Welcome to The BRIDGE, an online network from LMT dedicated exclusively for members of the Dental Laboratory community.
About This Series
3 Faster, Smarter, Better Customer Service Strategies to Boost Your Business: What Are Your Secrets For Excellent Customer Service?
>In this economy, working faster, smarter, better is the key to riding out the storm. Here are 3 easy-to-implement...See more tips that can lead to a leaner, meaner, more efficient laboratory operation. ###Problem: I want to find a concrete way to reward customers who have remained loyal to us and haven't been lured away by lower prices in this economy. Strategy: Consider a loyalty rewards program; many laboratories have programs that award dentist-clients cash, credit or even travel credits equal to 2-5% of their total volume. In 2009, Doug Egts, Owner of Esthetic Dental Creations in Rawson, OH, was spurred by the challenging economy to implement the loyalty program he had been considering for a few years. He awards clients 3% of their monthly volume in "Creation Credit Points." Doctors can then use each point for a dollar off future lab work or 50 cents in cash back. "I always think it's unfair when businesses give new customers all the perks, while it's the loyal, long-term customers that keep a business alive," says Egts. "I couldn't be happier with the program; it's a great way to thank my clients, some of whom have been with us for 25-plus years." ###Problem: I've been working on ways to re-energize our customer service effort and I need to get my employees as fired up about it as I am. Strategy: Before you can expect your customer service ethic to be embraced, you must be sure that you are servicing your internal customers--your employees--effectively. If low morale is rampant in your laboratory, it's going to be difficult to rally the troops. On the flip side, employees who feel valued and are shown how their work contributes to the success of your business are more likely to "buy in" to service goals and supply the enthusiasm you need to fire up your service effort. But even the most motivated, eager-to-please employees need some guidance. For example: • Give employees "the big picture." Share your goals for the business and explain how the renewed concentration on service can help achieve them. For example, are you focusing on added-value benefits to combat the loss of clients to offshore laboratories? Are you striving to be seen as a technical resource to encourage more customers to transition to digital dentistry? • Share customer feedback. Keep employees motivated by letting them know customers have noticed and appreciate their efforts. • Empower your staff. If you own a larger laboratory that employs customer service representatives or other front-line staff, you must allow those employees to make decisions or offer solutions to customer problems. Set guidelines for employees to follow and be sure they understand how their decisions affect the laboratory's profits and work flow. This avoids putting off a customer and shows him that service is a matter of course at your laboratory. It also gives your employees a chance to "own" making a customer happy. ###Problem: I picked up a few new customers last year but lost two of them within a short time. Neither of them gave me a concrete reason but assured me it wasn't due to quality or price. Strategy: Always roll out the red carpet for new customers. The first few cases are a precarious time because the client is trying something new and watching results very closely. Plus, he's not yet invested in your laboratory so the smallest detail can turn him off. Be sure you know his preferences inside and out. Whether it's with a technical preference questionnaire or simply a phone call, develop a clear understanding of the new client's expectations. Does he like tight contacts? What style of laterals does he prefer? What about occlusion? Laboratory Owner Jeff Hucek uses his introductory phone call to not only cover technical and esthetic preferences, but also business-oriented expectations. "We establish a game plan, which includes topics like whether he wants the case back one week or one day before the seat date, does he prefer UPS or FedEx, will statements be paid by check or credit card...those kinds of things," says Hucek, Acorn Dental Ceramics, Crivitz, WI. "During that 'settling in' period, you don't have the luxury of assuming a single thing."
