In this article, we talk about how training and investing in your staff can help increase pharmacy sales. We’ve taken the accounts of Fin McCall from Prestwich Pharmacy to help us deliver what we hope is an excellent resource to help you deliver more OTC sales.
“Up to 80% of customers don’t buy anything when they visit the pharmacy”
This is an astonishing statistic and, depressingly, a huge missed opportunity for pharmacy businesses where revenue is being eroded from all directions. There are 6 million people visiting the pharmacy every day and each pharmacy can make a guess at how many customers they have coming into their pharmacy and how many are leaving without a sale. What other retailer has this footfall and yet is happy with that low conversion rate?
Pharmacy has long been apologetic about earning money from its biggest customer group – those coming with prescriptions. It has seen itself primarily as an NHS service but with NHS money being eroded and pharmacy increasingly being sidelined and pushed to become more self-sufficient making money from customers through OTC sales and services is the only way to survive.
Poor consumer engagement = lost revenue
Poor consumer sales engagement hasn’t been a big issue for pharmacy until now because the primary source of revenue has always been prescriptions – in fact over 70% of pharmacy profits have come from this. However, the NHS cuts have put a spanner in the works and they will continue to shrink prescription revenue, seeing it as a transactional activity that can be executed more cheaply by other means, whether through hub and spoke, automation or Amazon-style delivery. Anyone relying on prescription revenue to keep the business afloat will be in for a shock. So what can pharmacy do to shift its focus from eroding prescription revenue to the untapped, profitable consumer part of the business?
Time for change
While the policy makers and stakeholders battle it out, a number of pharmacy owners have started to take a long hard look at their businesses and seek out opportunities to develop new revenue streams that can make up for the NHS payment shortfall and more. And underpinning these changes have been strong leadership and an upskilled and motivated team.
Leadership training has been a requirement of the HLP Quality Payment and the principles of leadership can be applied to develop any part of the pharmacy business. A fundamental part of the leadership training is around inspiring and developing the team to help the leader drive the HLP agenda. That same approach can equally be taken to drive the pharmacy’s OTC sales agenda or services agenda.
There is an NHS shift to self-care and for patients to buy OTC medicines instead of going to the GP or A&E. OTC is more profitable than NHS prescription business and the great thing about this is that pharmacy is already geared up to offering this. It’s just that there hasn’t been the focus to drive this. It is a significant untapped market for independent pharmacy and customers trust the pharmacy and team to give them the right advice and recommend the right products for what they need.
Pharmacies need to look rationally at their OTC offer. Fin McCaul speaking at the Pharmacy Conference said that he, like many other pharmacies ‘‘have the wrong stock, in the wrong places at the wrong times’’.
More revenue from OTC sales
Fin McCaul has put this into practice and has seen a 17% increase in OTC sales over 6 months in spite of competition. Speaking at the Pharmacy Show, he said to do owners must make a decision to invest in that part of the business. Opportunity is ‘nowhere’ can be read as ‘now here’. He also stressed that if you don’t measure it, it won’t happen and he knows the average transaction by each member of staff. Although he relies on EPOS sales can be measured in other ways too.
This 17% increase is sales were down to:
Change layout of the pharmacy so people have to walk past the shelves – previously it was a straight line from the entrance to the prescription counter so there was no opportunity to become familiar with the pharmacy and stock
80:20 rule – 80% of sales came from 20% of products stocked
Stock rationalisation – he took out ‘dead’ products that were not shifting from his inventory and focused on the ‘20%’
Product flow – placing products appropriate to customer flow in the pharmacy e.g. flu products next to the seats where people were waiting for prescriptions
Improved use of EPOS – monthly reports allowed him to analyse sales and customer habits and change products lines and positioning accordingly
Use of planograms – these have been designed to reflect seasonal demand, hero brands and consumer shopping psychology
Improved merchandising – Never ever run out of popular stock lines
NHS services seem to come and go and are surrounded by a shroud of uncertainty and inconsistency, especially if they are commissioned locally. National smoking cessation services and minor ailments schemes have come and gone while advanced services such as medicines use reviews, new medicines services and flu vaccination are going strong now but for how long. As for Quality Payments, it’s still not clear whether this was a one off or a repeated revenue source.
Private services especially those linked to PGDs are the emerging saviours and are starting to become the norm rather than the exception. Travel health, flu, strep B, erectile dysfunction, hair loss, and period delay are just some of the services now being offered through a pharmacy.
There are other programmes you’re able to affiliate yourself with too, such as the Prolongevity Programme that helps you combat prediabetes and other chronic conditions. Develop your connections and your offerings.
How to do it
Aligning training with business goals
The majority of visitors to the pharmacy come in for prescriptions and so are unaware of what else they pharmacy does and it’s key point of difference on the High Street, namely pharmacy medicines, services, expert staff and convenience of health advice. The team and the pharmacy owner too may have been so comfortable in the prescription service that there hasn’t been the opportunity to look at the pharmacy’s strengths and how it can better promote its OTC products and extended services, both NHS and private.
Training for training’s sake is a waste of time and resource and does nothing to motivate or drive revenue. A healthcare assistant that can see how training fits into the business and their crucial role in the success of the business is vital in giving him/her a sense of pride and ownership. For example, one business goal may be to develop a new travel service. To achieve that goal, pharmacy looking to develop a new travel service requires a number of steps:
– What customers need
– What the service entails to meet that need
– What the KPIs are for the service
– What skills and knowledge are required to deliver the various aspects of the service
– Which team members will need to be involved
– What training they need to help deliver the service
– How the service will be delivered and marketed
– How the service will be measured, reviewed and improved
Setting out the pharmacy’s business goals for the year or next five years is the first starting point.
Fin’s top tips
– Make small changes, in steps
– Involve staff, don’t impose
– Focus on numbers – hold weekly team meetings, and monthly meetings to review stock and sales
– Hold staff to account
– Signposting of service instore but also outside store to pull passersby into the pharmacy
– Enforce non-negotiable standards – e.g. pulling forward, clean and tidy store, greating customers with a smile
– For people bringing in prescriptions, never tell them to come back and lose that opportunity but keep them in store by saying “would you like to have a browse around the pharmacy”.
We hope this article has helped you understand how important training is when considering how to increase pharmacy and OTC sales. If you’d like to talk to us about anything in this article or would to book in for a demo, please don’t hesitate to contact us.
The Team @ Mediapharm
This blog post was written for Mediapharm by Pharmacy Mentor.