As part of their ongoing mission to give veterinarians analytics and insights to help them make better business decisions, IBISWorld released a 2019 veterinary industry report: Top dog: New services and higher prices have driven industry revenue growth.
A key finding in the report was that pet owners’ demand for veterinary services is forecast to grow strongly over the next five years, driven by a willingness to spend more on vet procedures to prolong their pets’ lives. They are able to financially support this due to their higher incomes and greater uptake of pet insurance.
Also, pet parents are becoming more aware of different pet services, merchandise, premium pet food, medications, and supplements and are willing to spend money on them to make sure their pets stay healthy and well.
Along with these key findings, the IBISWorld report highlights six key factors to help you make sure your veterinary practice succeeds.
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Good facilities
It’s important to be visible and accessible to clients, including being located where demand is strong. The research shows that urban pet owners tend to choose their vet based on the convenience of their location. However, rural pet owners make their choice based on the expertise and reputation of the veterinarians operating in the practice.
Your veterinary facilities should also be attractive to pet parents. This is especially important if they have several practices to choose from. Research shows that 86% of clients are willing to pay more for a great customer experience, so it’s essential to create a welcoming and positive environment to build loyalty. Your practice should look efficient, be comfortable and inviting for a variety of pets upon entry and in the waiting area.
Simple things like having free pet food samples in the waiting room, or a fenced-off area outside so pets can be let off their leash to burn some energy before or after their appointments, can make your practice more attractive.
Creating a positive atmosphere and offering a memorable experience is the best way to retain clients and drive practice growth. For more tips, read our 10 tips for creating an exceptional customer experience.
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Effective cost controls
It’s no secret that setting up, maintaining, and growing any business needs skill, judgement, and common sense, plus a small dose of luck. Like all successful businesses, veterinary practices also need to control and minimise operating costs, such as rent, wages, and stock to minimise operating costs and maximise returns.
The costs associated with setting up a veterinary practice can be significant, depending on the type and location. High equipment costs can be a barrier to entry, as veterinarians need high-end, expensive equipment – particularly for more advanced medical procedures. Fitting out and operating a rural clinic can be more expensive than an urban one, due to the scale of equipment needed to treat larger animals.
Veterinary practice owners and managers should also factor in the costs of staying up to date with veterinary technology and equipment as it advances. While these improvements should let you offer a wider range of services, your clients must be prepared to use and pay for these expanded services.
A good way to help manage costs is to have an effective inventory management system in place. This can help your practice monitor expenses and – if kept up to date – spot problems before they occur.
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Appropriate pricing
The pricing of products and services should aim to maximise revenue and profitability over the long term. Many veterinary practices are facing increasing financial challenges with rising costs, plateauing client numbers, and increased competition.
Despite the temptation to raise prices to combat this, pricing must remain balanced. A practice that charges excessively is less likely to benefit from return visits and may develop a poor reputation. At the same time, practices that charge too little are unlikely to make a profit.
Another factor to consider when setting pricing is the general economic conditions. The report outlines that pet owners may put non-urgent veterinary needs on hold during an economic downturn to cut down their household expenses, which may impact on cash flow and profitability.
Economic conditions also affect the pricing of products such as pet food and medicines. The report finds that fewer veterinarians are buying pet products for resale to customers because large pet stores are selling these items at more competitive prices.
A good reputation can positively affect a practice’s pricing and customer base. If the clinic has a strong reputation, clients will continue to bring their pets and pay the price – even if it is more expensive – instead of finding somewhere cheaper. This leads to the next key success factor in the report.
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A strong reputation
Clients form opinions about practices quickly through online reviews, past experiences, word-of-mouth, or pricing. According to Veterinary Practice News, 68% of customers form an opinion of a business by reading just one to six online reviews, and nine out of 10 determine whether they can trust a business after reading 10 or fewer online reviews.
For a veterinary practice to be successful, it must have a good reputation. Before a client sets foot into your practice, they will shop around to find which one suits their needs and, importantly, has the best reputation.
That’s why it’s advisable to make sure your website and social media accounts are up to date. This will increase your business credibility and give potential customers the impression that you’re active and trustworthy. Also, if your clients say they’re happy about your service, ask them to leave an online review to add to your practice’s ratings.
Another way to improve your reputation online is to become a thought leader in your field. Start a blog, share valuable veterinary tips, share pet information on social media, or even start a pet care podcast. These strategies can also improve your practice’s search engine optimisation (SEO), so you can be more easily found on search engines like Google.
And don’t forget another important aspect: staff wellbeing and creating a positive work environment. If your staff are happy and satisfied at work, they will be more committed and dedicated to your practice. This will create a better practice environment, which will lead to better customer service.
If the pet owners in your practice connect well with your staff members, it’s more likely they will come back and recommend your practice to others. Training your staff is a good way to build a better practice environment. For tips on staff training, read our blog on how to build a better vet practice from the inside out.
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Expand to succeed
According to IBISWorld, successful veterinary practices look for ways to expand their business to other locations. This strategy lets you reach a bigger market, where you can apply your tried and tested methods to increase revenue and profitability. Scaling also helps minimise marginal costs and spread fixed costs over a larger number of clinics.
The report anticipates the veterinary industry will consolidate in urban areas over the next few years, which will subdue growth. However, it adds that “consolidation will assist economies of scale and lead to additional capital investment, particularly in equipment for high-technology procedures”.
IBISWorld also highlights that most veterinary practices tend to be small owner-operated businesses, with few operating more than one clinic. This is because of the high costs associated with opening a new practice and buying the necessary equipment.
According to dvm360, small practices have the opportunity to expand their business and compete against their larger counterparts if they focus on improving client service and patient care, profitability, and team spirit.
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Know your market
The report suggests it’s important to identify your target market, so you understand what your clients need and want. This is important because it affects what services you offer and whether your customer base will pay for them.
For example, if your practice is in an area where there is a need for a 24-hour service, you can gain a competitive advantage by offering this service. Understanding your target market can also help with your practice’s decision making – for example, whether to upgrade technology or improve medications.
This shouldn’t be a one-off exercise; it’s important for your practice to keep looking at ways to understand your target market, identify available capacity, and capitalise on new opportunities. Practices that fail to monitor and respond to changes in their business and operating environment risk being left behind or getting lost in an increasingly competitive environment.
Another way to keep up to date with new veterinary innovations and practices is to research emerging trends for the industry. To help, we’ve put together a list of the top 10 trends to look out for in 2021.
To be successful, veterinary practices also need to watch the numbers and use these to help guide business decisions. This is because markets are unpredictable, and you should never become complacent by taking your finger off the pulse of your business, or industry.
The IBISWorld report predicts a 2.6% annual growth in the veterinary industry from 2019 to 2024, meaning the industry is set to continue growing. Despite the impact of COVID-19 , the industry’s future is positive, so practices should keep looking for opportunities to target their services and stay up to date with emerging technologies. This will help them attract and retain customers for long term growth and veterinary practice success.
Learn more about how you can improve your veterinary practice like Hervey Bay Veterinary Surgery.
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