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Generally in January business improves after a slow December. From December 2007 to January 2008, turnover picked up by 7 per cent. However, the report in January last year stated: 'A stark trading year is expected by many, and, just one month in, results do indicate a fall in dispensing and sales.' Results indicated even then a decline in the benchmarked figures, compared to previous performance.
In December 2008, the Index reported that sales were up on the previous year, and many contributors gave accounts of a sudden rush of appointments and dispensing. This has not continued for the optical practitioner into 2009. The percentage change for each performance indicator is shown in Figure 1, compared to the same period, January from December, the previous year. Turnover on average is down 10 per cent from December 2008, although eye examinations are up by 2 per cent. The higher-value sales are down, progressive lenses by -7 per cent, and likewise added AR coats are down by -7 per cent. The proportion of AR coats is at 39 per cent, a fall from 50 per cent seen last year, although more often now AR coats are added as standard and may not be counted. Despite a good December, figures would not usually be expected to fall as shown, which further affirms the effects of the economic downturn.
New contact lens fits usually fall in January, and were seen to be rising in the lead up to Christmas. New fits are down slightly from last January, -3 per cent. Turnover per eye examination is also down slightly. Last January the average was £134.92, while this January the figure is £131.80.
Benchmarking
Optician Index is based around the idea of benchmarking. Generally it is the average change each month that is reported for various aspects of practice performance, eg the number of eye examinations going up or down by a certain percentage or dispensing of spectacles with certain lens types. The figures can be used for much more than just looking at the industry as a whole. By comparing the objective data with your own practice performance, the practitioner can manage practice targets and recognise opportunities for marketing and improving sales in certain areas.
Without benchmarking it is only possible to look internally - at historical results, and hence the practitioner can only have a subjective perception of what customers want and what competitors are achieving. This is not appropriate when reviewing business plans or performance with business partners or bank managers. The targets set for any business would be reactive, based solely on what has gone before, and lacking any real understanding of what is happening in the market.
With benchmarking the targets you set are credible, arguable, and based on market reality. Looking externally can challenge your existing perceptions of what is possible. Effectiveness can be improved in many ways - expenditure, marketing, practice development, staff involvement.
Key relevant benchmarks for a business to aim for create an environment which values continuous improvement. Your staff can also benefit from being given realistic targets, which are based on fact, and enable them to work effectively to close the gap.
The Index offers contributors the opportunity to benchmark their performance every month. An example of more detailed analysis based on turnover bands follows.
Benchmarked comparisons by practice turnover band - January 2009
Average values are not usually reported in Optician Index as the size of practice contributing varies so much. Reporting an average monthly turnover of £30,000 for example would make figures irrelevant to practices where turnover is £5,000 or £80,000. Hence the movement up or down for each benchmark is reported. A 5 per cent increase in turnover is just as relevant to the smaller practices as to the larger ones. However, it is possible to split up the sample into say, turnover bands, and report performance in terms of minimums and maximums, and quartiles for various performance indicators. These can then be used to look at your own practice and determine whether the opportunity exists to improve performance, whether targets are potentially achievable, and indeed whether others are achieving the same as you.
Contributors have been classified into three monthly turnover bands, £0-£20k, £20k-£40k and £40k-£60k. Figure 2 shows the total number of eye examinations broken down into maximum, minimum and quartiles. Just briefly, quartiles are as follows - the data is sorted into order, minimum to maximum value, and then is cut into four equal parts. The midpoint is the median, then a quarter of the way up the list gives the lower quartile - 25 per cent of the sample fall below this point, 75 per cent above it. Likewise the three-quarter point gives the upper quartile - 25 per cent of the sample have results that lie above this, and the rest are below this point. The minimum, average and maximum are exactly that.
As you would expect the number of eye examinations increases as practice turnover increases, but now you can place your practice in its category on the graph. If you fall below the median in your category, then perhaps there are untapped opportunities to explore, and questions to ask - why are you not getting the footfall? - what could you do to attract more? - could you cope with more? - how do other practices manage more? - how often are patients returning?
Likewise, dispensing is shown in Figure 3. Dispensing for the category £20k-£40k is interesting. There is a step change in performance from the smaller turnover category, and some 25 per cent of practices are achieving more dispensing than the larger practices.
Figure 4 shows turnover per eye examination. Values generally increase by practice turnover, but the maximums actually decrease with practice size. Look at the highest value - achieved in a smaller practice! There is potential there for improving the customer experience and adding more value to sales.
By sub-dividing the sample, it is possible to make further analyses, eg by region, by location, by patient demographics. However, ideally we do need more contributors to enable this type of breakdown.
The Index is always keen to welcome new contributors to enable further analyses. If a practice would like to contribute to this free service to practitioners in the UK, please contact Louise Reynolds on 01622 851726, to discuss the benefits, no obligation, or by email to l.reynolds@businessbenchmarks.co.uk.