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What Is The Value Of A Dental Patient?
In recent years, the UK dental market has seen significant growth, with market value increasing by around 90% between 1999 and 2010. The market is estimated to be worth £5.73 billion a year. In the UK, there are 49,350 dental care professionals and a further 32,900 working in general practice.
As a dentist, your most valuable assets are your patients. And it’s not just a matter of new dental patients brought in by your practice. To successfully launch a dental marketing campaign, it is important to know the value of each patient in your practice. The overall profit, delivered over time by those patients is what can make or break your dental business. If you’re going to keep a steady and growing number of patients, you need to find something that keeps them happy.
For example, many Irish people are now choosing to get dental treatment in countries such as Turkey, Spain, Portugal, and Eastern Europe. Dental clinics in some of these countries offer their patients savings of up to 70% of what Dublin offers. Perhaps these countries add more value to their dental patients, which is the basis of the importance of why your practice should review its marketing strategies.
The cost of a new dental patient
Most dental practices spend a portion of their overall marketing budget on recruiting and acquiring new patients. The amount that must go into attracting new patients will, of course, vary greatly from one dental clinic to another. It is clear that the dollars that go to marketing efforts designed to attract a new patient must not exceed the lifetime value of the patient to the practice.
This makes calculating the cost of a new patient a critical component in determining the most prudent way to allocate your marketing budget. Marketing experts, however, have very different estimates when it comes to the long-term value of a new customer. Some put the estimate at a few hundred dollars, while others put it at over $10,000.
The Wealthy Dentist survey revealed that of 68 dental survey respondents, only a quarter had attempted to estimate the cost of a new dental patient. Overall, the estimated cost of new patients provided by respondents was between $200 and $3,000, with the average per patient dental cost between $900 and $1,200.
Determining the Value of a Patient’s Life
To build a meaningful dentist-patient relationship, you must have an estimate of the lifetime value of each dental patient. This way, you can plan and market your practice strategically with the goal of increasing revenue and taking your business to the next level. Customer Lifetime Value or CLV is an estimate of a customer’s total value to a business over the course of an engagement.
For any business, Customer Lifetime Value is an essential marketing measurement tool. It is especially important in relationship-driven businesses like dentistry. Factors to consider when estimating CLV for a particular clinic include:
• Relationship Lifetime: Total time spent by the patient at the dentist.
• Average Annual Cost: Annual revenue per patient.
• Client Referral Value: Patients referred by the average client.
In calculating the lifetime value of an average patient, the following formula is useful:
Lifetime Patient Cost = Lifetime Relationship x Average Annual Cost + Customer Cost
The Importance of Patient Lifetime Costing
Once you have an estimate of the lifetime value of a new dental patient, it is possible to make more informed decisions about marketing and sales. You certainly don’t want to spend more resources on getting new patients than what they bring to your dental practice in their lifetime.
When you have a clear idea of the current value of each new patient, it also gives you a guide to the target client to pass on. If, for example, you think that a new customer is worth $500 and you have invested $5000 in a patient postcard campaign, then, in order to consider your campaign successful, you will need to bring in 10 new patients.
Another way to appreciate
One way to estimate the value of a new dental patient is to ask yourself how much you would be willing to receive from another dentist if you were to “sell” one of your patients. Would you, for example, be willing to settle for less than $400? At every opportunity, you can ask for more.
Oftentimes, dental patients who need emergency services tend to return to the dentist they see regularly. In such a case, when calculating the cost of a patient, consider how you can convert that emergency patient into a routine patient. Improve the lives of your dental patients and your dental office will be profitable and successful.
Armed with how to calculate the value of your new dental patients and why you need to make an estimate, your dental practice will be in a position to make informed marketing decisions that lead to a higher Return-On-Investment. The Customer Lifetime Value method helps you evaluate the profitability of specific marketing and promotional efforts. It guides in highlighting which awareness efforts should be stopped or maintained. If you can increase the lifetime value of each dental patient, your practice will have sustainable gains in profits over time.
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