Your patients are actually your most important asset. But it’s not really just the number of new patients your dental practice takes in that counts– it’s the total return that those patients generate over time that can make or torpedo your business. If you want to start a successful dental marketing campaign, you need to know how valuable each patient is.
But how do you calculate what the lifetime value of a dental patient is? Plus what does this actually mean for your practice?
Within this article we’re breaking down everything you need to know about the lifetime value of your dental patients so you can maximize profits and skyrocket your business, all of the while building substantive relationships with your patients.
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What Is Customer Lifetime Value?
Customer Lifetime Value (CLV) is a prediction of the overall value of a customer to a business over the entirety of their working relationship.
CLV is a vital marketing measurement for any kind of business concern, but especially for relationship-driven businesses like dentistry.
Think of your perfect patient. They don’t just come in for one routine check-up then afterwards disappear. Rather, these patients come to you for all their dentistry needs during the course of their entire lifetime. They depend upon you to preserve their healthy smile for years on end– which can amount to some significant cash flow.
What Is The Lifetime Value Of A Dental Patient?
No a pair of dental practices are generally alike and, because of this, lifetime value will vary for each practice depending upon location, the services provided and how effective their online marketing strategy is.
You’ll often hear $10,000 thrown around as the special number for the lifetime value of a dental patient. Derek Naylor, a dentist practice consultant, claims a slightly more optimistic estimate with $22,000. At the top of the spectrum, True Dental Success thinks that the CLV of a dental patient falls around $45,000 over a 20-year lifetime!
Given the large variables between estimates, we suggest taking the time to calculate the CLV for your particular dental practice. Listed below’s what you’ll need to consider:
Lifetime Association: What is the entire period of time (in years) in which the ordinary patient spends with you?
Average Annual Value: What is the revenue you make from each patient on an annual basis?
Client Referral Value: How many patients does the average client refer?
To calculate the lifetime value of your average dental patient, use this formula:
Average Annual Value x Lifelong Relationship + Client Referral Value = Lifetime Value
Let’s break this down. Initially determine just how much the average patient spends each year. If the majority of patients come in twice a year for hygiene/exams and spend $400 each time, then the Average Annual Value of your patient is $800.
And now we need to know the lifetime of your average dental patient. Supposing that you’re not exactly sure, then use an industry average of ten years. We can plug that into the first part of our Lifetime Value Calculator and see that thus far the patient’s lifetime value is $8,000.
Average Annual Value ($ 800) x Lifetime Relationship (10 Years) = $8,000.
But we’re not done yet. Let’s suggest the average client refers a pair of new patients over their lifelong relationship with your practice. Each new patient is worth an additional $8,000. For two patients, our Client Referral Value is $16,000.
Revert to our calculator:.
Average Annual Value ($ 800) x Lifelong Relationship (10 Years) + Client Referral Value ($ 16,000) = A Lifetime Value of $24,000.
Although you won’t have the ability to predict the lifetime value of a dental patient down to the precise penny, just as long as you understand the typical behavior of most of your patients, you will certainly have the capacity to get a reasonable idea.
Still with me? Number crunching isn’t always glamorous, however taking the time to monitor your new patients and get a prediction on their total lifetime value is critical to the success of your dental practice.
Why Does Customer Lifetime Value Matter?
Once you know the lifetime value of a dental patient, then you’ll be able to make much more educated decisions about advertising and marketing to new patients. You certainly never want to be investing more hard earned money on acquiring new patients than the lifetime profit they provide to your practice.
Knowing how much each new patient is worth to your practice right now is going to also give you a number to exceed. Improve the lifetime value of your patients and your dental practice will definitely turn into more successful and valuable.
How To Maximize Your Dental Patients Lifetime Value.
1. Continually Provide High Quality Service.
Never underrate the value of over-delivering on your services and cultivating your relationship with your patients. Treat each and every patient like a VIP, and you can rest assured that your patients will keep going back to you for all of their dental needs.
2. Aquire The Right Patients.
In order to maximize the value that your patients are actually providing over time, you want to ensure you are obtaining the right patients. Those people who will most likely say YES to complicated cases, and have the insurance coverage or income to pay for pricey procedures. The good news is, driving patients to these types of premium offerings is easier than you think.
Now that you know the real value of your dental patients, your practice is able to make more educated marketing decisions that will result in your highest return on investment. And if you can enhance the lifetime value of each patient, your dental office is going to experience consistent profit gains– and your most successful practice yet.