Retail Metrics: Opportunity Knocks Every Time the Threshold Darkens

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When a customer walks in the door, Mark Schulein sees opportunities. The first opportunity is to create an experience so memorable that the customer will not only want to return, but will also be inspired enough to tell family and friends about the visit. Second, he sees numbers. For Schulein, each customer is a chance to apply a series of metrics that are carefully watched in order to plan course corrections that will have an impact on the future results. Schulein does not have a medical office. In fact, he didn’t even go to medical school. Schulein is the president of Crown Ace Hardware, a successful 16-store hardware enterprise, with locations in two states, that is the largest Ace Hardware chain in the western United States. Crown has been successful, in spite of intense competition from much larger companies, partly because Schulein and his management team have remained nimble and partly because they are constantly watching numbers. Those customer numbers include:
  • the average ticket, which is the average dollar amount that each customer will spend in a particular store during a visit;
  • the number of tickets (or transactions), which determines the level of customer visits;
  • the overall sales per store on a month-over-month, year-over-year basis; and
  • employee productivity, which helps determine the level of staffing required in each store.
There are other key indicators, including sales per square foot and sales by department, but with these top four, Schulein can get an instant reading on the state of any store. “Every retailer has a different way of looking at the metrics that helps them make intelligent choices about the future,” Schulein says. The metrics, sales strategies, and planning used by Schulein and other retailers have applications in an outpatient imaging center, and while it is not an apples-to-apples comparison, the knowledge gained from the retail setting can be instrumental to the future of your business. The biggest difference is, of course, that in many cases you are saving lives, not kitchen sinks, and that even when you are not saving lives, you are assisting in important health care decisions. This point must be underscored: While reviewing imaging center metrics has value, you are still dealing with patient health—and no patients or referrers, regardless of the cases that they send, should ever receive less than the best possible attention and care, each and every time. At the end of the day, however, yours is still a business. Without a realistic business model to follow, there is the danger of losing control over the strategic direction you need to take to stay viable. Three Customers In an outpatient imaging center setting, there are usually three customers: payors, patients, and referrers, and all must be monitored for satisfaction and profitability on a regular basis. The most important leg of this stool is the referral community, for without their patients, existence is difficult, if not impossible. The key is to look beyond scan volume and toward revenue generation, but due to delays in payments and fluctuating reimbursements, the metrics for your referrers are not always easy to review. Your top referrer, for example, may be sending you dozens of radiography cases in a given period, but if reimbursement levels are low, there is less reason to market to that office than to one that has the potential to refer more profitable cases. The metrics for your imaging business to watch are similar to those monitored by Schulein. The average patient value (or ticket): This will tell you whether a shift to attracting more scans having higher reimbursement levels is paying off well. To determine this, take a period of time and divide the amount of net revenue generated by the number of patients seen. You can also determine the average referrer value using the same formula. The number of patients seen: Again, take a specific period of time and compare this number to that for the same period in the previous year. If you combine it with an effort to attract cases having higher reimbursement, you may drive your business to a point where you are seeing fewer patients, but generating more revenue. The overall sales per location on a month-over-month, year-over-year basis: As you shift to cases with higher reimbursement rates, a rise in this number will grow revenue more sharply than ever before. Staff productivity: This is the amount of revenue generated at a specific location divided by the number of people at that location. Comparisons can help you determine whether you are overstaffed or understaffed. Crown Ace Hardware not only rewards its best customers, but markets to them. These frequent Crown customers are the easiest ones to get back into the business because they have already indicated satisfaction. Due to Stark laws, rewarding your referral base is severely restrained, but sometimes, the simplest acknowledgement, such as an occasional thank-you note, can be quite effective. If rewards are limited or impossible, marketing to referrers then becomes the method used to maintain healthy relationships. For this, a steady stream of reminders of the benefits of referring to your business (conducted in a tasteful, inoffensive way) will help keep your business visible and set you apart from any competition you may have. Delivery of this message by a practice representative has proven to be an extremely effective way of sustaining healthy relationships. The most important use of your metrics is to help determine one extremely important strategy: where to go to attract additional referrals. Using profitability metrics, it could make sense for you to pursue those specialties that are more inclined to refer patients and those cases that generate a higher ticket, as Schulein would say. Thanks to evolving reimbursement standards, using numbers as strategic business tools is no longer optional. These metrics, however, must have the proper place in your business, not as the deciding factor for specific direction, but a tool for guidance. “Looking in the rearview mirror is easy,” Schulein says. “Looking forward is the hard part.”