Three months after its public debut, Uber posted a $5.2 billion loss that’s “impressively vast” even for a company whose business model is based on outspending the competition, said The Economist. Since its inception, Uber has lost a total of $14 billion. A few weeks ago it laid off 400 people from its marketing department, representing a third of the entire division, and has placed a hiring feeze on new engineers.
Uber’s stock is down 20 percent since their IPO in May. It’s expensive to recruit drivers, there’s more competition and consumers are very price-sensitive. Even the most-promising startups, with billions of dollars in venture capital, must answer to the laws of gravity.
Last Wednesday was a private coaching call day. I started early in the morning and took call after call, in 45 minute increments, until late afternoon. In many of the calls, there was a common theme of growth via attempt to ignore gravity. Doubling the size of your business is not as simple as doing twice as much of what you’re doing right now. Growth creates complexity and complexity kills growth. New employees, hours, locations, additional doctors and strategic partners – all of this is complex and it can strangle the very thing you want to achieve.
As a recovering stubborn-headed know-it-all who used to do all of this the wrong way, please learn from my mistakes and understand what I get to see working all over the world and also what doesn’t work.
Understand the laws of gravity in your business. Attempt to defy them and you will eventually be pulled back down to earth.
First, decide how big you want to get and why. Aimless growth is like a mapless journey. It might turn out great, but the odds are not in your favor. If you can’t write down a revenue goal, you’re highly unlikely to achieve it by accident.
Second, determine how much profit you must derive from each unit of time, service or product. Do not violate it. Cut costs at every turn.
Third, know your “enough is enough” number and have people in your life that can hold you accountable to not only achieve it, but also to enjoy the life you’ve created around you before you’re dead and gone.
Fourth, realize every successful business is really a marketing and sales business. If you don’t know the money math inside these core competencies, you will never achieve significant growth.*
Take total collections and divide it by the number of new patients, clients or total products sold last year. Do the same with total collections and number of full time employees. Know your most-productive hours in the business and your least-productive hours. Set the minimum required revenue per hour or per product line and task managers to maintain or exceed those metrics.
Failing to acknowledge the gravity in your business is like ignoring a bad joint sprain and attempting to run a marathon. Most of your peers operate blindly and big dumb companies behave badly all the time, but this is no reason for you to follow in their path.
* You and 39 other clients can join me in 2020, where I will show you best-of-class statistics for each of the metrics (i.e., gravity) in your industry and help you perform in the top 1-5% of your market and field. You can request details for an upcoming discovery call where you will see details of the program. Make your interest known by going to MyCoachingApplication.
I’ve been presenting on the power of patient gifting and marketing automation for many years. The most common question from audiences revolves around cost. I’m asked, “How much should I spend on a new patient welcome gift, shock ‘n awe package or new start ‘wow’ box?”
My answer has always been the same: whatever it takes.
Clearly, one of the top five reasons why patients don’t refer, which I review extensively in my writings, is that they aren’t welcomed to the practice in a BIG way.
I learned this principle from The Ritz-Carlton Leadership Development Center, The Disney Institute and by studying top producers in home and car sales. Everyone wants to feel special and important. Consumers want to know that you sincerely appreciate their business. They also want something to talk about.
A financial advising firm sends one of the nicest new-client welcome boxes I’ve ever seen. It’s not extravagant and it’s not that expensive, but it’s completely congruent with their avatar client and the message they want to send.
I’ve produced entire Loud and Clear marketing programs on this topic. If you’ve been hanging around for any length of time, you get it. This is all redundant. But, so are the Ten Commandments if you’ve been going to church or synagogue for any length of time. Repetition doesn’t make them any less important.
Yet, I won’t waste this entire article reminding you of the power of gifting and welcoming new patients, clients, customers or donors in a BIG way. Instead, I’ll stimulate some higher-level thinking on the dangers of cutting the small things in your business, like new-customer welcome gifts, birthday cards and marketing automation, when business slows or when the decision maker gets bored and wants to do something new.
Vilfredo Pareto, an Italian economist, noticed that 80% of the land was owned by 20% of the people in Italy at the time, similar to 80% of the peas which were produced by 20% of the pods in his garden, so the story goes. Most know this phenomenon as the 80/20 principle.
What most people don’t know is that Pareto was famous for another smart economic theory, clearly applicable to your practice. In it, Pareto explains, if you were on a sinking ark, you wouldn’t throw a few cats or dogs overboard to save the ship, because it would have no impact and the boat would still sink.
