How to identify new revenue opportunities for your pharmacy, by simply thinking about your different customer segments.

For every pharmacy, it’s extremely important that value is being provided to all customer segments. However, how many of us spend the time to identify new customer segments, that currently aren’t being serviced as well as they could? This paper will aim help pharmacy owners complete a simple demographic analysis of your customers, and help you identify potential revenue opportunities.

Customers are the lifeblood of any business, especially a small community pharmacy. Serving our customers the best way we possibly can ensure that not only will they continue to visit our business, it will also ensure that you have a profitable business now and into the future. If you think for a moment, the customer essentially is determining the fate of your business by deciding where they spend their money. If there is a lot of choice for a similar service to yours within your local area, then it’s critical that your offer is differentiated in order to compete and ultimately survive. Now we all know there are hundreds of different customer segments who visit your business on any given day. Pharmacy owners generally cluster these customer segments into broader categories i.e. male or female, elderly, teenagers, etc. What’s extremely important for pharmacy owners to think about is what customer segments is the pharmacy currently servicing in a big way, and what segments could be focused on to generate further revenue?

I’ll give you an example, and then I’m going to give you a step-by-step checklist of what you could do to help identify some untapped customer segments. Imagine you have a pharmacy located in a busy central business district (CBD) in one of our capital cities. As you could imagine rent would generally be higher in these locations. One likely customer segment for the pharmacy are white collar professionals who are generally well educated and have a higher than average understanding and interest in their health and well-being. How could a pharmacy in this location provide a service that would benefit white collar professionals that enter the pharmacy on a regular basis? We know that half of the battle for pharmacies these days to make sales is getting the customer through the front door. So what service could you offer that would add value to these white collar professionals? What about being a click and collect destination or pick-up or drop off location for something that white collar professionals regularly use or do? I was thinking along the lines of becoming a parcel click and collect location or offering a drop-off and pick-up for a dry cleaning service.

Why would offering a click and collect or drop off/pick up service be targeted to a specific customer segment? White collar professionals are generally time poor and constantly in a rush especially in CBD locations. Providing a click and collect or drop off/pick up service allows this customer segment to use your business in a more efficient way than they previously did. In some pharmacies that I have been involved with, 4,000 extra customers entered the business because they implemented such a service many of whom didn’t even know the pharmacy existed until they used this service. The revenue generated from the service directly is usually minimal, however, if you think broadly, if your average transaction value is say $25.00 and let’s assume that 60% of those 4,000 customers make extra purchases by visiting your pharmacy, then that equates to $60,000 in extra sales. Obviously, if the percentage of customers making a purchase is higher, then your sales would be higher and vice-versa. This service was implemented in the pharmacy firstly by asking the question, who are our top customer segments? What’s important to them? What are they looking for? What services are important to them? Is our pharmacy providing all the services they need and want?

Customer segment checklist

  • Brainstorm all the different customer segments in your business. Ask for your team’s input. Then identify your top five customer segments.
  • Ask yourself these questions for each customer segment:
    • What is important to them? What are they looking for?
    • Why do they come to your pharmacy? Why don’t they visit the competitor?
    • What services (if any) are important to them?
    • Does your pharmacy provide all the services they are looking for?
    • Have you had any requests for services that you don’t currently provide?
    • What other services could be provided?
  • If you need help to answer these questions, ask your customers for feedback. Setup up an in-store prize in return for feedback.
  • After collating all this information, look to the market and see what services you identified as a potential opportunity.
  • Research these services and see if they make commercial sense.
  • Most importantly, be open minded and willing to give it a go even if it doesn’t work. You’ll never know if it was going to work if you never give it a go.