8 Faster, Smarter, Better Management Strategies to Boost Your Business: We Want to Hear Your Management Strategies
###Problem: I'd like to implement pre-scheduling to help make our workload more consistent; we're overwhelmed...See more one day and slow the next. Strategy: Pre-scheduling—where the laboratory, rather than the dentist, determines the turnaround time for each case—helps ensure an even workflow, which minimizes the pressure of deadlines and enables a technician to focus on his product quality. For example, some laboratories use a manual pre-scheduling system. Each technician has a designated block of time and pre-determined number of units he can handle per day. As cases come in, the office manager schedules them into an appointment book according to this set capacity and the laboratory's current workload. Once a technician's slot is full, no more cases are scheduled for him that day. The office manager then calls the dental office with the date on which the case will be delivered. There are also a variety of software packages on the market that can streamline the pre-scheduling process. Pre-scheduling doesn't eliminate inevitable problems such as cancellations, late cases or remakes that can wreak havoc with your production cycle. So you still may need to juggle your schedule or implement strategies to maintain flexibility. For instance, consider scheduling your days at a slightly lower capacity to accommodate emergencies, allow for breathing room and maintain the level of customer service you want to offer. ###Problem: I know documenting our fabrication procedures will help our work be more consistent and raise quality, but the whole process seems daunting. Strategy: While showing a technique takes less time, it doesn't give your employees a point of reference. Step-by-step procedure manuals are a valuable way of getting all of your technicians on the same page. "You have to have something written down so your technicians have something to fall back on," says Ryan Dutton, Co-Owner of Dutton Dental Concepts in Bolivar, OH. Each department in Dutton's lab has a fabrication manual that includes detailed instructions for every step of the fabrication process and even illustrations. To create his manuals, Dutton tapped into the people who were most familiar with the ins and outs of the daily production process: his technicians. He asked each department to review their fabrication procedures and develop written standards. The teams used manufacturers' product manuals to guide them and experimented when they disagreed on what should become the standard practice. For instance, the lab was using both pinned and pinless model systems so the staff members did a side-by-side comparison and determined that they preferred the results of the pinned system. While Dutton admits that writing the manuals was a time-consuming process—it took one year—he says they have eliminated a lot of mistakes and reduced the number of remakes by almost half. Another benefit: because he involved his employees in the process, he feels they have a greater stake in following the documented procedures. "Giving my technicians a voice in establishing our quality controls helped make them more vested in our quality control efforts and feel like valuable, empowered members of the team," he says. ###Problem: In this economy, I'm losing clients to price-cutting and offshore laboratories. Strategy: The bleaker the economic picture, the more people want to do business with companies they trust. But for those dentists who may be tempted by a price-cutting competitor, you need to remind them constantly about why their loyalty should be with you. "My specific strategy in this economy is to bend over backwards. I'm agreeing to short turnarounds, saying 'yes' to the emergency cases, and dropping everything for that last-minute pick-up or custom shade," says Beth Kotewa, Owner of River City Dental Studio, Essexville, MI. "Everything I do is to show the dental offices they can't get that service from offshore or out-of-town labs that may offer a $30 savings." Some labs are also instituting tiered pricing plans that allow you to retain business you might otherwise lose to a less expensive lab. For instance, rather than lowering prices on your premium restorations, offer them other options—like basic and mid-range restorations that require less labor and use a different quality of material. Another strategy is to market your specialized expertise that's not likely offered by a cheaper laboratory. For instance, in the implant specialty, complex restorations like overdenture bars have grown in popularity, creating a window of opportunity for some proactive laboratory owners. "We are a lab limited to implant dentistry and our fees reflect the extra labor and knowledge required to produce implant-supported restorations," says David S. Weber, CDT, Owner, Sun Dental Laboratory, Medford, OR. "Competing by offering a higher level of service, care, knowledge and craftsmanship, and charging the dentist for the value of that level, has been a winning strategy for us." ###Problem: My lab is bursting at the seams, but I can't afford a larger facility. Strategy: Get a roommate. A few years ago, Brad White, CDT, Owner of two-person Perdue Dental Laboratory, Sarasota, FL, moved into a new building owned by another lab to share space and common expenses. "I'm paying the same amount of rent as before, but we've gained about 40% in terms of common areas, like the kitchen, dining area and an extra bathroom," says White, who splits the utilities with the other owner, Larry Brown, CDT, Brown Dental Prosthetics. "We also save about 15% by buying office supplies together. For instance, instead of us buying just a few reams of paper, we'll buy a case to share." ###Problem: I'm getting ready to retire in a few years. As a solo operation, I feel like my only choice is to just sell off my equipment and shut the doors. Strategy: If you're willing to plan ahead, that may not be your only option. If there's no family member interested in buying your laboratory, a sound strategy is to