A guide to marketing your lab's services: laying the groundwork | Medical Laboratory Observer | Find Articles

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FindArticles / Health / Medical Laboratory Observer / Sept, 1987

A guide to marketing your lab's services: laying the groundwork

by James Fantus
More Articles of Interest The sour truth about apple cider vinegar - evaluation of therapeutic use Hidden causes of weight gain: If you're doing everything right but still gaining weight, a medical problem could be to blame. Here, five frequently missed culprits behind excess pounds - Health 10 questions your gynecologist wants you to ask: don't be shy; speaking up could save your life Get Ripped in 12 weeks: is your lean bodybuilding physique hidden under a layer of fat? Don't waste another secondshred up for spring with this scientifically designed high-octane training, diet and supplementation program 12 tips for healthy hair: get the shine, movement and softness you desirefast and easywith our expert advice from top pros A guide to marketing your lab's services: Laying the groundwork I owe my success to honesty and wisdom. Honesty means that when you promise a customer something, you'll go to any length to deliver it, no matter what the cost. Wisdom is never promising anything you can't deliver. Promise and deliver--that's the world's shortest marketing lesson. Laboratories should abide by this creed if they want to market their services successfully to a larger clientele. Suggestions in this article and the one that will follow next month rest on the success of a marketing program in use at our company. From its start as a hospital-based laboratory that moved off-site six years ago, the company has grown into Arizona's largest independent laboratory chain, with more than 210 employees. Our company's position continuously improves due to responsiveness to clients and entry into new markets. When marketing programs fail, the reasons often can be traced to vague goals or lack of a sound marketing plan. You must have clear achievable goals, defined strategies, an action plan, financial analyses, and contingency plans if strategies do not work effectively. Marketing goals fall into three categories: Don't lose existing clients, get more business from existing clients, and locate new clients. Limit your overall plan to 10 or 15 goals. Establish goals that can be reached--not pie in the sky hopes--and state each in a single sentence. If you can't say it in a sentence, the goal may not be comprehended by everyone. For example, a goal might be to increase
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A guide to marketing your lab's services: laying the groundwork | Medical Laboratory Observer | Find Articles

3/29/12 3:58 PM

revenues by $1 million. Next, define strategies to help achieve each goal. Strategies also should be stated if possible in a single sentence. Break the goal into measurable strategy segments --for example, "The way we're going to increase revenues by $1 million is to set quotas for additional sales of $250,000 per sales representative, raise test fees by 5 per cent, expand the sales force, and reduce write-offs of bad debt.' Establish a plan of action to narrow down the who, what, and when. You must spell out when the strategy will be implemented and identify the party who must see to it. The action plan for the goal of increasing revenues by $1 million is this straightforward: Sales quotas will be met by Dec. 31 and will be the responsibility of the salespeople, a 5 per cent fee increase will occur March 1 and be the responsibility of the marketing director, the sales force expansion will be completed by June 1 under supervision of the sales manager, and the finance manager should act to improve bad-debt write-offs by April 1. Financial analysis of the cost of implementing strategies and reaching goals is essential. To complete your analyses, use pro forma income statements to demonstrate feasibility; perform a break-even analysis to estimate the point at which revenues will equal costs; and construct budgets to serve as the control mechanism. You can budget per goal, per group of goals, or for the total marketing plan. Monitor the progress of strategies toward achieving goals by holding a quarterly review meeting, and form contingency plans that will maximize progress toward any goals that are not being met. Hold accountable those whose section of the plan is not meeting the target goals. In addition to developing a comprehensive marketing plan, you must organize an effective marketing department and research the market carefully. The director of marketing should report to the chief executive officer. If the laboratory doesn't have a CEO, as in most hospital laboratory settings, the marketing director should report to whomever oversees the entire operation. Avoid the mistake of having laboratory marketing report to the finance department. Marketing efforts might then be restrained because finance generally concentrates on controlling costs. It's also a mistake to have the marketing department report to the chief technologist or technical director of the laboratory. In this case, restraints on marketing would be based on operational reasons: "We can't handle the work; you're making us work too hard.' The marketing department monitors competitors' activities, performs market research for strategies necessary to promote lab services, contributes to service design, and engages in public relations, advertising, and sales. If the sales force is large, the director of marketing supervises area sales managers, who in turn supervise sales representatives. Another essential employee in the department is a marketing assistant who can keep up with all the day-to-day paperwork. Once the marketing department is organized, market research can begin. The aim, to gather information for decision making, can be accomplished by assessing patients, clients and prospects, the competition, and trends in laboratory service:
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A guide to marketing your lab's services: laying the groundwork | Medical Laboratory Observer | Find Articles

3/29/12 3:58 PM

Patient satisfaction surveys. Are patients satisfied with your services and will they tell their physicians if they aren't? I can guarantee they will. Distribute questionnaires to patients when they visit your lab (see Figure I). Client satisfaction surveys. Also ask your clients--physicians, other hospitals, etc.--to rate your services (Figure II). Try to find out through these surveys what it would take in terms of price, turnaround time, or other factors, to sell a prospective service. I recommend that you mail the questionnaires and ask clients to return them by mail. We got more candid responses that way than we did when our couriers distributed questionnaires and picked them up. Few clients ever complained about service when they dealt face to face with a company representative. Competition assessment. Identify competitors and their strengths and weaknesses. Sales representatives can usually provide this information, but sometimes it helps to perform market surveys. Knowing what competitors have to offer should be a number one priority because the better their lab services are, the better your services must be. A direct way to learn about the competition is to visit their laboratories --most organizations are eager to show off their place of business. In addition, contact their salespeople and have them try to sell you their services; then use some of the services so you can better evaluate competitors' operations. Talk with customers of your competitors. If you hire individuals who formerly worked for competitors, interview them for information. More oblique methods of gathering information include writing in for competitors' literature or picking it up at meetings and exhibits. Two laboratory chains are publicly held at present, and you can send for their annual reports and financial statements. Also review trade journals and attend trade shows to see what others are selling. Business trends. Keep up with trends in your area of business. Reading journals like MLO and business and government publications can help you identify important regulatory and market changes. Talk to your own customers, vendors, and competitors, and attend as many laboratory and health care seminars, symposia, and conventions as you possibly can. Once you have sized up the market and your competitors' operations, it's time to price your services. Be sure to price competitively --no other single factor will have as profound an impact on your marketing program as your pricing strategy. First, compare your fees with fees for the 50 most common tests offered by your biggest competitor. This involves the following steps: 1) multiply your average volume for each of the 50 tests by your fee for each test; 2) take the same volume and multiply it by your competitor's fees for each test; 3) add up your column of revenue and your competitor's column of revenue, and calculate the percentage difference between the two totals. Using this method, we found we were charging 4 per cent more than our main competition. If we chose to remain even with that firm, we would have had to reduce fees for all tests by 4 per cent
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A guide to marketing your lab's services: laying the groundwork | Medical Laboratory Observer | Find Articles

3/29/12 3:58 PM

across the board or discount some high-volume tests at a level that brought total pricing down by 4 per cent. As you will read in a moment, we did not choose either pricing option.
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