Inside Dental Technology
February 2016
Volume 7, Issue 2

Murphy’s Law: Management Reports

Three statistics you can track to help your business

By Mark T. Murphy, DDS, FAGD

Eight pounds and 20 inches! From the average newborn, through myself at my last physical (20 pounds overweight and 6-foot-3), we get prodded, probed, tested, and measured from head to toe. Measuring is one thing, but making sure we are tracking the right things is another. I would like to propose three metrics that dental laboratories do not commonly track, and then defend why they should be measured.

Three-Month Rolling Average Change Report

This is a simple calculation of the percent change in revenue per dentist from the average for the previous three months. If a clinician drops 50% and was not on vacation, you should react immediately. If you wait until they drop to zero, solving whatever the problem was may be as hard as acquiring a new dentist-client.

Similarly, if a dentist’s numbers are significantly more than the average this month, call them and make them feel good about how much they have spent with you over the past month.

Make the “up” calls first and reward yourself; then dive into the drops. Don’t call regarding small changes. If a client regularly has huge swings because they only send big cases to you, don’t call at all. It’s not just math. You need to think!

Monthly Average Laboratory Bill per Dentist

The average general practitioner generates just less than $800,000 in revenue per month. If 6-8% of that goes toward laboratory expenses, they should have monthly bills totaling approximately $4,500. Remember, the average clinician uses just over three dental laboratories, so their average bill from you should be approximately $1,500 per month.

When you know what each clinician is spending, you have a pretty good idea of how engaged they are (or are not) with your laboratory. When you execute strategies that drive cross-selling, you can increase those numbers by several hundred dollars per month.

Programs such as TravelFlo (travelflo.com) incentivize dentists to spend more with one laboratory so they can earn rewards. That incremental income is so valuable that it is easy to justify the small cost of the rewards program. There is no fixed cost associated with it, so when you set the entry level for rewards above your current average, you win big time. Credit card points only build loyalty with the credit card company, not you. Dentists can take that card and walk it down the street and still get rewards — from another laboratory. I would take the card and pay TravelFlo, and build it into your fees over time. It is a cost of doing business.

Revenue by Dentist by Product

The example above certainly helps increase your client's monthly average spend. Another driver of that number is the ability to cross-sell existing clients into other products you have.

Many full-service laboratory owners tell me stories about clients who were unaware that their laboratory handled removables (or implants, esthetics, etc.). That is a missed opportunity.

If they do know about all of your services, you can target the conversations, promotions, discounts, etc. to specific products for select clients who are not using that item. If you have a dentist who is only using you for anteriors, you could offer a special to try your posteriors. Your visits and conversations could focus on that, or you could provide a trial at a fee that matched your competitor during a temporary phase while you demonstrated a better fit or seating time. Sell them something they are not buying now.

I am not suggesting you stop running or reading your current report mix. Rather, consider the management potential of these three reports when you are prioritizing what you monitor and how to use it.

Data and information are most useful when we can make better decisions and choose more effective actions. Knowing how tall you are and what size shoe you wear won’t help you lose weight; measuring the calories you take in and the calories you burn could. Maybe you will see a new, slim and trim me in Chicago this year. I can create metrics for that, but I can't change my height!

Mark T. Murphy, DDS, FAGD, is the Principal of FunktionalTracker.com and Lead Faculty for Clinical Education at MicroDental Laboratories.

Murphy’s Law Monthly

Read the Murphy’s Law column from Mark T. Murphy, DDS, FAGD, every month in Inside Dental Technology. To read previous months’ columns, as well as other IDT Inside Business articles, go to insidedentaltech.com/business.

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