This is being felt from animal health advancements within the industry to the way veterinary staff communicate and engage with pet owners before, during, and after a patient consult.
But quickly, how is the experience economy relevant to the veterinary profession?
The experience economy is the idea that businesses can compete and retain clients by creating an experience that customers value. For veterinarians whose primary ‘customer’ is an animal that can only give you thanks by the way they look at you with those big eyes, the second important experience that happens within your clinic is shared between staff and clients.
The value or ‘delight’ factor clients are looking for more due to the experience economy is something unique to your business and reinforced with expertise, technology, and personalised engagement for every patient and client.
This creates an opportunity for veterinarians to use technology and tailor the way they engage with clients because the last best experience a client had is the experience they expect everywhere else.
The flow-on effect of accessing preventative pet care
Consumers are adopting the convenience of e-commerce platforms. Across Australiasia, consumers are using eBay and Amazon’s growing personalised shopping experience and next-day, direct-to-consumer delivery as the benchmark by which they now hold other services.
This is having a flow-on effect on access to pet care and long-term wellness of pets. The biggest shift in the industry is the means to focus on prevention, rather than treatment, driven by the rise of ‘pet parents’ humanising animal companions and investing more into the experience of owning a pet.
This is the experience economy effect you may already be encountering as a veterinary professional. Clients weigh up your service offering against online and big-box retailers who are competing based on price but lack the trusted, medical recommendations and advice on dosage, frequency of repeats, and health check-ups. And this is the point of difference no retailer can compete with when the experience your clients receive is specific to their pet’s health, needs, and long-term wellbeing.
The changes brought on by the experience economy have created three trends in the pets and pet supplies industry affecting the day-to-day operations of a veterinary clinic:
1. From ‘brick-and-mortar’ to ‘click and mortar’
Veterinary practices offering products and services from a physical location is described as ‘bricks-and-mortar’. The internet, however, has introduced a new world of online channels for clients, which is dubbed ‘click-and-mortar’.
A key feature of click-and-mortar is the low barrier to entry industries. In contrast to brick-and-mortar operations, they can operate from anywhere in the world, don’t require a physical store, and consequently have lower overheads. The 2019 IBISWorld Report on Pets and Pet Supplies1 states: “Online marketplaces like eBay benefit from… being reliable and providing easy payment systems for small sellers. These online marketplaces are also considered a good platform for niche products due to their high traffic.”
Consumers seek – and often expect – additional value from the businesses they visit, including the convenience of modern, mobile technologies that bring meaning and add value to their lives and those of their ‘fur babies’ or companion pets.
Illustrating this trend, international research organisation, Nielsen, found 21% of pet food sales have shifted online, providing challenges to the traditional suppliers of premium pet products. According to their 2019 research findings, there has been a 9% shift in sales toward e-commerce, with no signs of slowing down. In fact, it found one in four shoppers are more like to purchase pet food online than in traditional stores.
There is a clear opportunity for practices to create an online presence as captivating and convenient for clients as standing in-store at the counter has traditionally been. Success for veterinary practices means combining your bricks-and-mortar community-based practice with the accessible, immediate benefits of a click-and-mortar operation.
2. Direct-to-consumer pet care products
As of April 2019, there were 1.2 million listings in the ‘pet supplies’ category of eBay Australia, up from 375,000 listings just three years earlier. This does not account for other online retailers, boutique stores, or big-box retailers and grocery chains. Collectively, this represents a sizeable proportion of industry revenue falling outside of veterinary practices and reducing bottom-line figures.
According to Australia Post, e-commerce in Australia is growing rapidly, with online spend comprising 10% of total retail sales in 2018 – 2% higher than the year before. Australians spent $27.5 billion buying goods online in 2018, an increase of 24.4% with year-on-year growth forecasted. The postal company predicts that by 2020, one in 10 items will be bought online.
The effort and cost to connect with Australasian consumers through these direct channels may feel intimidating, however with the way other industries and consumers are learning to buy products it is an experience practices must consider offering. Aside from the commercial value it has to revenue and saving time spent by staff ordering and managing product deliveries, it is a necessary ‘value-add’ for servicing your clients who live in a world where choices are all about them.
What veterinarians have over external corporations is their dedication to those consumers’ pets’ long-term health and wellness, including recovery from chronic illness or operations. By leveraging the personal connection with your clients and creating convenient touchpoints for them to purchase and schedule preventative care, a practice can retain patients better while maintaining profitability.
3. Diversification
Modern pet owners are spoilt for choice when it comes to pet care products. The positive side to this is according to IBISWorld, households are adopting a more holistic approach to the health and wellbeing of their pets.
The Pets and Pet Supplies Retailers industry is benefiting from these trends, with operators expanding their range of products and services to embrace these developments. Many consumers are now choosing to buy their pet-related purchases from specialty pet stores – particularly for premium products.1 Nielsen adds that these trends in pet care are matching – and even surpassing – human ones. Growth in the sale of pet care products with natural claims, for example, is keeping pace with those in the baby care and personal care categories.
These trends set a high standard for veterinary businesses to follow to keep up with the high expectations of consumers in the experience economy. Consumers, however, often weigh up potential cost savings against the quality of products and supplier credibility – particularly when buying online. Again, this is where community-based veterinary practices come into their own as trusted pet health professionals, educators, and advisors with the help of direct, 24/7 and diverse points of engagement for treatment.
According to Provet, a Covetrus™ company and Australian distributor of animal health products, over the counter products for small animals contribute on average 40% of a practice’s cost of goods sold.2 Clearly, the diversification and trends taking this revenue away from practices could have a significant impact on business growth.
Provet also found that sales to practices of preventatives and food are growing at a slower rate than prescription drugs. This is evidence of how the experience economy is affecting practice revenues. There is room for practices to reclaim this revenue stream by improving client retention so clients return to a trusted source of information for their pets, rather than have an online store recommend a recently purchased preventative.
How do veterinary practices leverage these new pet care trends?
To supplement their traditional role as trusted advisors, veterinarians need to be able to pair prescribing special foods, preventatives, post-consultation follow up or treatments appropriate for long-term patient care with the experience economy services that attract client’s long-term patronage.
This marriage of expertise and service is necessary to maintain client retention and practice growth and profitability. By partnering with a specialist provider with product and technology expertise, much of the heavy lifting can be automated from your practice management software.
What’s next?
Check out our infographic for an overview and statistics or download our latest Proactive Patient Health white paper for details on leveraging the experience economy for your veterinary practice.
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Sources:
1. IBISWorld. 2019. IBISWorld Industry Report OD5128: Pets and Pet Supplies in Australia
2. Provet, a Covetrus company. 2018. Report: Small Animal Clinic OTC Purchase Report