail optical.

However, within a 45-minute drive is Raleigh-Durham where you can find every big box and major optical chain. Walmart is only 3/10 of a mile away. Thus, Walmart represents an annual eyeglass revenue loss to this practice of at least $21,264.

• INTERNET. Online is also a significant factor. Sixteen percent of PPs and 20 percent of NPPs indicated they would seek their glasses online.

This represents an impact on eyeglass revenue of at least $15,948. Also, 46 percent of these patients chose “other” as their alternative source for glasses, resulting in a loss of at least $40,758 annually in revenue.

In regard to complete pairs of eyeglasses, what is more important to you at this time?

Here we tried to determine the quality of glasses patients are willing to pay for. We did not use answers like “superior quality for a cheap price” because that would have been an obvious answer. Thirty-one percent of PPs and 24 percent of NPPs seeking glasses elsewhere did not mind paying a high price for superior quality.

However, the largest group—62 percent of PPs and 76 percent of NPPs—were happy with average quality for an average price. Very few, seven percent of PPs and no NPPs, wanted low quality for a cheap price.

This is quite interesting because 45 percent of PPs and 38 percent of NPPs went to either Walmart or the Internet. That means that most don't perceive these sources as low quality for a cheap price.

Would you like to see us offer low-quality glasses and lenses for a cheap price (similar to some large retail competitors)?

This question is somewhat loaded. Even though most patients are telling us that they don't perceive the Internet or big-box opticals as low quality for a cheap price, we are asking them if they would like to see us offer low-quality glasses and lenses for a cheap price similar to some large retail competitors.

Thirty-eight percent told us yes. A quarter told us no, and the rest (37 percent) were unsure, and possibly confused by the line of questioning.

How do you perceive our optical department?

Finally, we asked their perception of our optical. Four out of five patients told us we offered great quality for the price, yet only 12 percent planned on returning to the office to purchase glasses from us.

A significant number perceived our optical as expensive. Even more interesting was the fact that there was a greater likelihood that if a patient has never purchased from the practice before, they perceived prices as being expensive compared with those they have purchased in the past.

This is more evidence of why it is important that the patient talk to a sales person prior to taking their prescription out the door.

If 29 percent of previous purchasers and 36 percent of not previous purchasers perceived our optical as expensive—and only two percent said we were inexpensive—that indicates a possible economic reason for patients looking elsewhere. EB