At Stander, we have traveled the country, training sales staff and visiting stores. Over the years we have identified two very powerful and disruptive forces that are affecting Home Medical Equipment (HME) stores. These market forces are creating several pain points and issues for storeowners, who are not ready to adapt to the new market landscape. We’ll first explain the market shifts, then we can talk about one of the most important assets that an HME store has to combat these issues.
The first market force effecting HME stores is the advent of competitive bidding. This process has caused a precipitous drop in revenue for most HME stores, requiring them to shift to retail cash sales to try to revitalize their businesses. For store owners whose initial business structure was fundamentally non-retail, this has been an especially difficult transition. The Stander team has traveled throughout the country to visit stores while conducting training for retail best practices. We have found that many show rooms are barely more than a couple of shelves full of some consumable items and a desk for filling out reimbursement paperwork attached to a stock room full of concentrators and oxygen tanks. This type of set-up may have been successful when highly profitable reimbursements and long-term contracts were readily available. Those days are gone, and thanks to reduced reimbursements and fluctuating market forces, this strategy lacks the capability for success.
Many forward thinking store owners have made positive changes to their HME businesses by infusing their storefront with an inventory mix of products that will encourage retail sales. This shift in the industry that has encouraged many HME stores to adopt retail best practices; we have even seen some HME stores who have become leaders in the retail space.
That is a daunting headwind for business owners, but there’s more! A second factor creating pressure for HME store owners is that the retail best practices are shifting. HME store owners need to be aware that online retailers like Amazon are causing the entire retail industry to change (see our article on How HME stores can Compete with Online). I know, I know, that is terribly inconvenient. It isn’t enough that the HME business is changing significantly because of changes in government regulation, but the very business model that would assist HME retail stores is also being disrupted. That being said, change happens. There is an old Roman quote “There is nothing permanent except change.” So rather than wishing these changes weren’t happening, store owners must find aspects of their business that they can control, and make sure that they have properly laid the foundation to succeed regardless of the changes in the industry. Brian Tracy is a world-renowned trainer and his thoughts on these stresses are particularly appropriate. He says that “you cannot control what happens to you, but you can control your attitude toward what happens to you, and in that, you will be mastering change rather than allowing it to master you.” Yes, the industry is changing significantly. What can you do in order to master that change? One very important thing that every HME retail store needs is well-trained staff. The days of succeeding because you’re good at paperwork are gone! Sales staff must be knowledgeable about all the issues that customers face as they prepare to Age In Place.
I want to reiterate that last statement. Sales staff must be knowledgeable, and well-trained. Let me explain why this is so critical. There is an inverse relationship between how predictable the future is, and how critical the quality and skills of employees are. If you are in a mature industry, where every obstacle has a well-tested answer, then the predictability of the future is relatively high. Because of that, systems, processes, and institutional knowledge can support and prop up an employee who has lower skills. On the other hand, if you are in a dynamic industry that is quickly changing, then you cannot rely as much on the past. In this type of industry, new and unforeseen problems and issues arise daily. Having sales staff who are adaptable, knowledgeable, and skilled in universal sales tactics is the only way to navigate through those challenges and thrive. Stores need sales staff who can think on their feet, and have enough sales experience and training to be able to quickly adjust their sales pitch to the needs of the people who are coming into the store. They must see ways to add value to the sale in real time by cross-selling, and reassuring the customer that they are knowledgeable about their unique issues. If you have a great sales team, you can weather the current storms of change in the industry. If you have a weak sales team, each new market adjustment or technology will leave your store unprepared to capitalize on opportunity when it arises.
What tactics and skills do sales teams need to survive in this changing environment? Some of the following items are more tactical, or skill oriented. These are skills like learning how to close a deal no matter what sales techniques are employed at the store. Speaking of sales techniques, we’ll also talk about the most powerful and effective ones that you can employ in a retail setting. This article is not meant to be all-inclusive. Feel free to reach out to your Stander rep if you need more help.
Listening
This skill almost seems so obvious that we shouldn’t need to mention it, but it is shocking how often a customer will ask for help only to be inundated with various sales pitches about products that may or may not even fit the customer’s needs. It is almost as if the salesperson is afraid that if they stop talking, the customer will walk away.
