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Marketing your lab's services more effectively.

Marketing your lab's services more effectively

Apply fixed costs

to prices

When setting prices for lab tests, should we consider fixed expenses as part of the cost? Our rent for the lab and other fixed cost remain constant whether volume increases or decreases.

Yes, you must consider some portion of fixed expenses in your cost analysis. Although a single new account might not noticeably affect your rent, 100 would. If you decide to expand in the future, as many labs wish to do, your fixed expenses will increase. By incorporating a portion of your fixed cost in the price of each test, you will accumulate the necessary revenue to expand, should you decide to do so.


sales reps

The sales representatives for our lab are paid salary plus commission. Is it necessary to give them annual increases in their base salaries? If we raise our prices, won't this automatically increase their pay, since commission is based on a preestablished percentage of the selling price?

In the lab industry, about half of a sales rep's income consists of base salary. Increasing test prices affects only the other half. Since you wouldn't give other employees half a raise, you shouldn't do so for the sales staff, either.

Tailor services

to clients

We serve several types of unrelated client groups, including physicians, veterinarians, and nursing homes. How can we market our services to them all effectively?

Lumping clients together could lead you to misallocate resources. For example, you might put all your resources into developing courier routes for your physician clients and fail to develop adequate phlebotomy teams to service nursing homes. Instead, separate your clients into specific groups, according to their needs; then develop a different marketing plan for each group. This will enable you to treat each group as an independent business and to focus the proper resources on it.

Predicting revenue


How can I determine the potential revenue from physicians in my market area?

From my experience in the lab, I have determined that the average number of clinical laboratory tests ordered per patient by a physician annually is 1.7. Multiply 1.7 by the general population of your market area. Because physicians perform about 50 per cent of out-patient tests in their office laboratories, divide the result by 2. Multiply that answer by your lab's average revenue per test. The final number will reflect the annual monetary potential of your market area.

Keeping clients

on your turf

What can I do when competitive labs target my clients?

You have several options. First, neutralize competitors by matching any offer they make. Second, retaliate by targeting opponents' customers yourself. A third option is to concentrate on a competitor's customers in another market area, forcing your rival to defend its turf. Finally, you can choose to do nothing. If you provide superior service, your clients should remain loyal.

Service worth the price

The fees at our small community-based laboratory are considerably higher than those charged by several large national labs that also serve the area. Since we can't lower our prices without losing our profit, how can we overcome their price advantage?

This is probably the most frequently asked marketing question in the lab industry. I respond to any price challenge as follows: "My prices are higher and that's exactly why you should use us." This thought-provoking and seemingly contradictory answer makes the prospective customer eager to hear more. You'll have created an opening to give the reasons for your prices and make a second sales pitch. Your objective is to make your service appear a better value. Among items you'll want to mention or describe are staff credentials, JCAHO and/or CAP accreditation of the facility, local presence in the community, service centers, personalized service aimed at individual needs, and fast turnaround time. Explain that it costs more to provide high quality.

Benefits of

health plans

Several large health plans in our area bid out their referred laboratory work. The winning bids are typically so low that we cannot compete with them. Why do labs vie for this work?

Labs love such arrangements because they stand to gain a great deal from them in volume and in obtaining new customers. Most health plans, such as preferred provider organizations and health maintenance organizations, have large physician networks. Contracts awarded to such groups by health plans usually require that the providers use a designated lab. The laboratory thus gets the opportunity to prove itself to a large number of clients who might otherwise not have tried it.

If the lab's service is up to par, it stands to acquire a substantial amount of fee-for-service work. In addition, any lab that can dominate the larger health plans in the area can actually make it inconvenient for local practitioners to use anyone else, since a substantial portion of work is designated for that specific lab.

My recommendation is that you acquire at least one major plan and consider the loss a marketing expense. Such plans are here to stay; why not obtain your share of their business?
COPYRIGHT 1990 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

Article Details
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Author:Fantus, James E.
Publication:Medical Laboratory Observer
Date:Sep 1, 1990
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