The dental industry has lost another manufacturer. LSM, an equipment company from Oregon, has sent a letter to vendors announcing that the company will be liquidated. I am not sure that this is the start of something, but the industry does seem to have too much equipment manufacturing capacity. Add to that an influx of imports from China, and you can see an ugly picture developing. A few years ago, it was easy to sell “productivity” by convincing the dentist that new equipment would help them practice more efficiently, so they could see more patients and make more money. Now we have a shortage of dentists and baby boomer generation needind all kinds of dental procedures, so it does not seem to me that dentists need new equipment to get more business. Equipment technology has not changed substantially since the J-chair was introduced over 50 years ago. We are also seeing some trepidation on the part of patients. High gasoline prices and housing market jitters force patients to postpone dental care, and this may be at their peril. There is now too much evidence linking poor oral care to poor systemic conditions. Every manufacturer should view the dentist, not the dealer as their final customer. Not every equipment manufacturer may survive, but those that do have an obligation to providing the type of product that encourages dentists to invest in a working environment that is safe and comfortable for their patients. Since it does not look like equipment will change anytime soon, this is a way to help insure a financially stable future for all concerned.
Now that the spring convention season is winding down, heading into the summer months usually means a summer slowdown in the dental industry. But hasn’t it been slow since the beginning of the year? Are we finally beginning to see the dental industry grinding a bit? When you think of the way we do business, there seems to be a group of factors that do not bode well for the near term. Conventions have become an economically-inefficient way to demo and sell product, especially equipment. Travel expenses are increasing because of the high cost of gasoline. Equipment design, other than color and materials, has not changed much in 40 years. Exciting new technologies like cone beam are horifically expensive and the end user is making a lot of money because there are too few dentists and more than enough patients. What can you do about this? I would give you some answers, but as I consultant I get paid for answers. Truth be told, I don’t have all the answers. The best advice I can give (for free!) is to identify your niche and do the best you can to stay in it. Like a vein of gold, your niche can be narrow, just be sure it’s long. Be sure your sales reps and your customers understand, as well, what your company’s primary focus is. Tell them about it as often as you can.
We have worked with all kinds of clients, from an individual dentist who specializes in technology integration and is now known throughout the industry as “The Digital Dentist,” to a global conglomerate who a few years ago was considering making a purchase in the dental industry and is now a major player. Along the way, we’ve noticed that our clients, no matter how big or how small, fit two simple criteria:
1. They need help
2. They are willing to admit they need help
As you might guess, there is no shortage of people who fall into the first category. The second category, however, is another story.
A willingness to admit the need for help requires a combination of insight, self confidence, and modesty. Just as there are men (sorry, but it’s true) who will drive around for an hour rather than ask for directions, there are dental industry executives who will continue business as usual, watching their business erode or at least failing to take advantage of opportunities rather than admit that outside expertise might provide some fresh approaches, new connections, or different directions.
Interestingly, I have found that the clients who are most willing to accept help are often the ones who are most successful. It’s not that we have all the answers, it’s that these are the executives that are open to new ideas–any new ideas. They listen to us but they also listen to their managers, business associates, competitors, and industry leaders. In short, they gather all the information available to them before making an informed decision, rather than just relying on their own insular thinking. They are willing to step outside their business as usual viewpoint and consider a few “what ifs.”
Last week I had the opportunity to play in the DPR golf tournament. It is a great event that brings a lot of dental industry veterans together for a day of golf and comraderie. It is interesting to talk to everyone and get different takes on what is going on with our business. Although everyone does not agree on everything, the one thing where you can find a consensus is that consolidation has not been the best thing to happen to our industry. Consolidation has meant fewer dealers, and fewer manufacturers and has resulted in alliances that often make it difficult (and more expensive) for smaller companies to do business. Even the industry trade associations have merged.Those of us who are longer in the tooth miss the kindler, gentler times, but this may mean our time is coming to a close.
Despite what some of us old guys may think, our industry does remain strong, and alliances and business relationships forged over many years continue to pay off. Those who will be the most successful are those who recognize the changes and re-orient themselves to take advantage of them. New electronic outlets mean information gets to potential customers much faster, and since communication has been the lifeblood of our business, this is a good change.
If only somebody could figure out what to do about those stupid dental meetings!
Last night I was playing poker with my son, who is home from college. We played a game called “Up or Down.” As each card is dealt, the player chooses whether to have it dealt face up (so the other players can see it) or face down. Only one card can be down at any time, so by the end of the deal the players can see four of the five cards in every hand and often have a pretty good idea what the “hole” cards might be. After winning a rather large hand, my son pointed out to me that I was paying too much attention to my own hand and not enough to what the other players had.
Believe it or not, this brought to mind competing in the dental industry, or really any industry. Many companies are self-focused and develop their products, pricing, strategies, promotions, advertising, etc. based on their own products and their own goals and objectives. They (hopefully) have a general understanding of their competitor’s products, but do not necessarily pay strict attention to their competitors’ actions. Yet, your competitor’s situation may affect your future even more than your own.
Suppose, for example, that you see an opportunity to improve upon a commonly used product. You focus your efforts on creating differentiating features, developing new sources that bring the price down, testing the product to make sure customers appreciate the benefits and indicate a willingness to buy at your price point, and developing a knockout ad campaign to launch it. Meanwhile, one of your competitors has been at work too. But the competitor has gone a different route, developing a piece of equipment that eliminates the need for your shiny new product.
The flip side of this is when you expend energy going head to head with a competitor, developing products with features that have the advantage over their product’s features, pricing relative to their pricing, trying to outfox them in the market, only to find that their hand wasn’t so strong afterall. By not reacting, you would have sold more at a better margin and not been sidetracked (perhaps allowing another competitor to gain ground).
Of course it’s not always easy to find out what competitors are up to, particularly with regard to product development. But be alert to their activities and you may pick up information that will give you an indication of what their “hole card” might be. Have your reps alert you to any changes in the way their reps are selling against you. Look for changes in dealer relationships, company structure, or marketing direction. Is a competitor suddenly gaining or losing ground in a particular category? Have their marketing expenditures changed? Have they made changes to their corporate structure that give more emphasis to a particular market or distribution channel?
In marketing, as in poker, paying attention to everyone’s position, not just your own, is the key to a winning strategy.