The salesperson should be listening for clues early on in order to identify the symptoms of problems that the customer is trying to solve. A good sales person must diagnose the customer’s needs before they can prescribe a set of solutions, and a good diagnosis comes from understanding the needs and pain points of the customer. In the course of the conversation, customers may reveal other important details that can help lead a sales associate to a more complete solution.
Part of listening is asking the right open ended questions that help the customer explore their needs. Avoid yes/no questions since any “no” answer can derail the conversation. Any time you ask a yes or no question, it is easy for a customer to shut you down with a “no” without even thinking it through. Any time they say “no” to your questions, they are short-circuiting the sales process. For instance, do not ask “do you need a security pole to help you get in and out of the tub?” Instead, start a conversation with a question like “where in your home do you have the most difficulty getting around, or standing?” or “Which room has the biggest risk for potential falls in your home?” These types of questions get the customer talking about their needs in a way that can give you clues to possible solutions. Also notice where there are cross-selling opportunities. If the customer talks about how it is difficult to get out of their couch or chair, then perhaps they also have issues getting in and out of the car, their bed, the tub, and even on and off the toilet. They may have identified one mobility problem as their primary issue, but they may be at risk in many other places in the home. They probably need help working through all the solutions that are available. Good sales staff become experts in the eye of the customer, and can help them realize easy solutions to their problems. They will be grateful for the information, and will be more likely to come back if they ever have other issues in the future.
Closing
The most important skill a sales person needs to know is how to close the sale. You may think that closing should come later in this discussion, since the assumption is that sales people only close at the end, once they have given their full sales pitch. Sales people should start the process of closing at the beginning of the discussion. A common mistake that sales people make is to miss signs of closing, and continue to sell after the customer has made the buying decision. Closing is critical, yet many sales people are afraid to close, so they delay the close as long as possible. They beat around the bush, and wait for the customer to get around to asking for the sale. There are times the sales person actually blows a sale from a willing customer because they didn’t know when to ask for the order. In fact, it is so important that we have a separate sales training on closing techniques so that we can give it the time and attention it deserves. Please see our article, Closing Tactics for HME Retail Stores. In the meantime lets talk about one of the most important techniques that can empower the sales efforts of your team.
Top Down Selling
In the retail setting, “Top Down Selling” is by far one of the most successful and effective sales techniques you can employ. It is also called “good, better, best selling,” and if you use this strategy, it will add a lot to your bottom line. We’ve seen it make big differences in stores. This technique is great because it is so simple.
Here is how it works—first you take your customer to the highest-quality, feature rich product in your lineup. You explain the benefits, and paint a picture of how much better off they will be if they are using this product. They visually imagine what it would be like to own it and use it. If, for any reason, they then choose to see other options, they will feel the pain of loss if they choose to downgrade from what they’ve already seen; which increases the chances of your customer buying the higher-priced product. It also gets them to see that highest price as a starting point, or the “Anchor” price.
In Marketing and Sales, this is called (obviously) “Anchoring.” Customers make a purchasing decision by comparing the differences between the options available. If you anchor them on the highest priced product first they will see any lower priced item as a comparative bargain, making the purchase of either a win (either the highest feature set, or the better price) for the customer depending on his/her particular preferences.
Once you have communicated the benefits of the Best product, you ask for the sale (remember what we said about closing?). There is no need to keep selling if your customer is already sold. This is important. One of the biggest mistakes a salesperson makes is to continue to try to sell a product after the customer has been convinced. No good can come of that! They are already sold, so go and ring them up! (see more on closing the sale in our article, Closing Tactics for HME Retail Stores). If, on the other hand, you are unable to close the sale at that point, take the customer to the next product down the line or the Better product. Let the customer know what the differences are, and explain the value of this product by relating the reduction in functions or features to a lower price point. Once the value of this Better product has been established, ask for the sale. See how that is done? Don’t explain every product you have in the store before asking for the sale. This is a quick way to identify objections and to get a sale to close.
Finally, if they are still concerned about price, you can take them to your commodity option or the Good option. This will most likely be one of the cheaper options in the market, and it should have a place in the product line-up to catch the customers whose primary concern is price.
Customers may not buy the higher-quality product every time, but by “selling high,” well-trained sales staff can get large percentage of their customers to purchase an upgraded product (Better or Best) over the cheapest option according to Jack Evans, an HME retail consultant. This is because you’ve anchored them on the best value not the best price.
