9 Ways to Help Increase Front-End Sales
November 4, 2013 by Smart Retailing Rx
Business and Operations
Business and Operations
Boost your bottom line by looking beyond prescriptions
With some savvy marketing, you could boost front-end sales and get your patients to leave your store with more than just their prescriptions.
Front-End Sales Add Up
Could you be focusing too much on driving revenue through back-end prescriptions? The 2012 National Community Pharmacists Association (NCPA) digest indicates that per-prescription profit is decreasing in independent pharmacies.1 An October 2012 Drug Channels article points out:
- Gross margin on prescriptions dropped from 23.3% in 2010 down to 22.1% in 2011.
- In 2011, gross profit dollars per prescription were $12.40, vs. 2010’s $13.43.2
While margins on prescriptions are falling, margins on front-end sales remain strong. A Hamacher Resource Group (HRG) report found a 38% margin on front-end sales,3 compared to the 23% average total gross margin reported by NCPA.4
And, OTC products are growing in importance to shoppers.5 The HRG report noted that several large OTC categories (e.g., first aid, eye/ear care, smoking deterrents, etc.) saw stronger sales growth in independent pharmacies compared to chains.6
Bottom line: increasing front-end sales translates into higher revenues, and the importance of OTC in the independent pharmacy business is only likely to increase.
Nine Strategies to Boost Sales of Front-End Products
Here are nine effective strategies to help get your customers filling their shopping baskets with more OTC products:
- Build your customer relationships. Shoppers value a pharmacist whom they trust to provide credible information and care. HRG found shoppers who cited their relationship with the pharmacist as a reason they’re loyal to their independent drug store were more likely to reward them with business. This group purchased 50% more personal care items and OTC products at an independent pharmacy than at other outlets. Interestingly, only 19% of pharmacists felt that trust was a reason people continued shopping at their store.7 The time you take to talk with your customers pays off.
- Design your floor plan to generate sales. Layout and in-store merchandising make a difference. Pharmacists who told HRG that their front-end sales were growing relied on both planograms and in-store merchandisers.8 Keep your store design fresh, advises Lorrie Thomas Ross, CEO of the marketing company Web Marketing Therapy. Revamp the space at least monthly, rotating displays and offering fresh “eye candy” that will capture customers’ attention. (Read “Is Your Appearance Turning Customers Away?” to learn more about how your pharmacy’s appearance can influence sales.)
- Check out market research. Don’t just rely on your intuition or informal surveys to figure out the best ways to drive more front-end sales. For example, HRG found that pharmacists thought that diabetes care ranked as the fourth-most-shopped front-end category, but point-of-sale data revealed that diabetes actually ranked 15th. In the HRG study shoppers also overestimated their buying of diabetes-care products.9 Ross points out, “There’s a difference between what people say and what they actually do.”
- Utilize your POS. By analyzing a year of POS data, HRG found that sales of health, beauty and wellness products are highest in October, and that the busiest time of day for front-end sales is between 11 a.m. and noon.10 Shopping patterns can suggest what to stock, when to promote particular items, and how to staff your store, so you can deliver the convenience customers demand from pharmacies today. POS can help you evaluate in-store promotions and enhance their impact, as well as recognize loyal customers and implement ways to retain their business.
- Link related categories visually. Understand the types of products your customers buy at the same time, then locate those items near each other and cross-promote them with signs in the store. For example, people who buy smoking deterrents also tend to buy gum and mints, and people who buy eye-care products also tend to buy vitamins and supplements for their eye health.11
- Make product suggestions. Independent pharmacies fill an average of 201 prescriptions a day, yet they recommend nonprescription products only 10 times a day. In fact, 41% of independent pharmacists HRG surveyed said they recommend five or fewer products.12 While front-line staff may resist what they see as pushing products, Ross advocates combining marketing with education, what she calls “MarkEDing.” Staff can educate and serve customers by making comments like, “Did you know we have …?”
- Draw customers in more frequently. The more often customers are in your store, the higher the percentage of OTC products they will buy from you. Keep things fresh with products that provide reasons for them to come back even if they don’t have a prescription to fill. Think about offering a line of natural or organic personal care items — a category that now takes up nearly 10% of the U.S. market and whose global sales are expected to rise from $9 to $14 billion between 2011 and 2015.13 Or, add an offering that matches your customer population preferences, like gluten-free or Hispanic items.
- Sell with stellar service. While shoppers at independent pharmacies have different priorities, they all care about the service they receive, meaning that fast and personal service always pays off. “Offering really great service is one of the best things you can do to boost business,” Ross advises.Ross suggests asking customers one very valuable question: “If there is something we could do to improve your shopping experience, what would it be?” That not only encourages shoppers to tell you what they want, but it also shows that you care. Their suggestions may be surprisingly simple to implement.
- Shop your own store. After years of running your pharmacy, when was the last time you walked in the front door with a fresh set of eyes? Use a critical eye and ask yourself if this is a store that you find inviting and fresh. Is this a store that you would shop in? If not, then update décor, rearrange fixtures and clean things up. Download and print this handy checklist of activities to help make sure your front end impresses customers from the moment they walk in.
These nine strategies are all based on the 4 P’s of good marketing: Product (the right products to meet customers’ needs); Placement (how products are placed throughout the store); Price (providing clear pricing on the shelf); and Promotion (activities to draw customer interest).
Check Out These Other Helpful Resources
- Is Your Appearance Turning Customers Away?
- What Pharmacy Customers Really Want
- Consumers’ Changing Service Expectations
- Independent Pharmacy Shoppers: Who, What and Why
The takeaway: Front-end products have good margins and can boost your bottom line. Through active marketing efforts you can influence shoppers to buy a greater percentage of nonprescription items from your pharmacy.