Back in December, 2015 we published a blog titled That Dirty Word ‘Discounting.’ After recently reviewing that article, we are comfortable saying that we were on the mark with our recommendations on how to approach discounts with wellness plans then, and continue to have the same philosophy today. Here is a recap from our original blog:
Base your decisions on data, not emotions or guesswork. The data shows that pet owners that purchase a wellness plan spend an average of an additional 150% of the cost of their plan per year on ancillary services… Research has also found that while offering no financial incentive leads to minimal plan sales, over-discounting (more than 20% on plan services) does not increase sales. In other words, moderation is the best approach – rewarding desired behavior (providing improved care for pets) without unnecessarily discounting too steeply.
Ultimately how you choose to package and price your plans should always reflect attention paid to clients, capabilities, industry evolution and competition. When done right, a sound incentive strategy can benefit all parties – the pet owner, the pet and the practice.
And in our blog from just a few weeks we reiterated the above based on even more current information:
Data shows that wellness plan programs can deliver a 10-15% increase in overall practice revenue; keep in mind that is above and beyond other growth initiatives and takes into consideration potential cannibalization of previously performed services (as mentioned above, a serious misconception). And the majority of practices offering plans discount between 10-20%, and even offer other benefits such as complimentary additional exams and discounts outside of the plan.
So why bring it up again? Because this topic can result in so many different emotional responses, and we want to do everything we can to ensure that when you are designing and pricing your plans that all decisions are based on fact, rather than emotion or fiction.
So let’s look at the facts:
- The average price of a wellness plan is $600 – far more than most clients currently spend on their pet annually
- Regardless of method, the average wellness plan is discounted between 10% and 20%
- On average a wellness plan client will spend 1.25x – 1.6x the cost of the plan on services and products outside of the plan, resulting in an annual per pet spend of $1,350 – $1,560
Even practices that choose to discount their plans far more than our recommendations see tremendous uplift in revenue, loyalty and service usage, although no doubt it eats away more of their profitability.
So are we telling you that you have to discount? No. In some demographics, being able to budget your pet care over 12 months may be seen as a discount in and of itself. However, you will also find that regardless of socio-economic status, many clients choose to purchase a plan (and will even pay for the plan up front in full), both because they appreciate the discount and also because they like knowing that their pets are getting the ultimate care without having to worry about it.
And the reality is that today’s consumer is always seeking ‘savings’ in some form or another and wants to be assured that they are receiving value for every dollar spent – whether at the grocery store, the gym or the veterinarian. However, that doesn’t mean that they expect you to offer the same monthly payments as they could get purchasing a plan from a “big box” veterinarian. In fact, they feel strongly that your services are worth more (otherwise they wouldn’t be coming to you when their pets are ill), and are willing to pay 30% – 40% more for a wellness plan at your practice rather than spending less at what may be deemed a lower quality facility.
Here is another tip when discussing added value and discounting: wellness plans should be used as a vehicle to promote other services at your practice – those that may be new, less well-known or underused. For example adding a complimentary weekend of boarding lets people know that you offer boarding. Or maybe your puppy plan includes a complimentary 1st grooming appointment or a couple of daycare sessions. Or maybe your senior plan offers a pain management options where clients can add on multiple laser therapy sessions and build the cost into their monthly payments. While some of these suggestions qualify as ‘discounting,’ the ultimate goal is greater paid usage of all your services.
Whether you choose to apply a flat discount across all services in your plans, include some services that are highly discounted or complimentary, or a combination of the two, ultimately the rewards of a successful wellness program exponentially make up for any ‘savings’ that are provided.
Next week we start our two part post on Branding and Marketing.