STRATEGY AND BUSINESSES

Sonova’s Audiological Care business stands as the second largest hearing care provider in the world, with more than 3,600 points of sale in 20 markets, employing more than 7,600 people – the vast majority of whom work directly with our consumers to help them navigate their hearing journey in the best and most convenient way possible. Our profitable growth strategy is founded on continuously improving in-store sales execution and productivity, and supporting these with integrated systems and targeted lead generation. This systematic retail approach boosts bottom-line profitability, but more importantly releases funds for further growth investments: acquisitions and greenfield store development to expand our network and to optimize store density in new and established markets; innovation in consumer contact and lead generation; and extension of our product and service range to increase the value we offer to each consumer.

The key enabler for accelerated growth is our omni-channel approach to consumer engagement. In an increasingly digitalized and connected world, consumers expect to be able to begin or advance their interactions with us at any time, anywhere. We have therefore built our business to take a proactive role in this evolution of consumer habits, creating a seamless experience from website to store to call center to supporting apps, leveraging our global systems, unique audiology and marketing expertise – and the unrivaled connectivity of Sonova products – to provide each consumer with the appropriate blend of digital and face-to-face interactions.

Expanding and deepening our network

The Audiological Care business has pursued an active network expansion in the 2021/22 financial year, adding over 500 stores to its global portfolio, both through acquisitions (such as the Alpaca audiologist-led network in the US and the Neurosensory network in Australia) and by organic growth in the number of new store openings. Our strong balance sheet supports an increase in our capital deployment target for bolt-on acquisitions from CHF 50–70 million to CHF 70–100 million, and we are ready to surpass it when appropriate opportunities present themselves. The goal is not simply to expand into new territories, but to achieve optimum density in all the geographies where we operate, supporting our hub-and-spoke model of standard audiological care centers close to one larger store (such as our World of Hearing stores) that offers the full spectrum of Sonova products and services. The key to our efficient network expansion is that it is achieved through a systematic, sustainable process, based on uniform criteria for strategic growth markets and supported by established integration programs using Sonova’s globally consistent IT systems, the Sonova X Business System, talent development, marketing, and lead generation.

In China – a highly digitalized market – we initially established our presence in the digital space, building followers through strategic online platform partnerships and engaging consumers through apps for hearing screening, appointments, and ecommerce. In less than two years since entering the market, we now have more than twice the WeChat online followers of the next five hearing care companies combined. We added a physical presence through network partners as our first in-store channel, and now have opened thirteen greenfield stores of our own with a first flagship World of Hearing store in Shanghai, providing a base for acceleration in greenfield development. This physical presence may still be small in comparison to the potential market, but it gives us the experience on the ground to expand, both organically and through strategic acquisitions.

Enriching the consumer journey

Lead generation is what opens the door to an omni-channel interaction with the consumer. It creates the profile to which all subsequent consumer data is attached and – when done right – provides the impetus that powers a long-term consumer relationship. We are convinced that such an important function should not be contracted out, so we established our own lead-generation factory in Berlin in late 2019. Its purpose is to build our in-house digital marketing platform for Europe´s strategic growth markets, linking a growing consumer database with new digital competencies to deliver a younger, more affluent consumer profile at lower cost per contact. It has achieved all this, so we are scaling up the initiative for global roll-out. Lead-generation hubs will provide us with invaluable data that we can apply, not just for targeted marketing efforts, but to store-by-store consumer contact, ensuring that however we talk to the consumer, electronically or in person, we know how to best address their needs from our full range of solutions, including Sennheiser-branded consumer hearing products.

A seamless consumer experience goes well beyond lead generation, and we have invested significantly to ensure that our in-store systems support the same deep customer engagement as our initial marketing. Our new unified Audiological Care IT system provides a consistent backbone for our global network, aligning all points of consumer contact and making sales, marketing, scheduling, orders, reporting, and finance all part of a single consumer-centered information landscape. The IT system has been rolled out in Italy and Denmark and is being launched in Germany, with further markets to follow in 2022.

Broadening consumer access

Getting ever closer to the consumer means expanding our offering beyond simply treating hearing loss. Hearing well is part of a healthy life, and research increasingly shows that hearing care overlaps with care for other significant age-related health conditions. The expansion of our in-store and app-based service offering helps our consumers gain further benefits from our product range: tinnitus and hearing loss are correlated, so we offer tinnitus therapies and support. Hearing and cognitive function are correlated, so we offer cognitive training, with a gamified experience and exercises to build cognitive skills and auditory perception. We are also exploring the correlations between hearing, balance, fall risk, and osteoporosis. Each of these efforts broadens our consumer base and expands the value we add per consumer.

These services are part of the full spectrum of Sonova solutions available through our audiological care network, including our World of Hearing stores, of which 22 now operate in markets around the world. They also represent a new channel opportunity for the products of Sonova’s Consumer Hearing business. The Sennheiser name is well-known and respected in the wider audio as well as the audiology market. By carrying Sennheiser-branded products that bridge the gap between audio and hearing care – such as speech-enhanced hearables and TV listeners – our audiological care network will gain enhanced access to a younger, more affluent consumer segment.