ONE of the fiercest challenges
facing the owners of many
independent practices right now is
maintaining a healthy and positive
cash flow.
It only takes a few quiet months in
the surgery to deplete cash reserves,
especially if your net profit margins are
already low. And seeing as fixed costs
are always
nudging
upwards, you
can suddenly
find yourself
in a situation
where you
have slipped
into a negative
cash flow.
Remember: It’s running out of cash
that kills most businesses. You can be
profitable on paper, but if there’s no
money in the bank to pay key suppliers
(or worse, meet payroll), your business
has a problem.
Clear strategy
The answer to this is to create a stream
of recurring revenue. And in veterinary,
there is a clear strategy to do this, in the
form of the health plan.
I have heard a lot of debate about
health plans. I’ve heard a lot of practice
owners dismiss them, saying they just
reduce net profit margins, and it’s too
hard to get staff on board.
Maybe. But the world is changing,
and a lot of people are offering health
plans these days. CVS reported last year
that it now has 111,900 members of its
Healthy Pet Club. In fact, the club
accounts for 9% of group revenue.
Done properly, a health plan
significantly improves your long-term
cash flow and client retention. Most clients love the ability to pay a small
amount off every month. Small regular
amounts are easier for most people to
pay than infrequent big bills.
Even if you can get just a few
hundred animals, that’s money coming
into the practice every month, regardless
of how busy you have been.
There’s no reason you couldn’t get
up to 20% of your client base onto a
health plan. Do the sums now: at £10 to
£15 per month per animal, what would
that do to your cash flow? Excited?
Less stressful
My team and I work with several
practices with successful plans, and
there’s no better feeling than knowing
the money for payroll is going to arrive
in the bank account every month,
guaranteed. That makes for a much less
stressful business.
Health plans don’t just bring benefits
to the practice. Clients also love to feel
like they’re getting a really good deal. If
they can get all of their boosters,
wormer, flea treatment and as many
consultations as they like for a slightly higher fee than a booster appointment
alone, that ticks a big box these days. It
significantly reduces the likelihood of
them looking for another vet (people
only do that when they are unhappy).
So why isn’t every practice offering a
health plan, and getting 20% of its client
base on board?
Well, many staff struggle to sell
health plans to clients. It’s not unusual
for a practice to launch a health plan, see
a big uptake immediately, then see the
scheme start to tail off as staff stop
mentioning it to clients.
Why do they do this? Nobody
becomes a vet or a nurse to sell. Selling
is simply not within the nature of most
of the people who work within
veterinary.
To keep the long-term focus on
selling the health plan – without the
clients feeling sold to, and the staff
feeling as though they are being treated
as sales people – there are three things I
recommend you do:
1. Place the health plan at the
core of the practice
Don’t make it this month’s
“new thing”. Make it the
only thing; the only
promotion. Make it the
focus of every staff
meeting or 1-2-1 you do.
So long as you keep the
focus on it, your staff will.
2. Tell your staff the benefits
to the clients, NOT the
benefits to the practice
If they can see that the client gets a
much better deal by being in a health
plan, they will feel much more
comfortable recommending it.
3. Make it easy for your team
to communicate the health
plan without having to do any
selling
Never ask a client if they “want to join
the health plan”. That’s a yes/no question, and it’s too easy to answer
“no”. Instead, go for an either/or
question. Either this option or that one.
The best example of this is three-
tier pricing. With three-tier pricing,
instead of just offering the health plan,
you offer a choice of three levels of
health plan: a good level, a better level,
and a best level.
Of course you don’t call them that.
Call them bronze, silver, gold … or
essentials, standard, premium.
As an illustration, for a medium-
sized dog, the good level might be £10 a
month, the better level might be £12 a
month, and the best level might be £14
a month.
The basic option incorporates all
boosters and a free 12-month health
check with a vet.
The standard level is the same but
with flea and wormer, plus a six-month
wellness check with a nurse.
The premium option is the best that
your client can get. So, this would
include everything you have in your
basic and standard options – and more.
You might, for
example, like to
increase the number
of health checks
with a vet and add in
10% off all products.
Whatever you
pick, the point is that
you create a real differentiation between the three
different levels. Then, when someone
looks at it, they can see that the more
they spend with you each month, the
better the deal they’re going to be
getting.
And this is key: your client needs to
think, “Wow, that’s a really, really good
deal!”
Your clients will look at everything
that you can do for them and pick the
level that’s most suitable for them. That’s
the beauty of this approach – no need
for your staff to sell. The selling
happens inside the client’s mind.