In order to make Top-Down-Selling work, you must have at least 3 options in your store. Carefully curate your inventory to make sure that the three options complement each other both on price and feature sets.
We tested these concepts first hand when we developed our Signature Life product line. Before Signature Life was introduced, Stander products were the Best choice in most HME retail stores. When stores brought in Signature Life, it moved Stander products into the Better category, and dealers reported a 30% sales gain on Stander products. By anchoring customers to the new Signature Life price points, Stander sales increased. In addition, Signature Life sales were robust resulting in more than double the sales of Signature Life and Stander products combined when compared to Stander products alone. This results in a pretty large lift to revenue in the categories that Signature Life and Stander are representing in your HME retail stores.
Don’t hesitate to recommend the most expensive option first. No one is ever offended by being shown the best that you have to offer. Their experience with a higher-quality product is likely to bring repeat business, so it’s a win-win for you and your customer.
Properly framing alternatives
One mistake sales people often make is that they frame the customer’s alternative as spending money on a product vs. not spending money on a product. This is the wrong perspective for successful sales. When a customer comes into your HME retail store, they are facing challenges that could cause the loss of their independence. Or worse, they face the increased risk of expensive injuries. Yes, a Security Pole may cost $200-$300, but if it prevents a single fall, that could save 10s of thousands of dollars! Over 80% of the falls in a home occur in the bathroom, and these falls are often the result of a loss of balance while transferring in and out of the tub, or a loss of balance when standing from the toilet. See what a bargain the Security Pole is? That isn’t even the biggest contrast. If the risk of falls or the loss of mobility is high enough, then another alternative that the customer may be facing is to move to an assisted living center. This option costs even more money, and has the added loss of independence that makes this an even more dreaded. Even if the customer can remodel their home to make it more mobility friendly, the cost of the average home remodel for the purpose of Aging In Place At Home is over $70k. Even if you sell the customer all of your Best options to retrofit their home, it will still cost a fraction of a remodel. Training your sales staff to frame the buying decisions against the customer’s real alternatives will help them assist their customers, and close sales.
Testimonials, or The Bandwagon Effect
If you have any stories or testimonials from previous customers, they can be very powerful when trying to close the sale. Customers like knowing that the recommended solutions have worked in the past. Sales staff should have stories of customers who have similar needs, and use the products that they are recommending to solve those problems. When done right, this can create the bandwagon effect which is a phenomenon where people make a purchasing decision or take an action simply because other people have made that decision or taken those actions. In the end, this is a very powerful tool, not a trick. Here is an example: my own father had double knee surgery a few years back. I outfitted his home with a few key products to help him as he recovered from the surgery. He told me that the Sure Stand Security Pole I installed between his shower and toilet was a lifesaver, and made a huge difference in his recovery. I can use that story whenever talking about the value a security pole. I also talked to a man who set up 13 poles throughout his house because they were so convenient to install anywhere. That story helps broaden a customer’s perspective on where, and how to use the pole! This customer even set one up in his garage to help get out of the car. These stories help a customer realize that many other people have found success using these products because they work! This is the very principal that is in force when reading online product reviews. The trust I feel towards a product with hundreds of positive reviews is significant when compared to the trust I fee towards a product with few, or mostly negative reviews. Letting a customer know what has worked well for previous customers with the same problems is a real value!
As you can see, these principles will work regardless of where the retail HME industry goes in the future, and a sales team that is trained proficiently in these principles can succeed in any sales environment.
These are the general sales principals. It is still very important to know the specifics of the products themselves. Most manufacturers are happy to train sales staff about the various selling points of their products, and will help train new employees, and re-train existing employees. Staying current on product features and benefits will supercharge the Top Down Selling method.
To review, here’s how to maximize sales in every category of your store…
- Make sure you have “Good, Better, and Best” options in your core-profit categories
- Train your staff on the “Top Down Selling” strategy
- CLOSE, CLOSE, CLOSE
- Use testimonials, or success stories to reassure customers
- Make sure that you understand what the customers real alternatives are if they don’t buy the product.
- And finally, always be learning. Pay attention to customers, and learn what has worked, and what hasn’t. This will help you craft more effective sales pitches.
Yes, the industry is changing, and online retailers are disrupting the current market, but a store staffed by skilled sales people will be able to adapt to these changes, and succeed!