Over the years, I have had the opportunity to see the rising popularity of refractive surgery, a category that is the merger of two worlds: (1) the medical world of treating patients and (2) the retail world of serving customers.
This merger has put ophthalmic surgeons in an awkward position. Although medically trained to diagnose and treat patients, the elective self-pay nature of LASIK and other procedures has forced ophthalmologists into the world of retail, which requires skill and training to serve customers effectively. As a result, surgeons view other surgeons and centers as competition, when in fact these other providers are in the same boat of trying to attract patients (and their money) toward an elective medical procedure.
In this context, the real competitor to refractive surgery is anything else the consumer can spend their money on, which includes the retail categories of new kitchen appliances, home entertainment systems (eg, flat-screen TVs), and vacations. What retailers are recognizing is that to remain relevant and competitive, they need to elevate the purchase decision beyond the commodity, good, or service they are providing, thereby increasingly focusing on the customer experience as a means of differentiation.
WELCOME TO THE EXPERIENCE ECONOMY
In their book by the same name,1 economists B. Joseph Pine and James H. Gilmore developed a framework that helps us understand what the Experience Economy is about. Called the Progression of Economic Value (Figure 1), the model provides historical context to help us appreciate the long-term structural shift that is underway in our economy. It started in the 19th century when farming was the predominant occupation of Western society, accounting for 90% of the workforce. Commerce was based on an agrarian economy and the extraction and trading of commodities (natural resources).
PROGRESSION OF ECONOMIC VALUE
With the rise of the industrial age in the early 20th century also came automation and factories, whereby manufacturing was the predominant occupation. As farming became increasingly automated, workers migrated from the farm to the factory. At the peak of the industrial economy, 50% of the labor force worked making goods (ie, tangible things) in factories. Although the manufacturing-based economy flourished, it too became subject to increased productivity through automation. Where did those workers go? By the 1950s, the majority of the workforce was involved in a service-based economy, performing intangible activities on demand. With increases in productivity (for which we can thank the computer, among other things) came parallel increases in standards of living. As was the case for the transition from farming to the factory, people were again in a position of paying for services they once did for themselves, including lawn mowing, oil changing, house cleaning, and wedding planning. These few examples illustrate how entire industries emerged to provide services to consumers who were willing to pay for them.
Today, according to Pine and Gilmore, only 3% of the US workforce is involved in farming and just 12% in manufacturing. That means the rest of the United States—85% of the workforce—is part of the service economy. Just as with farming and manufacturing, the service economy is also becoming increasingly automated. How often do you visit a bank teller? Most of our banking is done by an automated teller machine. Voicemail now largely replaces secretaries who once took phone messages. Airplane tickets are purchased over the Internet rather than at travel agencies.
Automation has caused a similar migration from services to experiences, where companies are seeking to differentiate their goods and services by shifting resources to offer (the technical term is stage) better experiences for customers.
An iconic example of the Experience Economy at work is Starbucks (Seattle, Washington), which has succeeded in taking a commodity worth pennies (ie, the value of the beans in a typical cup of coffee) and charging $4+ (a quantum leap in economic value). They have wrapped a basic commodity into an environment (referred to as the third place after home and work) that makes for a better coffee-drinking experience. Starbucks' success is evidenced by its growth from one to more than 12,000 locations worldwide during the past 20 years.2
THE FINAL STAGE: TRANSFORMATION
In their book, Pine and Gilmore describe a fifth level of economic offering—transformation—where the customer is the product. This economic offering is an apt description of refractive surgery, whereby the surgeon is transforming the vision of his patient. As the Experience Economy is increasingly adopted and the economy takes greater hold, Pine and Gilmore predict the emergence of transformational offerings.
A BUSINESS IMPERATIVE
In modern society, most people already have all the basic appliances in their home. Likewise, consumers are inundated with service offerings. For goods manufacturers and especially for service providers (that's you!), differentiation of the offering occurs mainly in the realm of customer experience. This is a global phenomenon, as highlighted in a recent survey of CEOs from 240 corporations across 20 industries worldwide: "With companies increasingly selling similar products, CEOs said the quality of customer service was often the only differentiator."3
This phenomenon, which is taking place around the world in a multitude of retail industries, similarly needs to take place within the practice of medicine.
MARKETING IS NOT ENOUGH
In reality, as many doctors will attest, it is not easy to market LASIK. At first, many surgeons I speak to are disappointed with results of their advertising efforts to attract patients. I attribute this dissatisfaction to the typical mediocre quality of LASIK advertising. I also ascribe this to the fact that LASIK is a highly thought-out purchase, meaning that individuals take a long time thinking about whether or not it is a procedure they want. Trying to garner direct response with a call now-type campaign for a highly considered product is challenging. An even greater challenge lies in reaching consumers at all. They are saturated: Daily exposure to several thousand advertising messages, too many of which seemed (and were) too good to be true, causes consumer skepticism. Furthermore, consumers are strapped for time, striving to balance the demands of work with the desire for personal time.
