If you have been following, reading, listening and viewing Peak’s content over the years you will know we are keen advocates for the “what you can measure you can manage” school of thought. Yes, we are accountants, so being analytically minded is part of who we are.
The Pharmacy Mastermind program was launched at the beginning of 2021 and it has been one of our most exciting and successful initiatives in Peak’s history. Personally, it has been immensely rewarding and gives me great joy in being able to help pharmacy owners.
Getting results for our clients is our goal, but to do that we have to have a good understanding of the business, the owners and the team. We need to have the right structures in place, with the owners focussed on the most important functions. To know whether it is working, we need data. So, what type of data do our Mastermind clients track?
A lot is the honest answer. But knowing your time is precious and you don’t particularly want to read a thesis at the moment, I have outlined below some of the most important.
Total Marketing Reach
We have got to get the marketing and community engagement strategies working well. The results from even the best marketing strategies can be like a slow-moving train. It takes a while to get going, but you need to be consistent and persistent. Done right the results will flow through. Here is how we measure Total Reach.
Total Reach = Total Website Users + Social Media Reach + Total EDM Opens
*EDM = Electronic Direct Mail (emails to your customer database)
All these target areas will capture different audiences who have accessed you in different ways.
The aim is to get constant growth in this number. If you get this working, over time it will translate to customer numbers, script numbers and ultimately sales. This is all about connecting with your community. If the content works, on the right channels, and relevant to your target audiences - you will see growth. It takes work and a little refinement, but most of all consistency and adapting are the keys.
One client we worked with, we managed to increase their Total Reach by 500% within 6 months.
We have plenty of content and webinars available through our website. So, make sure you check out this content. Also, if you are keen on getting your marketing working for you but not sure what to do, check out our marketing program here.
Customer and Script Numbers Growth
As we take a pharmacy’s community and audience through a journey from awareness to purchase, the ultimate test of marketing is growth in customers numbers and script numbers. Not only month by month, but also year to date. You have got to get traction on these numbers for you to succeed in achieving sustainable profit growth.
It’s a good measure of the effectiveness of your marketing. After all, the ultimate KPI from a marketing strategy is sales growth. Noting there is a delay effect. Your new marketing strategies won’t change things straight away. In our experience it takes at least 3 months until you start to see the growth in customer and script numbers if done well.
We got working on one client whose customer numbers and script numbers were both falling by an average of 4% and 8% respectfully. Within 6 months we halted the decline. They are now achieving consistent positive growth months for the first time in two years.
Sales and GP$ Per Transaction
If you have read our previous blogs, you would have read about the 4 KPI’s relating to turnover growth.
Customer Numbers, Customer Loyalty, Customer Frequency and Customer Spend.
Sales per transaction and gross profit per transaction are both very important to track here. What we are looking for here are those numbers to be at least consistent every month, ideally with slight increases. Don’t forget, these don’t just increase on price alone, but also increase by the quantity of items purchased by each customer. And small changes in this area results in big impacts on your overall profitability.
Gross Profit Growth
Once we have these KPI’s going in the right direction we should now start seeing gross profits increasing. I didn’t mention this first as this measure only comes about from so many other factors. More than what I have listed above. GP$ Growth just confirms what we are already achieving. It’s the final check that substantiates that we are on the right path. We want to see consistent growth. Monthly fluctuations do happen so be careful not to read too much into a one-month decline. Year to date is the most important measure here. Consistent declines however need addressing. If you have the data, then we have the ability to look at what is going wrong, then put in strategies to get you back on track.
Net Profit Growth
Sustainable Profit Growth is our ultimate goal here. Growth in profitability year after year. The best pharmacies I know are able to achieve this continuously. But you are not going to achieve this by trying to reduce your stationary bills. Yes, expenses need to be managed carefully but they are not going to result in sustainable profit growth. Rent is not going to change, insurance is not going to change, nor is telephone. Sustainable growth in profitability only comes from growth in the KPI’s I have mentioned above. This is why this area is so important to us, and why we spend a great deal of time on this area with our Mastermind clients.
There is a lot more we go into, more analysis and more strategies that need to be employed. This is just a taste. We are big fans of community engagement and strategies that achieve sustainable growth. Sustainable meaning regular, but sustainable also referring to the lifestyle of the owners.