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All Customers are NOT Created Equal
If we know the different needs and expectations of customer groups, we are much more likely to have a successful business model.
What do the Lexus, Toyota, and Scion brands have in common? They are all owned by the same Japanese automobile manufacturing company. Just like General Motors (GM), Ford, and Chrysler, Toyota presents three distinct brands for sale to the North American consumer market because all customers are not created equal. The same holds true for our industry. Our different client segments have different needs, wants, expectations, and patients. You do not really expect Lexus quality and service at a Scion price. Conversely, you would be upset if you paid for a high-touch, exceptional-quality product and received average treatment. Just as in the automobile industry, it would be very difficult to be all things to all people in the laboratory business. Glidewell directs their marketing efforts toward a very different market segment than does the boutique laboratory. It is not that one is right and the other is wrong, or that one is better than another. Rather, they are just different.
Know Yourself First
If you were to write a business plan for your laboratory and went through the important steps of strategic planning, you would include a thoughtful analysis of the marketplace you hoped to serve. Potential investors avoid a business that cannot define its target market or ideal customer base. Knowing what it is that we want to be and whom we want as customers or clients is perhaps the most important first step in starting a business. We can use that construct to define our product mix, level of service, brand message, and focus our marketing on the ideal clients. Remember there are no wrong answers. It is okay to strive to position your laboratory wherever you want. You just have to decide where that is. Let’s take a look at a $1,000,000 laboratory model and play with three (of the many) different variables that impact the market segmentation and focus for them.
To yield $1 million annually with 250 working days, the laboratory would need to generate sales of $4,000 per day. Again, to keep things simple, we will assume that the laboratory is only crown-and-bridge and only sells one type of restoration. If we charge a very boutique-like fee of $400 per unit, we would need to market, sell, receive, manufacture, ship, and deliver 10 units per day. We can begin to paint a picture of the laboratory, technician team, workflow, number of clients, materials, and everything else required to make that business successful. What happens if the price point is $100 per unit? Now we need four times the number of units (40) to arrive daily and flow through the laboratory to hit $4,000. This author cannot tell you which one is right for you, but the expectations and deliverables are sure to be as different as the four-times production ratio implies. Material selection, hand layering versus digital manufacturing, use of magnification, quality control cycles, and many other measurable systems would be different for each of these laboratory models. Not right or wrong, just different. “If you build it, they will come” does not mean you should open a Lexus dealership in the middle of northwest Detroit. That would likely be a recipe for business failure.
Share of the Chair
Starting with our model $1,000,000 laboratory again, how many clients does it take to fill this village? If the dentist sent us 100% of their laboratory work, and assuming the average dentist laboratory bill is approximately 8% of $750,000 annually or a total of $60,000 per year ($5,000 per month), we would need 16.67 doctors to reach one million annually ($5,000 x 250 days x 16.67 doctors = $1,000,000). But dentists use an average of 3.1 laboratories, so the average would be closer to 3 x 16.67 or 50 dentists making $1,667 per month (or 83 dentists making $1,000 per month.1 It would probably take 125 to 175 doctors to attain that average. If you never thought of that, you are not alone. Most small business owners never do. The typical thinking is “if they build it, someone might come,” or “all customers/clients are good clients.” What a difference the relationships would have to be in the two models above. Do you want 20 close friends that just happen to be clients or 150 people who you barely know? Again, there is no right answer for everyone. Your vision for who you want to be should guide you.
If we looked at two easily observable customer traits, you can see how important communication styles can be. There are numerous personality, communication, and socially styled metrics that can be used. By creating a simple two-by-two grid of assertiveness and responsiveness, you can see how important matching your target customers’ social style to your own can be (Figure 1).2 The horizontal axis is assertiveness. Low or ask assertive is on the left and high or tell assertive is on the right. How well we show emotion and responsiveness is along the vertical line. Emotionally responsive is on the bottom and controlled emotional responsive is on the top. Dentists are more introverts than extroverts and there are more analyticals than amiables or drivers. Expressives are the lowest count found in dentists. All styles are good. The point is, what is your style and whom would you best relate to? If you work on that, you will have less stress and more success in managing your clients, team, and even your friends and family. Remember to know yourself first.
1. American Dental Association Survey Center. Survey on the Use of Dental Labs (SC). Chicago, IL: American Dental Association; July 2009
2. Bolton R, Bolton DG. People Styles at Work: Making Bad Relationships Good and Good Relationships Better. AMACOM. 1996: 84
About the Author
Mark T. Murphy, DDS, is the vice president of sales and education for Microdental-DTI.