Instead, you would find the elephants and throw them overboard.
And so, I find myself in the frequent position of talking clients back from the edge of cutting all the things that have made them successful: convenient hours, risk-removal, putting the best team on the field, investing in the relationship with gifts, marketing automation and referral strategies, only to discover 18 months later that they’ve thrown cats and dogs overboard when they should have thrown off the elephants.
Hearing Care Providers: how many hours of underutilization occurred last quarter in your treatment department? Physicians, retailers and attorneys, what are your biggest line-item expenses and how much impact would it make if you found alternative vendors or strategic business partners that saved you 10% or 20% on those line items alone?
You might have seen in the news recently that Southwest Airlines shut down their entire operation at Newark International Airport.
Southwest said this decision was due to the grounding of the 737 Max airplanes until at least 2020. It might have something to do with landing fees, terminal conditions, union negotiations with bag handlers or any of a myriad of things. Southwest didn’t say, “No more bags fly free and no more peanuts and no more drinks for the customers.”
Nope. They threw an elephant off the ark. No more Newark.
Kill the entire operation until we can make money there. Smart, smart, smart. I didn’t get rid of my new patient gifts, shock ‘n awe mailers, welcome boxes, earmold + brain training gifts, referral campaigns and live events. Those are small cats and dogs. Thrown off an ark in times of trouble, they make no difference.
I threw off the BIG elephants of Managed Care and 3rd Party Networks.
Food for thought.
It’s Q4 2019 and time to start planning for next year. According to Definitive Healthcare and McKinsey and Company, here are the top healthcare trends for the coming year:
Consolidation – Over 803 mergers and acquisitions took place in the last 12 months, in addition to 858 affiliation and partnership announcements. This trend brings newer technology to smaller clinics and hospitals, as they join larger groups, driving down costs. Consolidation is predicted to accelerate over the next 2-3 years. It also decreases competition and creates mega-hospitals, with regulators watching closely.
Convenience – 65 percent of consumers buying commercial insurance select cost as the top factor when choosing where to seek care. Today, 24 percent of consumers reported using retail clinics like CVS Minute Clinics, compared to only 9 percent only four years ago. To go around this trend, you must get really good at marketing to the 35 percent who don’t list cost as a top factor and/or serve fee-for-service patients.
Telehealth – Over 70 percent of consumers would rather use video than visit their primary care provider in person. Telehealth is expected to reach $94 billion in care by 2026. State board and malpractice carriers will need to catch up. Consumers are now setting the standard of care, whether we like it or not.
Artificial Intelligence – is expected to continue growing with the tremendous amount of data being generated by hospitals each day. AI will help us utilize and understand all these data, driving down costs and improving care. This presents the biggest opportunity for private equity investment and staying power.
Staffing Shortages – will continue as the nursing and primary care workforce continues to age. Currently 55 percent of all registered nurses are 50 years old or older and 52 percent of the active physician workforce is 55 or older. Combined with an aging population, there is a higher demand for nurses and primary care physicians…AND Hearing Health Care providers! Effective hiring will continue to be a critical area of practice in addition to offering the best benefits packages, so that you can attract top talent.
Data Security – will continue to consume more time and attention, forcing more regulators to step in, as last year saw many data breaches that exploited healthcare records; eight of which exposed over 500,000 records and three exposed over a million. You must factor higher IT and cybersecurity costs into your budgets, moving forward.
If you haven’t scheduled your annual planning day, now is the time to get it on the calendar. My team likes to take a day or two out of the office and go somewhere fun and relaxing. Sometimes we go down to the country club and other times we simply rent out a cabin and get away from the office so we can think about a bigger future, outside the constraints of the physical workplace. We speak about trends like these and constantly ask how we can do things better for our patients.
All six of these trends will affect your practice, both now and in the future. The offices that are prepared to deliver more value than the competition and do so inside a convenient delivery model are the practices that will enjoy tremendous success moving forward.
* Every year or two, I take a day with top-level clients to talk about the future of the profession. It’s certainly not too early to plan the next date. If you have an interest and want to join me for a discovery day, where you can see what me and my top clients are doing to leverage these trends (surfing the wave instead of fighting it), then express your interest to one of our certified trainers and coaches at email@example.com and let’s make next year your strongest yet.