Is the veterinary industry passing its health check?

It depends whether passing a health check means that you are healthier than others or if it means that you indeed have nothing wrong with you. If the criteria for passing a health check is the latter of the two, then it means that the veterinary economy does have some problems and that some pro active business management is required to fix the problems.

Every month, with the help of our colleagues at Profitdiagnostix (www.profitdiagnostix.com) we collect a sample of data and compare it to the same month in the previous year, looking at some important parameters – just like you would with a general health check blood test. For both November and December the results showed a similar picture – nothing to panic about, but certainly some things that require attention.

Invoice numbers and animal numbers have decreased (animal numbers by 4.5%) – so the general customer base is shrinking and competition is going to get tougher. What’s more, is that client attrition (loss of clients) is increasing and where clients would last about 4 years at a vet practice historically, now they only last for 3.3 years.

This is the first time since APL Accountants started that we have seen these trends and they are as expected when the global economy is facing a recession. Consumers are deferring their spending on elective things (like vaccinations) because they have less money to spend as a result of high interest rates on their loans. If you look at the Consumer Price Index courtesy of the Australian Bureau of Statistics you can see that inflation in Sept 2022 was the highest it has been since 1990! And this closely reflects the downturn in numbers we have repeatedly been speaking about over the last 12 months in our newsletters.

We are actually lucky in the Veterinary industry and have the upper hand in 2 areas:

• Other industries are doing worse, and the veterinary industry has historically been more recession proof then most others
• We have very accurate data and tools to monitor the industry in real time – most other industries do not.

What the data does not show however is the variance in individual practice performance – don’t just assume that you are performing in line with the industry statistics because these are just averages. 

Never before have we seen such a broad spread of performance differences across our hands on customer base with whom we have regular meetings. 

Some practices are booming whist others who have been historically strong are declining. 

Only when averaged together does all this variable data come to a slowly declining market of 4.5%.

What this tells us is that something can be done to counteract the decline. Yes, it depends very much on how good your closest competitors are and what actions they are taking – so it means you have to be better than your competitors to win the consumer over in a shrinking market.

Our advice here to you is simple – thanks to our ability to predict the market more than 18 months ago, we were able to put things in place to assist pro active business owners who were staring down a recession.

Firstly you have to establish in light of the high variability in performance whether or not your business is declining – we can give every one of you this information and will be doing so with all our regular clients.
Secondly, if you are a declining practice, then you need to know precisely what your attrition (customer loss) is and start doing something about it that is more proactive and aggressive than your competitors. This is why Profitdiagnostix put resources into delivering direct text messaging campaigns to lost clients AND to monitor the feedback from the pet owners receiving them.

Whilst it may seem unusual for an accounting firm to pro-actively start recommending specific marketing strategies to businesses, the economy has dictated to us that this is one of the key areas where we can assist veterinary practices in these times, and it ticks all the boxes:

• Direct marketing to pre-existing customers is about 10X more effective in terms of cost per customer acquisition/re-activation vs less direct strategies like Google advertising and Facebook advertising.
• Direct marketing strategies allow us to monitor whether or not they are directly resulting in clients being re-invoiced out of your practice management system and charged for specific items vs costs per click and telephone calls which seldom result in an actual invoice and cannot easily be traced back to customer and patient records.
• They allow us to monitor what clients are texting back – for example ‘we are going to XYZ vets down the road because we prefer them’,  ‘we would love to come in but need to save money’ or ‘thanks for reminding us, we forgot’  

So for those of you who are sitting on the fence, we would urge you to contact the team at Profitdiagnostix: https://profitdiagnostix.com/contact/

You may be surprised how easy this is to do and how little it costs vs other types of marketing and also how effective it is – we have seen practices re-activate up to $45,000 of business in 3 months.

Dog Tales – the more the merrier!

It’s not only veterinary practices that feel a recession, rescue centres do too! It seems in the recent months that there are fewer and fewer people opting to be pet parents which is not surprising when money is tight. So when Mom saw that one of the rescue centres she follows was getting too full because fewer people are taking on pets she decided that she would help and become a foster carer. 

First she had to convince Dad who naively agreed to foster a few puppies – little did he know that a day later there would be 5 high energy working fur babies running around the house. Chica and I (Strudel) would then teach them the benefits of behaving like a sausage dog or a Chihuahua (we know these are 2 of any vets favourite breeds – or not). So with a total of 7 delinquent dogs in the house we had a very festive Christmas period.

Needless to say that with homes being hard to find these days – 6 weeks later and only one of the little monsters has exited to their forever home. The others remain and continue to assist in opening and reading all your important ASIC notifications and tax notices that arrive in the post and removing trust deeds from the shelves.

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