Over the recent years, the UK dentistry market has seen significant growth, with the market value rising by around 90% between 1999 and 2010. The market is estimated to be valued £5.73 billion a year. In the UK, there 49, 350 dental care professionals and another 32,900 who are working in the general practice sector.
As a dentist, your most valuable assets are your patients. And it’s not simply a matter of new dental patients that your practice brings. 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 are to retain a steady and growing number of patients, you must also now what keeps them happy.
For instance, considerable portions of the Irish people are now opting to receive their cosmetic dental treatments abroad in countries such as Turkey, Spain, Portugal, and Eastern Europe. Dental clinics in some of these countries offering their patients savings of up to 70% on what Dublin has to offer. Perhaps these countries add more value to their dental patients, underlying the significance of why your practice needs to re-evaluate its marketing strategies.
Value of a New Dental Patient
The majority of dentistry practices channel a part 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 the dollars going into marketing efforts geared to attracting a new patient must 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 most prudent way of allocating your marketing budget. However, marketing experts, have a widely ranging estimate when it comes to a new client’s long-term value. Some have placed the estimates at just a couple of hundred dollars, while others place it well over $10,000.
A Wealthy Dentist survey that revealed that out of the 68 dentistry survey respondents, only a quarter had ever tried estimating the value of a new dental patient. Generally, the estimated value of new patients given by the respondents was in the range of $200 to $3,000, with per dental patient average of between $900 and $1,200.
Determining Patient Lifetime Value
To build meaningful dentist-patient relationships, you need to have an estimate of the lifetime value each dental patient brings. This way, you can structure and market your practice strategically with the goal of maximizing revenue and taking your business to the next level. The concept of Customer Lifetime Value or CLV is an estimation of the total value of a customer to a business during the entire period you have an engagement.
For any business, Customer Lifetime Value is an indispensable marketing measurement tool. It is particularly critical for businesses that are relationship-driven like dentistry. Among the factors to consider in estimating CLV for your particular clinic includes:
• Lifelong Relationship: Total duration that an average patient spends at your dentistry.
• Average Annual Value: Revenue made annually from each patient.
• Client Referral Value: Patients referred by your average client.
In calculating the lifetime value of an average patient, the following formula is useful:
Lifetime Patient Value = Lifelong Relationship x Average Annual Value + Client Referral Value
Importance of Patient Lifetime Value Calculation
Once you have an estimate of a new dental patient’s lifetime value, it becomes possible to make decisions that are more informed in regard to advertising and marketing. You will certainly not want to spend more resources on acquiring new patients than what they bring to your dental practice in their lifetime.
When you have a clear idea of the current worth of each new patient, it also gives you a guide client target figure that needs to be exceeded. If, for example, you think the new customer is worth $500 and you have invested $5000 in a patient postcard campaign, then, for you to consider your campaign a success, you will need to bring over 10 new patients.
Alternative valuation method
Another method of estimating the worth of a new dental patient is by asking yourself the amount of money you would be ready to receive from another dentist were you “selling” one of your patients. Would you, for example, be willing to receive less than $400? In all probability, you would ask for more.
Many times, dental patients seeking services during an emergency tend to go back to the dentist they see regularly. In such a scenario, when calculating patient value, consider how you can convert that emergency patient into a regular one. Improve the lifetime worth of your dental patients and your dentistry office will become more valuable and successful.
Armed with how to calculate the value of your new dental patients and why you need to do the estimation, your dentistry practice will be in a position of making marketing decisions that are more informed leading to higher Return-On-Investment. The Customer Lifetime Value measurement methodology helps you in assessing the profitability of specific marketing and promotional efforts. It guides in highlighting which promotional efforts should be abandoned or kept. If you can enhance the lifetime value of each dental patient, your practice will experience steady gains in profitability over the long-run