Sakaduski Marketing Blog

In an economy where restaurants are going begging for patrons, why are there still people in line at P.F. Chang’s?

According to an article in Newsweek, at the first sign of business softening, the restaurant’s management looked at every single element of their business that didn’t touch the patrons or the product.  They cross-trained employees to perform more than one job, hired an expert to develop a new scheduling tool to manage staffing more efficiently, and did everything EXCEPT fall into the panic-discounting trap. 

While streamlining operations to reduce costs isn’t exactly new news, focusing on process improvement rather than just revenue boosting is paying off for P.F. Chang’s, whose stock has doubled since November.

There are two sure-fire ways to know when convention attendance is down. The first is to be able to find a seat in the Javitz Center Food Court at lunchtime on Sunday during the New York Meeting. The second is to be able to find a seat in the shade at the Grill Court at the CDA meeting in Anaheim; both were in abundance this time around. (The third, some would argue, is the length of the line at the Glove Club booth).
In speaking with a number of equipment and merchandise vendors at the show, the mantra seems to be “We’re down about 20%”. The CDA meeting did little to close that gap. Everyone in the dental industry wants to the business to recover to 2006/2007 levels, and they are hoping that there won’t be another October surprise in the fourth quarter this year. If I had the answer, I would not be here finger-typing this blog! There will be some recovery, but some recent events, like Midmark’s acquisition of Progeny, might mean that everyone won’t recover at the same pace. Some companies are positioning themselves for the run-up. Others are asleep at the switch and, for one reason or another won’t know the recovery has occurred until after the recovery has occurred. How can you tell the difference? Watch which companies are partnering with others. MCC/PSA, and VELscope/Den-mat are two examples. Who is upgrading their sales force by hiring better reps? Who is using more electronic advertising? Who is upgrading their websites? Which dealers are supporting new technologies and are trying to convince their dentist customers that the time to add value to the practice is now.
Like other industries, the dental business has to get leaner. There are simply too many suppliers chasing fewer buyers through a shrinking distribution system. The model we use is an old one. Change is a word that has been worn out lately, but we finally are facing change whether we want to or not. Remember, failing to plan, is planning to fail.

Today is the ninth anniversary of the day we incorporated Sakaduski Marketing Solutions. We’ve worked with dozens of companies during the past nine years, from one-person start-ups to gi-normous Wall Street Firms. We helped a global conglomerate whose name was virtually unknown in the dental industry learn about the market before it stuck its toe in the water in a big way with the acquisition of Kavo.  We put a small whitening company on the map virtually overnight with strategic, cost-effective visibility.  Oral Health America’s Gala took a leap the year we started handling their publicity (on a pro bono basis).  We maintain long-standing relationships with Pulpdent, Lares Research, Mydent, Adstra, and OSAP, among others. 

Yesterday, someone we highly respect commented that we “take the high road.”  I like to think that’s how people view us.  If we can’t help, we say so.  We try to keep our fees reasonable, and consider the size and resources of the company when setting the price.  We avoid conflicts of interest, and let people know when we have a financial arrangement with a company or service we recommend. We do our fair share of pro bono, volunteer, and community work.  We’re not perfect, but we do our best.

Recently, we formed a partnership with Global Practice Solutions to offer small to mid-sized companies a managed independent sales force.  This endeavor will complement, not replace, our business, marketing, and communications services.  The recent launch of the Trimira Identafi 3000 Cancer Screening Device is an example of the kind of synergy we are now able to offer our clients

We appreciate the support we’ve been given over the years by our many friends in the dental industry and hope to continue to maintain these friendships in the years to come.  It’s been a great nine years.  Thank you.

When was the last time you revamped (or even looked at) your website? Today’s economic situation has many people (even dentists!) doing a little more shopping around before they buy. In the dental industry, that shopping around is done on the Internet. Even if you sell through distribution, you would be wise to think of your website as your storefront. It is the place where you have a nice big window for displaying your company’s advantages.

The first thing your website should do is convey what your company is all about (and I don’t mean just a list of your products). Is your company highly specialized, or the experts in a certain niche? Look at Hu-Friedy’s website:  http://www.hu-friedy.com  There can be no mistaking what this company does, even from a single glance. Maybe you are the cost-effective alternative to higher priced brands.  Check out Mydent’s website: http://www.defend.com. 

Your website should provide all the information necessary for making a buying decision, even if you are not taking orders online. The products’ features (and more importantly, benefits) should be clearly outlined, as well as the nuts and bolts of sizes, configurations, compatiblity, etc.  Ideally, there should be educational information as well: How to use the product, clinical documentation, case studies, preferably including information of interest to different audiences (dentists, hygienists, students, etc.) and plenty of good quality pictures.

Your website should also showcase your company’s other advantages. Do you provide extraordinary customer service? Hold educational/training sessions? Provide in-office assistance? How good is your warranty? Are you active in the dental industry or your local community?  Have you considered all of your audiences? If Spanish were your native language, wouldn’t this be helpful:  http://whipmix.com/espanol.aspx

Finally, keep your website current. If you use e-newsletters, post the newest one on your site. Feature any current promotions right on the home page. Add new products promptly–the moment people hear about them they will go to your website! React to any questions or concerns about your products quickly. Remove dated information. If one thing is out-of-date, people will have to question everything on your site because they won’t know if it is still accurate. Place downloadable copies of your literature online. That way, customers (and sales reps) can access them immediately.

