28 Nov 2017 | 09.08 am
Interview: Stephen Leddy, Hidden Hearing
The hearing aid market leader sees huge scope for growth
28 Nov 2017 | 09.08 am
William Demant is one of Denmark’s most successful high-tech businesses, though most people in Ireland have never heard of it. The company’s roots go back to 1904, when Hans Demant founded the business. His son William took over after his death in 1910, and though William Demant is now a plc, a family foundation with a charitable focus is still the majority shareholder. It trades here as Hidden Hearing.
It’s a great business, with a gross profit margin of 75% and an operating margin of 20%. Turnover in 2016 was €1.6 billion, up from €1.2 billion three years earlier, and net profit was €200m. Since November 2016, the share price has appreciated by 40%, partly on the back of a novel new product that gives William Demant a competitive advantage.
So what is this Danish wonder? William Demant is a global player in the hearing aid business. In the UK it trades as Hidden Hearing, as well as in Ireland, a legacy from when the Danes bought a UK retail business of that name. In charge of operations in Ireland is Stephen Leddy (pictured), who has guided Hidden Hearing to market leadership.
Though people have no problem consulting an optician when their eyesight needs a boost, it’s much different with hearing. As hearing loss is mostly associated with ageing, there is a stigma associated with seeking help. This attitude isn’t entirely rational but it is deeply ingrained, so much so that a tradition emerged of measuring up people for a hearing aid in their homes rather than in a clinic.
That still goes on, but Leddy has pulled back Hidden Hearing from domestic visits. Instead the focus is on a high street presence and suites in medical clinics. There’s also a focus on the bottom line, and though Hidden Hearing doesn’t separate out accounts for Ireland, Leddy must be on the right track as he has survived in the managing director role for 15 years.
Number crunching runs in the Leddy family. Stephen’s grandfather was an accountant and so is his father, and PKF O’Connor Leddy Holmes is one of Ireland’s Top 20 accountancy firms. After doing the ACCA qualification, Leddy junior was expected to join the family firm. He took time out in Australia and worked with Fitzpatrick Morris Barrett on his return to Dublin. An FMB client in the windows business poached young Leddy, who was given free rein while the business owner embarked on overseas adventures in a Winnebago.
When the windows guy crimped Leddy’s autonomy, he took on the finance director job with Hidden Hearing. It was 2000 and William Demant had just bought Hidden Hearing plc to beef up its retail reach. At the time Hidden Hearing had only one shop in Ireland, in Cork, with the business being run from the UK. The Danes changed that and installed Leddy as managing director in 2002, when the business was losing €500,000 a year.
“We were spending a lot of money on marketing but nobody was looking at return on investment, so that was my first area to delve into,” Leddy recalls. “The industry back then was like the Wild West — you could train someone in three days and off they’d go out into the market. Back then 95% of our business was in the home, driven by direct advertising and telemarketing.
“We don’t go to the home anymore. We redefined what the Hidden Hearing brand stood for and the domicile business didn’t align itself with that, because people didn’t trust you going to their home.”
The stigma attached to hearing aids is more pronounced in Ireland than in most other countries in Europe. Leddy concedes that what Hidden Hearing provides is a product nobody really wants, a grudge buy. “The key to this business is to get people to sit in front of you,” he adds. “Until people put up their hand and commence the patient journey, it’s tough job to get someone to book an appointment.”
Having made the strategy decision to abandon in-home visits, Hidden Hearing expanded its branch network to the current 27 outlets. The company is also represented in about 50 medical centres around the country. “In an area where a shop didn’t make sense, we mailed the GPs in the area offering our hearing service in their clinic. So now people walk into a shop or a medical centre, though everything is by appointment only.”
A more recent strategy focus has been the company culture. “We’ve shifted from a sales focused company to a customer-centric model,” says Leddy. “In any business, 75% know how they do it, but very few people know why they are in the business. We are in business to help more people hear better. Our objective now is to get as many people in the door as possible and give them a phenomenal experience.”
In effect, Leddy is eyeing what he believes is a huge untapped market of young and old people who have hearing deficiencies and don’t admit it. “We want to raise brand awareness and have more people screened as part of their overall attitude to personal wellness. The test is free and we spend a tenth of our time testing normal hearing,” says Leddy..
“For the hearing aid products, we also redefined the market in terms of the returns policy. The standard period was 30 days but we changed that to 90 days, on the basis that customers need three months to get used to their hearing aid. If they’re not happy they return it and get their money back, and we have about 6% returns.”
As part of its ‘trust us’ policy, Hidden Hearing has three people going around the country removing ear wax and a five-person customer service desk. Leddy adds: “I hate being told that someone leaves their new hearing aid and in a drawer because they don’t think it works. The brain has to train itself to new sounds and the customer has to work with it. We invite customers to contact us after six months and to come in for a free check-up, because hearing loss changes.”
Diagnosing, treating and alleviating hearing loss spans cognitive science, audiology, acoustics, electro-mechanics, software engineering, behavioural science and communication technology. Hidden Hearing’s latest hearing aid is the Oticon Opn, billed as a ‘paradigm shift’ for facilitating a better understanding of multiple speech in noise.
Traditional hearing aid technology uses narrow directionality to make speech coming from the front clear, while all other sounds — speech and noise alike — are reduced. This prevents the user from following conversations with multiple speakers in a natural way.
With the Oticon Opn (pictured below), sounds are handled individually, giving the user the ability to engage in conversations with multiple speakers, and to decide where to focus and when to switch attention when something more interesting occurs.
The technology behind all this is very complex. OpenSound Navigator scans the sound environment more than 100 times per second. Another trademarked feature, Spatial Sound LX, helps with precise localisation of sounds. In its perch behind the ear, the Opn has one communication system for binaural processing and another for linking with the user’s mobile phone.
“In our industry it’s like phone technology — there is always somebody who is ahead of everybody else, before the competition catches up a year or two later,” says Leddy. “Right now Oticon has the lead on the R&D, with the most sophisticated nanotechnology in the market. However, technology isn’t driving our growth strategy. Our aim is to normalise the hearing issue, to go after all the rejecters.”
Pix: Jason Clarke Photography