Hear.com to Develop Direct-to-Consumer Strategy
SEC filing outlines plans to exclude HCPs in some online sales
Yesterday, hear.com announced plans to go public. The initial public offering (IPO) SEC filing provides a tremendous amount of insight into hear.com’s business model and finances, and lays out a six-point growth strategy to “transform hearing care delivery at scale.” The growth strategy for hear.com, which currently operates 11 different countries, includes:
- Attracting new customers and growing its partner network
- Expanding into more countries
- Bringing telehealth solutions to more countries
- Developing and expanding a direct-to-consumer (DTC) channel
- Selling “incremental solutions” and encouraging repeat purchases
- Continuing to invest in consumer innovations, solutions, and services
With regards to DTC, hear.com has a two-pronged strategy for growth. The company is looking to expand its telehealth-supported sales, while at the same time developing a new DTC model that does not include appointments with hearing care professionals (HCPs).
DTC via telehealth
The company currently offers a proprietary telehealth solution dubbed “Clinic-in-a-Box”. Clinic-in-a-Box is essentially a telehealth-supported hardware package that includes “a tablet, pre-selected hearing aids […] and equipment for the hearing test and fitting.” The company currently offers the service in Malaysia, Canada, and the United States, and hopes “to expand it further to multiple other geographic and regional markets”
With Clinic-in-a-Box hear.com handles “all aspects of the purchase, including invoicing, settling reimbursement claims and providing financing options, as well as post-purchase servicing.”
Customer retention is an important part of hear.com’s Clinic-in-a-Box strategy. While the HCP may play an important role in servicing the customer (hearing test and hearing aid fitting), hear.com stresses that future purchases will likely be made via hear.com. The purchase process allows hear.com to maintain “multiple points of contact with our customers to ensure the highest levels of satisfaction and retention for their next purchase.”
Direct sales without the HCP
The second prong to hear.com’s DTC growth strategy includes online hearing aid sales that are not supported by HCPs. The company plans “to introduce a differentiated and lower cost direct-to-consumer retail model where [hear.com] serve[s] consumers with mild hearing loss in a more efficient and direct manner with fewer physical touchpoints.” The new DTC model “will continue to offer all of [hear.com’s] existing solutions and services to consumers with the exception of appointments with hearing care professionals.”
The filing refers to this new model as a “lower cost over-the-counter retail model” and indicates that a regulatory regime change would be required, in some countries, to enable the model. In the United States, for example, “there is currently no over-the-counter hearing aid retail category because the FDA has not yet published regulations establishing a category of over-the-counter hearing aids”
Value proposition for HCPs
A big part of hear.com’s success in the USA, at least prior to the OTC hearing aid regulatory regime change, is the HCP. The company summarizes the strong value proposition it has for HCPs: “We help our partner providers by giving them access to a curated network of patients that they can use to fill excess capacity and increase their income. Moreover, we typically enter into geographic exclusivity with them in specified areas, which provides them with a continued flow of customers. Our Clinic-in-a-Box solution offers our partner providers access to patients beyond their geographic area and in underpenetrated consumer segments.”
The future for HCPs
Working with hear.com is a double-edged sword for HCPs. On the one hand, hear.com is promising to drive new business through its traditional and HCP-inclusive DTC channels. On the other, the company sees a future where HCP services are no longer essential to all hearing aid sales. Will hear.com’s proposed OTC sales channel cannibalize the HCP-supported sales channel, or will hear.com’s growth strategy bring an increased flow of new customer leads to all channels? HCPs will have to make their own decisions when it comes to partnering with hear.com, and yesterday’s SEC filing will certainly provides food for thought.
Ongoing coverage of new DTC/OTC market
This is a developing story. Updates related to new direct-to-consumer hearing devices, clinically-relevant regulatory changes, and emerging hearing industry trends can be found here.