In recent years, the UK dentistry market has seen significant growth, with the market value increasing of around 90% between 1999 and 2010. The market is estimated to be valued at £ 5.73 billion a year . In the UK, there are 49,350 dental care professionals and another 32,900 working in the general practice sector.
As a dentist, your most valuable assets are your patients. And it’s not just about new dental patients your office brings in. To successfully start a dental marketing campaign, it is important to know the value of each patient to your practice. The total profit, delivered over time by those patients, is what can break or make your dentistry business. If you want to retain a steady and growing number of patients, you also need to know what keeps them happy.
For example, a considerable part of the Irish population is now choosing to receive their cosmetic dental treatments abroad 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% over what Dublin has to offer. Perhaps these countries add more value to their dental patients, which underlies the importance of why their practice needs to re-evaluate their marketing strategies.
Value of a new dental patient
Most dental practices channel a portion of their overall marketing budgets to acquiring and locating new patients. The amount that should go towards attracting new patients will, of course, vary substantially from one dental clinic to another. It goes without saying that dollars spent on marketing efforts aimed at attracting a new patient should not exceed that patient’s lifetime value to the practice.
This makes calculating the value of a new patient a vital component in determining the wisest way to allocate your marketing budget. However, marketers have a very broad estimate when it comes to the long-term value of a new customer. Some have put the estimates at just a couple hundred dollars, while others put it well above $ 10,000.
A Wealthy Dentist survey that revealed that of the 68 dental respondents who responded, only a quarter had attempted to estimate the value of a new dental patient. Overall, the estimated value of new patients given by respondents was in the range of $ 200 to $ 3,000, with an average per dental patient of between $ 900 and $ 1,200.
Determination of the patient’s lifetime value
To build meaningful dentist-patient relationships, you must have an estimate of the lifetime value that each dental patient brings. In this way, you can strategically structure and market your practice with the goal of maximizing revenue and taking your business to the next level. The concept of Customer Lifetime Value or CLV is an estimate of the total value of a customer to a company over the entire period that it has a commitment.
For any business, Customer Lifetime Value is an essential marketing measurement tool. It is particularly critical for companies that are based on relationships, such as dentistry. Factors to consider when estimating CLV for your particular clinic include:
• Lifetime relationship: total length of time an average patient spends in their dentistry.
• Annual mean value: Income obtained annually from each patient.
• Customer referral value: Patients referred by your average customer.
When calculating the lifetime value of an average patient, the following formula is helpful:
Lifetime Patient Value = Lifetime Ratio x Average Annual Value + Customer Reference Value
Importance of calculating the patient’s lifetime value
Once you have an estimate of the lifetime value of a new dental patient, it will be possible to make more informed decisions regarding advertising and marketing. You certainly don’t want to spend more resources on acquiring new patients than you contribute to your dental practice in your lifetime.
When you have a clear idea of the current value of each new patient, it also gives you a target lead number to be exceeded. If, for example, you believe the new customer is worth $ 500 and you have invested $ 5,000 in a patient postcard campaign, then in order for your campaign to be a success, you will need to bring in more than 10 new patients.
Alternative valuation method
Another method of estimating the value of a new dental patient is to ask yourself how much money you would be willing to receive from another dentist if you “sold” one of your patients. For example, would you be willing to receive less than $ 400? In all likelihood you would ask for more.
Many times, dental patients seeking services during an emergency tend to return to the dentist they see regularly. In such a scenario, when calculating the patient value, consider how you can turn that emergency patient into a normal one. Improve the lifespan of your dental patients and your dental office will be more valuable and successful.
Armed with how to calculate the value of your new dental patients and why you need to estimate, your dental practice will be in a position to make marketing decisions that are more informed and lead to a higher return on investment. The Customer Lifetime Value measurement methodology helps you assess the profitability of specific marketing and promotional efforts. Guides to highlight which advocacy efforts should be abandoned or maintained. If you can improve the lifetime value of each dental patient, your practice will experience consistent gains in long-term profitability.