merge with another lab that is interested in bringing you and your clients on board. In a case like this, the perceived value of your laboratory is directly proportionate to your willingness to stay to ensure a seamless transition. If you're not inclined to seek out a merger or work full-time during a transition, another possibility is to find a laboratory in the area that offers a similar quality product and shares your service ethic. Work out a deal in which you earn commission on those customers whose work you can transition to the new laboratory. Then, handle introductions, relay client preferences and help cultivate your clients' relationships with the new laboratory. It's not an extremely lucrative plan, but you can earn extra retirement income while taking care of your customers at the same time. ###Problem: I'm thinking of merging with another laboratory owner but worry we won't work well together and the business will suffer. Strategy: You're right to be cautious; a partnership isn't something you should enter into lightly. Consider these questions to be sure you're a good match: • Do you have the same goals? Be sure to discuss your priorities and your vision for the business. "The most important thing my partner and I determined was the type of laboratory we wanted to be. We had both owned our own small laboratories and essentially our name was on every product that went out the door," says Allen Weinbrecht, who is entering his 23rd year of partnership with Ken Bailey, a former competitor. The two merged their businesses in 1989 to create Den-Tech Dental Laboratory in Pasadena, CA. "We both wanted to grow, but we also agreed our priority was to be sure our joint venture would continue to produce the quality our clients had come to expect." • Do you complement each other? Ideally, the two of you will be able to play off each other's strengths and weaknesses; for example, maybe he's introverted and you're extroverted, or he'd like to focus on production while you handle the business end. Determining this requires you to step back and take an honest look at your strengths and weaknesses—as well as those of your potential partner—and think about who would be best suited to handle different parts of the business. • Are your personalities a match? It's not only the other person's professional qualities you should think about. Consider whether or not your personalities "click" and whether you have similar values and personal priorities. • Do you have a similar work ethic? If not, this is a common reason partnerships fail: one partner isn't contributing the energy and hours the other person is investing. Resentment is bound to grow if you're at the bench cranking out all of the work while your partner is spending the morning reading the newspaper. • Are your financial philosophies in sync? Like a marriage, money-related disputes can be a source of tension between business partners. Sharing similar attitudes about finances—such as how you spend money, handle debt or stick to a budget—goes a long way toward minimizing that stress. ###Problem: I've been hearing about laboratories implementing Lean Manufacturing; how can it help my lab? Strategy: After implementing Lean Manufacturing in his lab, Creative Expressions in Winterville, NC, Tim Tyndall, CDT, reduced his turnaround time from approximately 12 days to five or six. "By switching to small batches, organizing the laboratory and getting rid of excess equipment and products, Lean has transformed our lives. It's made us super efficient and improved our quality and bottom line. It's a great stress reducer and great competitive edge, especially against offshore laboratories that can't compete with the shorter turnaround," says Tyndall. Although Lean Manufacturing is a wide-ranging management philosophy built around five interrelated principles, what it boils down to is taking a comprehensive look at your processes with an eye toward eliminating waste and maximizing value. Processes include everything that is done to a case from pick up to delivery; waste is anything that doesn't add value to the final product and could include wasted time, materials, labor, space, etc. As with any major management shift, the first step to implementing Lean principles is to get everyone on board; it can't just be a top-down management strategy. One way of involving staff members is to have them participate in flow charting, which entails defining all the steps in each process of the laboratory so you can begin defining and eliminating waste and extraneous work. Flow charting also helps distinguish value-added from non-value added activities, which are defined as waste in the Lean philosophy. Two other key aspects of Lean: establishing good work flow to create an efficient progression of the cases through departments; and organizing your laboratory so that everything has a designated place and anything out of order is immediately visible. ###Problem: I've been saying for a few years now that I was going to spend less time at the bench and more time managing the business but it just hasn't happened. Where do I start? Strategy: The first step is to delegate just one task and build on it. Carefully look at how you spend your time and, while itemizing your various responsibilities, ask yourself, 'what job could I have someone else do for me that would make my life easier?' In an ideal world, you already have a technician whom you trust to take on some of those duties. If you need to hire someone, think about exactly what you need. Maybe it's a high-end ceramist who can take on some of the more challenging cases or perhaps the only way to relieve the pressure would be with an experienced, all-around technician. Delegating is not something that comes easily to most business owners. But the only way to successfully get off the bench is to stop wearing every hat—that of head technician, quality control manager, salesperson, marketer, CFO—and entrust some of those responsibilities to others.
Faster, Smarter, Better: 6 Financial Strategies to Boost Your Business. Share Your Money Saving Tips Here!
