A Cash Sales Learning Curve
There are many lessons to learned in retail sales, and merchandising is a critical course.
- By David Kopf
- Jan 01, 2012
Retail sales represent both a key opportunity and a major learning curve for HME providers. HME professionals know that there is revenue to be had through cash sales, but they also know that retail requireswhole new skill sets in order to excel.
But cash sales is not just a an opportunity — it’s a necessity. Providers are flocking to cash sales as a way to help them drive new revenues in the face of massive Medicare funding cuts. The 9.5 percent MIPPA cut; competitive bidding Round One, and soon Round Two; the continuing effects of the 36-month rental cap for oxygen; the removal of the first month purchase option for mobility; and an all-out audit onslaught via RAC, CERT and ZPIC audits have worked together to put the pressure on providers to find alternate revenue sources.
Lessons to Digest
So they are launching retail sales efforts to try and drive more money to their bottom lines without having to deal with the hang-ups, hassles and heartbreaks of Medicare claims. And with these launches come multiple lessons. But providers need to learn so much before they can truly be retail experts.
For instance, their staff must learn whole new approaches to helping consult with patients to determine their retail needs. And, before they can do that, many HME professionals simply need to learn that sales is not some form of trickery, but is a collaborative approach that, if done responsibly and ethically, will actually cement lifelong patient relationships. Also, providers need to pump up their retail marketing muscle so that they can get an accurate read on their patients’ and marketplace’s cash sale needs, the sorts of products they should be offering at retail, and how to properly price them.
And perhaps one of the biggest retail lessons HME businesses need to learn is merchandising. If anything, merchandising is a profession unto itself when done right. Good merchandising represents a vast storehouse of retails ales expertise that has been gained by retailers across the world over generations. And done right, merchandising can build a pathway to cash sales success for providers.
Merchandising represents much more than how a store or showroom “looks.” If anything the look of a retail operation has a serious strategy behind it. Good merchandising not only attracts and invites a shopper to enter the store, it convinces them to interact with it and truly go shopping (in other words, move through the retailer’s wares to investigate what is available. “A lot of DMEs often don’t understand the importance of retailing — that posters are updated, that the packing looks great, that they’re including displays,” Musone says.
A key element to any successful merchandising strategy is displaying the product. Retail clients need to see how the product looks, how it works and want to be able to interact with it so that they can see how the product will benefit them. This is why compression clothing and accessory manufacturer Juzo often outfits its providers with special leg displays, says Tom Musone, Marketing Director.
Compression products are a key cash sales category because they appeal to such a wide variety of patients. In fact, compression products also appeal to atypical HME customers, such as people who spend a lot of time on their feet and need relief from aching, tired legs. So, the leg displays help them interact with the product.
“We give them all sorts of tools, such as leg displays and swatches that let them see different materials and colors,” he says.
The legs are essentially a manikin leg with a stocking on it, but when properly maintained, they can feature stockings (or arm sleeves on arm displays) that are in seasonal colors to help attract customers.
“We always like for our retailers to put a color stocking out there, because it definitely gets attention and gets notices,” Musone says. “Then from there you can start the sales process.”
Also point-of-purchase displays are an important element in merchandising. Not only can they help the retailer add an “impulse buy” to a customers purchases for that transaction, but they can also educate the patient on the product. So, Juzo offers its providers POP displays that sell the product and hold roughly a score of socks of the product for instant purchase. “When a patient comes in, he or she can learn some more information, or get within a few seconds what compression is all about,” he says. “If they’re there to pick something else up, the [POP display] can cross-sell the product.”
Packaging is also an important component to successful merchandising. It needs to engage customers, and a good way to do that is by ensuring they can relate to the product. Pictures of users of the product on its label are a big help, Musone says.
“We put our target audience, a 40- to 50-year-old type person, to help attract a buyer that might not necessarily think they should be wearing compression products,” he explains.
Attracting and engaging the potential customer is only part of the packaging battle, thought. Once the user investigates the product, the packaging must properly convey the product’s value proposition in a clear and concise fashion. “We have other selling points on the packaging,” Musone says. “What we feel best makes the brand stand out, because our brand really stands for the quality of the product. That’s what we’re about. Other brands might have other value points.”
The same goes for signage. Providers should use posters and signs to help advertise their cash sales products within the store. Again, the imagery has to engage the customer and get them to identify with the product. This can be especially effective for customers who might not necessarily see themselves as a user of that product, Musone adds.
“Our pieces use pictures, models and messaging to illustrate the point that you don’t have to have an ulcer on your leg or 80-yearsold to wear this product,” he says. “You can be trying to do everyday, normal activities and need something to help you get back to doing those activities, whether you have minor venous disease or varicose veins or mild lymphedema.”
The same goes for signage. Musone says that in the same way advertisers change their ads in magazines and on the web, providers need to swap out their signs to keep attracting more and newer patients to products. Fresh imagery and message are key.
“We try to keep things fresh by coming out with yearly posters,” he says. “We just came out with our Christmas poster [in December] that says instead of a giving a perfume to a mother or grandmother, you could give a compression stocking or over-the-counter comfort sock. … Basically, a stocking stuffer stocking,” he jokes. “We definitely have a little fun with it.”
And that kind of seasonal fun is just the thing to grab a casual shopper’s attention to a product they might not necessarily have bought unless the signs made them aware of the product.
How providers locate items in the store is also important. It’s very important to have products placed near complementary items. This is why cereal is located near milk in grocery stores. So, for providers, sheets and mattress covers are ideally placed with beds and mattresses, for example.
In the case of compression items, Musone says that providers should keep those items near fitting rooms, since most compression stockings are fitted products. Once the products have been generally located, they must be properly shelved, as well.
“We try to put our top-selling sizes and materials at eye level or chest level so that it is easier for viewing by either the patient or the fitter,” he explains.
Putting it Together
Getting the right mix of these various merchandising elements also is important. Providers don’t want to have too much signage and too little packaging, for instance. There is a golden retail ratio, according to Musone.
“We teach our sales reps to go in and help provide that,” he says. “The rule we like to walk away with is 70 percent on product and packaging, 20 percent accessories, and 10 percent displays, whether it be a POP display or a leg display. Make sure all the product on the wall gives some visual notice, some attention when the customers walks in. And then you can do some cross selling with the accessories.”
By combining these various elements, providers can craft a winning retail strategy.
“Its amazing how important merchandising is,” Musone concludes. “You have to retail properly.”
This article originally appeared in the January 2012 issue of HME Business.