Inflation, Recession, What’s Next?
Recession-resistant is not the same as recession-proof. How do reps assist customers in the current economic climate?
Supply chain issues, workforce shortages, inflation, and rising interest rates are currently hot topics of discussion with the U.S. economy and the direction it’s headed. Of course, there is a political spin on everything as to why we’re currently experiencing an economic downturn. But, no matter your political stance, we cannot blindly ignore the warning signs of change. Prices have risen in most sectors. Housing prices are at an all-time high, and supply chain issues have plagued nearly every industry, including animal health. Where is all this leading?
The animal health industry has often been described as recession-resistant. Food animal production must continue, and most pet owners view their commitment to their pets the same as their commitments to family members. These facts make our industry a bit more resilient than others.
However, recession-resistant is not the same as recession-proof. A recent survey conducted by the pet care site Rover indicates that animal shelters across the country are seeing more pets surrendered for factors like the cost of housing or financial constraints. How do we prepare for the impact of a recession? How do we assist our customers in preparation for what is already started?
With product prices rising across many animal health segments, we see many pet owners searching for more affordable ways to procure their pet care products. This puts an additional strain on veterinary practices and their staff to be knowledgeable of the pricing in the market for the products they offer or recommend. The internet has become the tool of choice for pet owners to research alternative sources outside of the veterinary practice. Many pet owners choose to migrate to cheaper brands of treats and food to continue to provide for their pets. How does that mentality play out in relation to medications and veterinary care?
We know that preventive care is far less expensive than the treatment of a sick animal. Often, prevention methods are some of the first pet care expenses to be ignored by pet owners. In tight economic times, it’s less likely that pet owners will bring their pets in for wellness checkups, dentals, and other preventive care offerings.
Knowing your customer’s business and their purchasing habits is very important, and one of the most effective tools in your arsenal when it comes to managing your customer’s needs and expectations.
It’s time to take a minute and analyze what is currently happening within the practices that you serve. Look at a couple of years of history and see where they may be altering their purchasing habits. Don’t just focus on volume. Are they choosing alternatives?
Be proactive to help your customers cope with the added strain of pricing pressures, competitive pressures, and pet owners that are looking to reduce their pet care spending. Focus on key categories of products when researching your customer’s history. Good indicator categories for companion and mixed animal practices are flea and tick products, pain management, antibiotics, and in-clinic testing products.
If you notice a downturn in one or more of these categories, it should be worth having a discussion with your customer about it. Work to find out why the practice staff thinks the reduction is happening. Understanding what factors your customers are facing will help you to assist them in dealing with some of the outside pressures. Let them know that they’re not alone. Try to provide any anecdotal information you can about the number of practices you have spoken with experiencing the same thing, without giving up specific practice information. This tactic also allows you to start a conversation about potential ways for the practice staff to combat the recent trends.
Part of the solution
Starting these conversations as a true partner to the practice is important. If they view you as a person trying to sell them more, you will have become part of the problem versus part of the solution. Making observations from historical purchase research enables you to ask open-ended questions about the changes in their purchasing habits. Talk about the trends that are appearing outside of their practice and ask them if they are experiencing the same trends. Once you have a rapport started that makes the practice realize you are interested in their business and their struggles, you can easily transition to potential cost-saving methods for the practice to entertain.
Promotions are often volume-based discounts and rebates, or discounts and rebates achieved by bundling products. These can be difficult to present when the practice has transitioned from a product “want list” to a product “needs list.” Knowing what your customer needs and typically uses can empower you to have a different conversation when presenting these promotional opportunities. If you tell them what they historically have purchased and then tell them how the volume or bundling makes sense based on their usage, you have a much better chance of them seeing this as a benefit versus an upsell. Either way, you will be presenting opportunities based on their practice needs, which gives you credibility.
Alternative brands and generics are another way for a practice to compete with lower-cost providers and still offer the same great service to their customers. Generic products are required to be bioequivalent to the premier brands. This should give the practice a sense that they will provide the same care at a lower cost. Many practices will bring in a lower-cost alternative product to offer when a client expresses concern for the price or indicates that they will go shop the internet to fill the recommendation or prescription from the veterinarian.
Knowing the practice history is important here also. When there is a reduction in the purchases of a key premier brand, it’s important to note if there are alternatives or generic versions that may be less expensive. Telling the practice that you can provide an option that may help them to retain their business or improve their margin while offering the same care will also position you as their true partner. Putting their business first, doing your homework, and framing the conversations around their business is a great way to help your customers navigate these challenging times.
We are told that things will get worse before they get better. Now is the time to start practicing and researching to be the best partner that you can be.
ABOUT THE AUTHOR
President of Same Page Consulting Inc.
Photo credit: istockphoto.com/anilakkus