August 28, 2014Overhead Control
The Myth of the Three Dental Supply Product Propositions
It was 1998.
I worked my dream-job while in high school. The job was flexible, it worked around my sport’s schedule. My best friend’s mom was the manager.
It was a place I could watch as many movies or take home video games to play at the house after I closed at 10:00. (Hey, I had realistic dreams as a teenager)
Yup, I worked at my neighborhood equivalent to Blockbuster.
It was great, I could recommend movies to complete strangers that I thought were good. I was responsible for entertaining people. Their date night or escape from the mundane world depended on the viewing pleasures of a 16 year old kid. I would get so excited to hear from our customers on if they enjoyed my recommendations. (Wow, I’m painting a fantastic picture of myself here)
So here is a real picture of me back then:
Gotta love the senior pics with musical instruments, American flag background, AND cargo pants! (At least I was in rock band, that’s cool)
In 2008, that video store closed down. I was disappointed. I felt like I had a connection to that store even though I hadn’t worked there in ten years.
In reality, I had no connection to the store other than:
- I had placed Star Wars on repeat in the middle of store.
- I received a paycheck.
- I gave my time and energy to the success of the business.
- I wanted it to succeed because it had, in it’s own way, cared for me.
- My best friend’s mom was the manager and without a job. (She immediately found a better job, she was an awesome manager)
Now that time has passed, I realize the closing of the store was inevitable.
Why? The store didn’t adapt to the changing sands of business. One of the reasons I moved from being a “generalist” CPA to a business coach is that I feel in 10-15 years, CPA’s and accountants will be replaced by robots or at the least, the basic accounting and payroll work will be outsourced.
There will always be jobs, but you are already seeing real start-ups offering bookkeeping packages for $125/month. (proof: https://bench.co/pricing/) Let me know if you end up using them, would be interested in hearing how it goes.
In the 90’s and early 00’s, accounting firms tried this approach and failed. Mostly due to communication and business process issues between their foreign counter-parts. With technology today, that gap is gone.
Traditional firms can’t really compete with that price other than by tapping into the other levels of what is called the Three Selling Propositions Triangle.
This is a financial theory that was developed back when the telephone was the hip new thing. It’s incredibly sound, however I feel that the triangle doesn’t stay in tact. It shrinks over time. This is the product triangle:
The theory surrounding this picture is that any business can only offer two of the three selling propositions. Convenience, Quality, or low Price. Pick two.
In theory you can only be the best, at max, two of these. When a customer values one over the other two, they will go to someone who “specializes” in that proposition.
- If it’s convenience and quality, you would have such demand it wouldn’t be worth it to sell it for cheap.
- If it’s convenience and price, you’d have to sacrifice quality to spend the time servicing clients.
- If it’s price and quality, you’d have such demand you couldn’t spend time with your clients.
This theory has been sound for about 100 years. But the propositions have evolved.
In fact, I make the argument that convenience has been completely replaced.
Look at Amazon. Is receiving the lowest price for the same product with free two day shipping all three of these propositions?
Now, some people’s definition of convenience is different. Some people believe that convenience includes being able to speak to a person and ask questions about the product. Test it out before hand, etc.
Amazon answers this by allowing free returns for pretty much anything. Shipping is on them.
Regardless, the definition is different for everyone.
That is why I believe convenience is no longer needed in this product triangle. Convenience can now be replaced by human interaction. Yup. I’m debunking a hundred year old financial theory.
The Bad News for Dentists
In today’s business environment, price and quality are no longer something you have to search for. The internet makes this information very easy to find. Heck even in dentistry, CIGNA is starting to rate their dentists by price. (Source) You can find reviews anywhere on the internet for pretty much any business. And if the person you are looking at doing business with doesn’t have reviews, you can easily find someone else who does.
There will always be a certain subsection of the population that will determine where they spend their money based off of price. So if you aren’t specifically positioning yourself as either a low cost provider, or as a non-low cost provider, you may be causing confusion in the market.
So, to put it bluntly, the bad news is that you will always be in competition with other dentists for price and quality.
The Good News for Dentists
First, you are in a service industry. The human interaction part of dentistry cannot be “outsourced” or performed by a computer. There is a lot of security in that.
Second, if you are utilizing technology you can drastically cut your cost of doing business if you realize the change in the product triangle.
The movie store I worked in as a kid shut-down because in that industry, machines and technology can do everything a person could. There weren’t enough people that received value from that interaction.
How to Save on Dental Supplies with this Theory
The human interaction part of the new triangle specifically relates to your dental rep. How much of your needs are fulfilled or dictated by that human interaction?
Answer these three questions:
- Do you require human interaction to find something to read?
- Do you require human interaction to find something to watch on your television? (Netflix, Amazon, Hulu, HBO Go, etc.)
- Do you require human interaction to purchase groceries? (Self-scan checkout loyalist here)
If you answered yes to all three of these you probably aren’t ready to replace your dental rep.
If you answered no to all of those questions, you are probably of the mindset that you can replace the rep to little detriment of your business. But you still may not be ready to replace them, I completely understand that and there are a lot of reps out there that probably don’t deserve to be replaced.
That doesn’t mean you are stuck paying what you are right now.
Stick with me until the end and I can teach you how to approach your dental rep in a professional manner and still receive BIG discounts on your dental supplies. I’ll also show you how to judge your rep objectively.
In my next post, I’ll show you the three different ways dental practices order their dental supplies with a dissection of the pros and cons of each. I’m betting you use one of them.