A good website makes your company accessible. Make sure you have a website that is easy to use and gives a clear and accurate picture of your company and its products. The shoppers are coming!

The people at Novalar made a big splash at the Chicago meeting with OraVerse, a new product that reverses the numbing effects of dental anesthetic–not immediately, but produces a return to normal sensation in about half the time.  Interesting product, but the first question is: “Will patients pay for this?”  During boom times, the answer would probably be yes.  Americans are known for wanting things faster, faster, faster.  Now?  We’ll see.

The supposedly recession-proof dental industry is, by most accounts, seeing at least a softening of demand, and in some cases, a collapse of demand.  I heard a story in Chicago of a cosmetic dentist who was down to one case a day. 

No doubt at the very high end, money is still not a concern.  And a case can be made that an investment in cosmetic dentistry may pay off at the job interview.  But indications are that many people are putting off not just discretionary, but mandatory procedures.  So, with the numbers of patients dropping, dentists will be looking for value added (read revenues added) for the patients that are coming in. 

There’s money to be made in any market, the secret is finding where. In the dental market, it may be that dentists need to concentrate on mining the patients they have–making reminder calls for missed hygiene appointments, perhaps offering discounts here and there, and making sure those who can afford it are completing treatment plans.  On the industry side, the key may be to provide dentists with products that allow new, inexpensive procedures that have high patient appeal, and those that help make dental practices run more efficiently and cost effectively.

There were a few advertising opportunities that did not get taken during the Oral Health America Gala in Chicago.  These are being listed again to help raise money for OHA.  Starting bids are less than HALF the market value.  This is your chance to snap up pages in great publications such as Compendium and Dental Lab Products, as well as online advertising opportunities such as 1-800-Dentist at a tremendous discount, all while contributing to a great cause.  Please call me immediately (610-388-2560) for a list of the opportunties and the starting bids. 

We had some requests at the Chicago Meeting to re-run this blog, which I have updated.

The Field Guide to Convention Wildlife

From years of attending dental industry conventions, Joe and I have compiled this handy field guide to the species frequently observed in that habitat. See if you recognize any of them:

1. Doctorus obliviata (The Wondering Doctor) – usually spotted walking slowly in a serpentine pattern, gazing up, without any clue as to what he’s doing or where he’s going.
2. Papyrus accumulata (The Literature Collector) – can be identified by its bulging bag of brochures, coupons, flyers, and catalogs, most of which will end up in a recycling bin at the end of the day.
3. Pathus coagulatii (The Aisle Clogger) – generally seen stopped in the middle of an aisle, or even better, an intersection, engaged in a long and involved conversation, usually including hand gestures that jab passersby. This behavior is often preceded by a sudden stop, so as to force a collision with those walking behind.
4. Wheelium rotatus (The Wheel Spinner) – a dentist, usually one netting $400k+, who will stand in line for 20 minutes to spin a wheel for a pack of gum.
5. Baggus tripata (The Bag Dragger) – an individual who drags a wheeled suitcase around the show floor, while others trip over it.  Particularly common during peak periods when traffic is most heavy.
6. Bambino strollifera (The Stroller Pusher) – an increasingly endangered species due to new regulations at some shows.  Can be found pushing a stroller containing a screaming child through the hall, accomplishing both to clog the aisles and inflict various injuries on those who collide with it.
7. Baggus pendulumnus (The Tote Bag Swinger) – Closely related to Baggus tripata, this species can be distinguished by the pendulum-like motion of a full tote bag, which often results in clipping those walking in front precisely in the backs of the knees.
8. Samplus grabbiosa (The Sample Grabber) – Most often recognized by the darting motions of its hands as it scoops samples off counters while walking by.  Has excellent vision. If any boxes behind the counter are in their range of vision, they will most definitely inquire about its contents and ask to see what’s inside. Juveniles of the species are particularly prevalent.
9. Phonus blatherus (The Cell Phone Yakker) – Easy to spot as this species is generally oblivious to its surroundings.  May be stationary or transitory.
10. Juvenilis non-babysitterus (The Child Dragger) – This species mistakenly anticipates that its young will enjoy attending a dental convention and when it becomes apparent that the juveniles are becoming unmanageable, they entertain them by encouraging them to test various pieces of dental equipment, particularly those that can be stained, misaligned, or broken.
11. Exhibitus ripofferii (The equipment stealer) – Rarely sighted, but known by the disappearance of equipment and display materials from exhibit countertops. Much entertainment can be had by affixing clear fishing line to appealing items before placing them in tantalizing positions on the counter and attaching the other end to large rocks, load-bearing pillars, or the company president’s legs.
12. Conventiana comantosa (The Worn-Out Conventioneer)  –  This often overlooked species can be recognized by its bloodshot eyes, zombie-like walk, and rumpled plumage. Having attended far too many meetings, and been at the Sirona party until the wee hours, this sad species can be seen passing through the hall in a hypnotic state.
13. Dentista fullofhimselfus (The Dentist Blow-hard)  –  A predator species guaranteed to clear out any exhibit booth, this species perches in front of the exhibit and warbles loudly, primarily for his own amusement, for long stretches of time.  Other species flee, allowing this species to rule the roost.

