I would like to start a bonus program to encourage multiple eyewear sales to the same patient. What are some of the different ways to incentivize my dispensing staff in the optical department?
Ava Sharyl, OD (name changed)
Dear Dr. Sharyl,
It's a great question that I get asked a lot.
First off, I am not a fan of ‘spiffing’ individual staff members for product sales to patients.
Yes, commissions will produce higher sales on high end products and second pairs if you have a money motivated employee (not all are) who also happens to be a good sales person.
My brother-in-law was really good at that when he worked in an optical shop. I’m just not convinced that approach is best for your patients or your practice.
Reward The Team, Not The Individual
Aside from the fact that sales-based bonuses can encourage your employees to be pushy, they can also be counter productive to producing a sense of teamwork.
You have to think about how individual bonus programs might make your receptionist, bookkeeper or chairside assistant feel if they are not participating.
Think In Terms Of Your End Result
Assuming you meet your year end financial goals for practice revenues and profits, do you really care how many pair of glasses your staff sells?
I say NO. It's the end result that counts.
That's why I coach ODs to establish overall financial goals for your staff based on the three categories they have a strong influence on.
1. Collected gross income
2. Cost of goods
3. General office overhead
Then set reasonable goals for practice production and overhead for the year, such as:
Collected gross income - $600,000
Cost of goods - 30% of gross revenue
General office overhead - 7% of gross revenue
As a practical matter, you want to break your financial objectives into quarterly increments. You are going to get much more bang for the buck if staff bonuses come every three months instead of twelve.
Your production goals might look something like this:
• Q1 2012 - $140,000
• Q2 2012 - $150,000
• Q3 2012 - $165,000
• Q4 2012 - $145,000
The production goals above include the criteria that your cost of goods must be no higher than 30% and general office overhead no more than 7% of collected gross revenue. Those numbers are arbitrary and based totally on the history of your practice.
Let’s assume you hit all your goals for Q1 2012 (January, February, March):
1. Gross revenues of $140,000
2. Cost of goods of 30%
3. General office overhead of 7%
You could then bonus your staff something like 1% of $140,000 = $1,400. This amount is then split equally among all employees based on whether they are part-time or full-time.
Now you have a program that rewards all your employees for achieving the results you really want, higher practice revenues and lower overhead.
Which by the way, equals higher net profits for you.
Thanks for reading,
Jerry Hayes, OD
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Disclaimer: The information and opinions contained on this site are for discussion purposes only and are NOT intended to serve as legal, accounting or investment advice. ©2011 Jerry Hayes, OD. Not to be reproduced without written permission of the author.
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