Where do the aforementioned obstacles leave the refractive surgeon? One of my goals has always been to show that for most practices, advertising is not the key to sustainable growth in procedure volume. Like global CEOs, physicians need to adopt the mindset that the future growth of their business is linked to how well they treat and serve their customers—as an antidote to the inevitable commoditization of services that can occur even in medicine, where all providers begin to look the same to the consumer.
To avoid this sameness, surgeons need to recognize the type of business in which they are involved. At first glance, it appears that surgeons are paid for the services they perform. But a closer look at the fifth level of offering in the Progression of Economic Value model shows that surgeons are actually in the transformation business, changing the vision and lives of their patients. Refractive surgery is inherently a transformational offering; however, surgeons have taken a leap from services to transformations and skipped over the experience, leaving a gap between what patients want and what they are offered.
FUFILL THE EXPERIENCE
To help fill this gap, I have summarized some ideas that fit under two topics: authenticity and attractiveness. We will explore each category in more detail.
Authenticity. In their recently published book on the subject of authenticity,4 Pine and Gilmore describe a fundamental shift in the criteria used by consumers when making a decision. This shift mirrors how the economy is progressing. In the farming economy, purchases were made primarily on availability (ie, harvest time). In the manufacturing economy, mass production of goods allowed consumers to purchase on the basis of price. With the rise of the service economy, quality became the means of comparison in the purchase decision. Additionally, with the Experience Economy, authenticity is what consumers are seeking in their purchase decisions.
You do not have to look far to begin to see how the desire for authenticity becomes evident. Notice the rising popularity in the following: natural and organic foods (eg, Whole Foods Market [Austin, Texas]), American-made motorcycles (eg, Harley Davidson Company [Milwaukee, Wisconsin]), and, yes, even in advertising (eg, Dove's Campaign for Real Beauty, [Unilever PLC, London, UK]).
Pine and Gilmore describe authenticity in this business context as, "purchasing on the basis of conforming to self-image."4 Applying this definition to elective surgery brings to the forefront how critical it is for surgeons to understand how consumers evaluate what a practice has to offer. The decision for a consumer to purchase an elective procedure is based on the offering itself ("I like that") and, equally important, on how well that offering matches the consumer's beliefs and values ("I am like that").
The staff in every refractive practice should ask themselves what they could do to render their customer experience as more authentic for its patients. The two key questions in this regard are (1) is our practice true to self and (2) is our practice what it says it is?
Attractiveness. A major goal of most surgeons is to attract new patients to their practices. With advertising becoming less effective, surgeons would be wise to increase their attractiveness by looking inside the practice. What impressions are you making with potential customers, especially over the telephone? Research conducted by SM2 Consulting during the past several years has shown that few LASIK practices consistently demonstrate the skills to properly handle phone inquiries from prospective patients.5 An indication of this problem is the qualifications of the person handling incoming calls. That individual tends to be the lowest paid and least experienced and knowledgeable person in the office. The aforementioned is not a formula for creating a great first impression. Similarly, what happens when people arrive at your practice? What type of welcome and reception do they receive? If your patients still sit in a waiting room, what can you do to make the time they spend there more worthwhile?
Your office is full of cues, both negative and positive, that reinforce a person's impression of you and your refractive offering. A valuable exercise is to go through every room that patients enter and conduct a sensory assessment with the entire staff. What do you see, hear, smell, and touch as a customer? This process will allow you to identify and eliminate negative cues and replace them with positive ones that reinforce the image of the practice that you are trying to convey. These small steps will enhance your attractiveness to current patients—and the future ones they refer to you.
SUMMARY
Refractive surgery is already a popular elective procedure; yet, it has more potential for growth. The key for surgeons is to recognize that they need to do a better job in the nonclinical aspects of offering the procedures. The framework and perspective of the Experience Economy brings to light what other retail industries are doing to more effectively compete and earn the consumer's income. Rather than focus on advertising, refractive surgeons should shift their focus internally, improving their practices so that the experience becomes the marketing.
Shareef Mahdavi, President of SM2 Strategic, draws on more than 20 years of launching ophthalmic devices to help companies and providers create demand for new procedures and technologies. He is also one of a select group of individuals certified as experts on the Experience Economy. Mr. Mahdavi may be reached at +1 925 425 9900; shareef@sm2strategic.com.
