Return on Investment Meets Return on Experience
How to narrow the field of countless dental technology options
The paradox of choice is the idea that too many choices at a consumer level is paralyzing, having the counterintuitive effect of discouraging consumption. The idea was presented in The Paradox of Choice by Barry Schwartz, a professor of psychology at Swarthmore College. In the years since the book was first published, the idea has been met with pushback from some social scientists. For instance, they suggest (rightly in my opinion) that for those who know a category well, more choices are preferable. Still, the paradox of choice is an interesting idea to consider when looking at the whole of technology through the lens of dentistry. With so many technology choices out there, how does the practice decide how to best deploy their capital?
Functional discussions are rooted in precise definitions, so defining “dental technology” would typically be an important consideration. Nobody sets out to buy “technology;” people buy solutions to problems. However, because “technology” now stretches across just about every aspect of the dental profession, we’re intentionally leaving the definition nebulous.
How do you determine what technology warrants your attention? The starting point for most discussions is return on investment (ROI). Over the past few years, a heightened level of sensitivity to ROI has emerged. In my opinion, two factors are driving this sensitivity: the overpromise of big data and the underperformance of the economy.
Disappointing Big Data
It’s impossible to read any business publication without getting battered with a barrage of stories touting the infinite power of information. The role big data plays in everyday life is growing each day. Yet power does not always equate to performance.
For all the progress we’ve made in capturing, storing, and analyzing vast amounts of information about patients, discovering the correlation between monies invested in a specific piece of technology and the aggregate of human behavior across different variables is still incredibly difficult. Look no further than the current election cycle. Candidates stand shoulder to shoulder in the debates, broadcasting their highly triangulated positions to the public. Yet, we can still only guess at what’s going to resonate with who and why.
It’s (Still) the Economy
There are only so many times you can mention “the economy” before you start sounding like a doom-and-gloom apologist, longing for the good old days. Some point to the stock market as evidence that the economy is fine. There are just a couple of problems. First, the stock market is not the economy,1 but even if it was, much of this growth is being driven by a few small segments in the economy. Apple, Google, Facebook, Netflix, Amazon, and Gilead Science accounted for more than half of the $664 billion of value added to the NASDAQ this year.2
Per the Wall Street Journal, on the eve of the dot-com crash in March 2000, the top six stocks in the S&P had accounted for all of the index’s market-cap gain that year.
This isn’t to say that things are bad or that we should all carry a panic button around with us, but businesses can sense if something is “off” and as a result, they want to be able to account for every penny. Everyone in this profession is aware that the great recession hit dentistry particularly hard.
Many practices are leaning especially hard on the ROI to do the thinking for them. Upon running the numbers and learning the ROI on their potential tech purchase isn’t a grand slam, practice owners (quite logically) assume it’s a shortcoming of the technology being considered. They wind up not taking the calculated risks that, in the past, became the paradigm shifting tools in the practice.
The real tragedy of all this inaction—aside from the outdated ideas and technologies that get dragged along far after they’ve outlived their time (looking at you alginate impressions)—is that it’s based on a flawed premise. “What’s my ROI” is an imperfect metric for the task at hand.
ROI was never meant to be used as a variable for assessing technology. The entire idea of ROI was designed as an accounting metric to make different businesses in a group comparable to each other. If you want to focus on the accounting aspect of it, technology is an investment that can be categorized as either an asset or a liability, depending upon how the financing is structured.
How many businesses would exist if they followed ROI as their primary financial compass? Amazon lost money for years before turning a profit. Invisalign followed a similar path. Just about every business that was born in Silicon Valley had a net negative ROI on just about every item on their balance sheet in the beginning. Yet “what’s my ROI” is worn like a suit of armor, insulating the business/practice owner into inaction.
Do we toss ROI out the window? Of course not. Determine the total cost, calculate the anticipated savings and revenue, and what sort of numbers you’re anticipating. Just understand that ROI is giving you a limited and slightly flawed analysis. What ROI fails to incorporate is the return on experience (ROX) that a new piece of technology will generate.
Why Practices Consider ROX
As we define ROX, or the emotional experience people take away from your business/practice, it should sound familiar. ROX has considerable overlap with brand image/brand promise. This is where the business owner making the buying decision and the business marketer trying to grow the business become one.
ROX can be a powerful tool. The ultimate iteration of ROX is when your customers become proactive advocates for you. For example, when considering whether to go from alginate to digital impressions, it’s easy enough to calculate the time efficiencies and the monetary savings in supplies and materials. You can then bounce that information against the cost of a scanner and amortize that across as many years as you want (typically 5 to 7 for technology). But where on your ROI model do you account for the patient telling their coworkers, family, or friends about the cool experience they had at the dental office today? You can’t.
There is a paradox of choice when making a purchasing decision about a specific piece of dental technology. Before you get to the ROI, take a look at how this technological offering will impact the customer experience, the ROX. Look at it from the outside in, as a potential patient, and work your way back to your end product. Ask yourself what experience your patients expect you to deliver, and what kind of experience do you want to deliver? This approach can often help prioritize your thinking and narrow down your choices. What you’re looking for is a situation where the ROI and ROX both give you a green light, which should make your decision much easier.
References
1. Cox J. The Market Is Not the Economy: What the Fed Misses. CNBC website. https://www.cnbc.com/id/100750350. Accessed October 8, 2015.
2. Strumpf D. The Only Six Stocks That Matter. The Wall Street Journal website. https://www.wsj.com/articles/the-only-six-stocks-that-matter-1437942926. Accessed October 8, 2015.
About the Author
Dan Reed is senior copywriter for Blakeslee Advertising, a full service marketing and public relations firm. Mr. Reed helps businesses discover, develop, and deliver impactful brand messaging. He has more than three decades of experience in the dental and orthodontic space. He can be reached at dan.reed@blakesleeadv.com.