The Chicago Midwinter, by most reports, was a surprisingly successful meeting.  Our clients reported brisk sales on Friday, with the usual tapering off as the meeting wore on.  Most talked about products seemed to be the A-dec chair, a gorgeous work of art and a bold move on their part; OraVerse, an injectable pharmaceutical product that reverses local anesthetic (halving the time of numbness); and the Identafi 3000 oral cancer screening device (http://www.trimira.net), which we are delighted to be involved with through our association with the GPS Clinical Sales organization (www.gpsclinicalsales.com).  This product is deservedly receiving a lot of buzz, and represents the next generation in oral cancer screening.  The Oral Health America Gala (a pro bono account of ours) was also successful, so even on the nonprofit side, the predictions of gloom and doom seemed to fall away to some extent.  The ADA in Hawaii may be another story…

The economic bad news is coming from everywhere. It may take a while to figure out how it affects the dental industry, but eventually it does. This morning, a major market leader announced an employee layoff. The word is that is was done because of slumping sales. That economic news has immediate impact on the dental industry. When the clear leader has sales woes, that means there are sales woes. No more talk about a recession-proof industry; hard times are here. Like other industries, ours has its own unique set of economic markers. Patients had money to spend on discretionary procedures. Anything cosmetic: whitening, veneers, adult orthodontia, implants, to name a few, meant more procedures and more income for the dentist. The dentist now buys more from the dealer. Digital pans, CEREC, and other high ticket items mean more profit for the dealer and more business for the manufacturer. The manufactururer adds capacity, hires more salespeople, attends more tradeshows and is willing to give more to the dealer to keep the end user happy.

What happens when the well runs dry? Patients lose jobs and postpone or cancel procedures. The dentist sees the cosmetic bubble bursting and decides not to invest in the the practice for the short term. Dentists are consumers too, and they begin cutting back on the number of tradeshows they attend. Dealers begin to reduce inventories in the light of reduced purchases from their customers and begin to demand bigger financial contributions from the manufacturers to cover the cost of catalogs, sales meetings, and promotions. The manufacturer, who has already reduced costs by integrating lean manufacturing practices and outsoucing components to overseas companies, now has no choice but to lay off employees to survive, and that gets us back to the beginning of the story.

Are there ways to fix the problem? Sure, but it means shifting the paradigm, thinking outside the box or (insert metaphor here).

Over the past 10-15 years, the contol of the dental business has shifted from the manufacturer to the dealer. Years ago, the dealer did a lot for 40%. Now they want the manufacturer to pay for their catalogs, sales literature, sales meetings, yet still give 40%, or more, discount. The money is just not there anymore. The manufacturer needs to determine the value the dealer brings to the transaction and pay accordingly.

The manufacturer needs to consider two key aspects of their business: tradeshows and sales representatives.  Regarding tradeshows, how many is enough? Is Yankee or Hinman worth the investment anymore? The ADA is in Hawaii this year. Are you willing to sacrifice your own vacation, but subsidize dentists’ trips to Hawaii by buying booth space at this show? And have you checked hotel prices in Cologne? Try skipping a bunch of state and local meetings and see what happens to your sales? MY bet is they don’t go down. The last issue is sales representation. If you are a small to midsize company ($5-25 million in sales) should you be employing dedicated sales representatives and owning all of that human capital? Dedicated reps mean base salaries, commissions, bonuses, benefits, and travel expenses. Although some dealers are loathe to deal with independent reps, most dealers are not. There are a number of organizations that can hire, manage, pay, train, and motivate sales representatives. This results in sales coverage for the manufacturer at a fixed cost of sales.

Lastly, there is the end user. It is time for dentists to realize that they must increase the value of their practices and raise the standard of care to their patient bases. They can do this with little investment. New products such as devices for oral cancer screening and saliva tests for periodontal disease and HPV are new areas to increase patient awareness and to provide new sources of income for the practice. Waiting for the bleaching market to come back is like waiting for Godot.

A lot has happened in the past few months which will cause a lot to happen over the next few months. And what is going to happen will be big, so if you were ever considering some big changes in your business model, the timing may not be better.

In the February 9th issue of Newsweek, Craig Barrett, the retired chief executive officer of Intel, talks about the fact that market share is won or lost during transitions.  And if ever there was a period of transition, this is it.  He points to the interest in fuel-efficient cars that allowed Toyota to take share from American automakers. 

He makes the point that although it is responsible for companies to cut back during times of financial crisis, those that cut back on research and new product development “do so at their peril.”  The bottom line is that you cannot save your way out of a recession, you can only invest your way out.

It’s difficult to take a long-range view when your sales are dropping, but the companies that survive this downturn may well be the ones that invest in innovation and competitive advantage.