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Last month we reported some improvements in many of our key performance measures and this month although some of the figures are lower, overall the situation is looking up with improved annual growth. Total turnover reduced by 5 per cent over the month to 164 Index points, this is 12 per cent higher than last March but still a negative annual growth of 5.5 per cent, notably better than the -9 per cent annual growth recorded last month and this improved the moving average to an Index value of 159, the highest point since August 2009.
Turnover per eye examination has gone up by £8.69 on last month to £144.82 the highest value so far this year, creating the highest moving average figure (£142.06) since November 2008. Dispensing rate is up by 6 per cent to 60 per cent and total dispensing has also increased by 5 per cent since last month and is now at an Index value of 92.
Total eye examinations are 3.9 per cent higher than in March last year, but they are down on last month's figure. The negative annual growth has reduced from the 5.8 per cent last month to 3.8 per cent.
All lens usage is higher for the second consecutive month. Single vision is down by 19 per cent on March last year but both bifocals and progressive results have improved by 0.5 per cent and 7 per cent respectively are patients favouring bi/trifocals and progressive lenses rather than purchasing more than one pair of single-vision spectacles?
Index this month is taking a closer look at benchmarking and how it works between practices with different turnover bands.
It would be neither realistic nor good business practice for a group of competitors to exchange business information, it would also be fraught with suspicion and untruths. However, the pooling of information with an independent, unbiased third party is the best method of understanding the business environment in which you operate. Benchmarking has become a sophisticated management tool providing 'snapshots' and key performance indicators which help to generate comparisons for industry and commerce, assisting business owners and managers to develop achievable, meaningful and realistic targets.
Without external benchmarking it is only possible for the company to have an inward focus. The practice of using past performance to produce ongoing performance goals promotes an inward looking attitude which can permeate through the management levels and become part of the corporate culture, stifling growth, constraining thinking and therefore hindering progress.
Our industry snapshots report the monthly indices for the retail optical market. The data produced is indexed so it means the same to a small turnover, independent practice as it does to the large multinational branches, ie a 10 per cent increase in turnover per eye examination is easy to understand in either circumstance. The indices are concerned with trends and percentage change over the month and in the same month of the previous year as well as annual growth.
Generally the Index does not report average values. However, as the following analyses are broken down into practice turnover categories, it makes minimums, maximums and averages meaningful to each group and it is therefore easy to identify where in each category your practice fits. The categories are based on monthly turnover, £0-£20k, £20-£40k and £40k+ each chart shows minimums, maximums, averages and quartiles. Quartiles are calculated by sorting the data and dividing them into four equal parts. The midpoint is the median, the lower quartile is the 25 per cent falling below the median and the upper quartile is the top 25 per cent. The middle 50 per cent is the median quartile. In all categories if your practice falls below the median line it is perhaps possible for you to explore new or different opportunities through marketing, range of products or operational changes and if your practice falls above the median line the challenge is to ensure you maintain or improve through continually evaluating all aspects of your business.
Figure 1 shows total eye examinations. In most cases it is normal to disregard both the minimum and maximum figures as they are frequently extremes. Understandably the larger the practice turnover the higher the number of eye examinations. It is interesting that in all categories, dismissing the minor and major units, the difference in the number of examinations between quartiles is around 100 in both lower categories and 120 in the higher turnover group.
Figure 2 shows turnover per eye examination. The most noticeable point is the maximum value in the lower turnover group. This is an outstanding performance value, and demonstrates that it is possible to achieve much higher values through exceptional customer experience, seasonal and promotional offers, although maintaining this level of activity may not be possible. There is only a £24 difference in the average turnover between the three groups and £28 between the median values, with the smaller turnover group in the lower quartile achieving higher results than the middle category. The difference between lower and upper medians in the middle turnover group are larger than the other groups.
Figure 3 (dispensing volume)demonstrates that the bigger practices have the facilities to dispense much higher volume with a marked difference between median and upper quartiles. Photochromic lenses have once more maintained their steady increase in volume, 13 per cent of spectacles dispensed (Figure 4).
This month we also studied the relationship between eye examinations, turnover and practice location. Figures 5-7 show that suburban and secondary locations have a higher turnover per examination than primary locations. Suburban and out of town practices seem to be making better use of consulting rooms. Secondary locations appear to make best use of retail space, not the more expensive primary sites as one might expect.
Our contributor panel includes independents, regional multiples and national multiple practices and by sub-dividing the sample it would be possible to make further analysis by practice type, region or patient demographics. However, ideally we do need more contributors to enable this type of breakdown. Figures are adjusted to a 25-working-day month. In March there were 27 working days. If a practice would like to contribute please contact Lynn Hawkins on 01622 880330 (email: l.hawkins@businessbenchmarks). ?