February 2012-- ###Problem: My lab is tight on cash and I'm looking to better control my inventory costs. Strategy:...See more Keeping a tight reign on your inventory and not stocking a lot of extra materials can be a great idea--especially when it comes to high-priced metals and implant components. On the other hand, you can also save money by buying in bulk--especially for frequently used items like acrylic or ones that have a long shelf life, like teeth. Other strategies to save on inventory costs include combining multiple orders into one to lower shipping costs, taking the time to shop around for the best prices and requesting bids from various manufacturers/suppliers before placing orders. Another way to save money on products and materials is to maximize your buying power by co-oping with local labs to purchase products in bulk. Perdue Dental Laboratory, Sarasota, FL, often partners with the C&B lab with whom it works on combination cases, and the labs save between 5% and 10% on orders of common consumables like plaster, stone and teeth. ###Problem: How can I ensure I'm getting the best deal from my service providers? Strategy: Renegotiate. From shipping costs to service contracts, ask your providers if you're getting the best rate possible. "In these times, they all want to keep the business they have and you might be surprised at what they'll do," says Doug Baker, Director of Professional and Industry Relations for National Dentex Corp. For instance, when Baker compared the cost of a local pick up and delivery service to hiring a driver and buying a car, he found he could spend less money each year than what the lab was currently paying using the delivery service. "I called the owner of the delivery service, he dropped his prices $1 on every package touched and we saved over $5,000 a year with that one phone call," says Baker. Similarly, over the last three years, Leon Hermanides, CDT, President of Protea Dental Studio, Inc. in Redmond, WA, has twice renegotiated his rent with his landlord by offering to extend the number of years on his lease. The result? He's saving $1,200 a month! ###Problem: I'm getting ready to sell my laboratory and need to ensure that all of my financial records are in order for potential buyers. Strategy: Work with your CPA to "recast" your financial statements so that a buyer gets the most realistic view of your laboratory's profitability. If you're like most closely held private companies, you do all you can to limit taxes by reducing profits; however, when preparing for a sale you need to recast the profits and remove the perks you take from the business. For example, if your salary is inflated, it should be substituted with an amount that's more realistic if you were to hire a replacement. Also look on your P&L statements for one-time costs such as legal settlements, fines or severance payments that can detract from your profitability and identify them as such. During the due diligence phase, buyers will want to examine income statements, balance sheets, income tax returns and aging reports, as well as your sales history for at least the past three years. ###Problem: How do I use my income statement to get a better handle on costs? Strategy: When analyzing your income statement, it's important to look at the percentages rather than the dollar figures. Dollars will change from period to period but the goal is to achieve or maintain consistent percentages. By comparing current and past percentages, you can determine where costs are increasing or decreasing in relation to all expenses. There are some industry standard percentages that laboratory owners strive for: • Direct labor and benefits should be between 30 and 35% of sales; if you combine all labor and benefits, this percentage might go as high as 50%. The extensiveness of your benefits package will affect your labor percentage. • Material percentages are usually between 8 and 15% of sales; this may vary depending on the size of your laboratory. For instance, a larger lab might have a lower material percentage because it has more buying power than a smaller lab. Keep in mind that these percentages can vary depending on how you keep your books and allocate expenses. For example, if you work at the bench, the time you spend fabricating restorations should be a direct labor cost whereas your "non-producing time" should be a general and administrative expense. ###Problem: I have a good client who has recently run up a large balance. I know I have to address it, but I'm not sure how to approach him. Strategy: Start with an honest conversation. If the client truly wants to pay off his debt but is having financial difficulty, you may be able to establish a payment plan or come up with another option. For example, Marc Daichman, Owner, Asteto-Dent Labs, Maplewood, NJ, once had a long-time customer who was having financial issues and ran up a large balance for the first time. "We let it go for 90 days. When we still didn't receive payment, we told him in a very upfront, polite way that he needed to decide whether or not he wanted to maintain his relationship with our laboratory," says Daichman. "As a result, he took a loan from his pension in order to pay off his balance." If the client is unresponsive or becomes belligerent, Daichman takes him to small claims court as long as the amount owed is under $2,000 (the small claims limit in his state). It costs about $20 to file a suit and, he's found that many times, a doctor will choose to pay once he receives the summons rather than spend a day in court. ###Problem: Given the current economic situation, I'm uneasy letting new clients who have no history with our laboratory run a balance. Strategy: Cut potential losses; set a credit limit for new customers until you're comfortable with their payment habits. "We simply let the client know that, until we've established a history, we have a credit limit of $2,000; once he hits it, he needs to send a payment or we will only deliver new cases by COD," says Dale Chandler, CFO, Maverick Dental Laboratories, Export, PA. "It can get awkward, but we have to ask ourselves, 'how much is too much to lose?'" Usually, if a practice demonstrates over a three-month period that it has control of its finances and pays on time, the lab incrementally increases the credit limit.
The Daily Bite
43% of laboratory owners are planning to retire within the next 10 years.
LMT Original Research © 2010 - 2013