[HOW TO GUIDE] One click to knowing the Lifetime Value of your dental patients – Don’t put it off any longer!

By Loran Simon | Good Stuff

UK +44 (0) 203 745 5551
IRE +353 (0) 766 805 551
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UK +44 (0) 203 745 5551
IRE +353 (0) 766 805 551
US +1 (650) 665-5551
SA +27 (0) 87 551 7851

Apr 14

Do you have a handle on what the lifetime value (LTV) is of each of your patients?

If not, then maybe now is the time to do so.

In this week’s blog, we want to help you calculate the LTV of your patients so that you can make better and more informed decisions about your marketing approach. For those of you who’ve been meaning to do this for a while, there’s a handy spreadsheet for you to download to help you crunch the numbers.

The benefit of having this information cannot be overstated. With it you can shape your marketing strategy to bring down your Customer Acquisition Cost (CAC) and extract more value from the patients you’ve already got. Without it, your marketing approach no matter how sophisticated, is just guesswork.

Note: If you want to skip the article and go straight to the free worksheet, click here.

So what is the lifetime value of a dental patient?  To put it simply, it is the average amount of money each patient in your practice is worth to you.

For relationship-driven businesses like dentistry, it pays to hang on to your customers. Transforming one-time buyers into repeat and loyal customers is crucial. They will be your greatest evangelists bringing with them friends and family and critically giving you that ‘oh so important’ social proof that businesses like yours rely on in the digital age.

What’s more with dentistry lifetime value can sometimes mean just that with patients returning throughout the many stages of their life to maintain a healthy smile. So how come too few of the dentists we speak to can quote this number when asked.

Well, part of the problem is it can be hard and knowing what formula to use - there are many out there to choose from can be overwhelming. The other issue is often being able to lay your hands easily on the data points you need to crunch the numbers. But if it feels hard, do it anyway, as I can guarantee it will be the best commercial decision you make this year.

Keep reading and we’ll tell you exactly what figures you need, how to calculate this yourself and of course, if you want to, download our worksheet to plug your own numbers in and get the insight you deserve into the health of your practice.

Get the worksheet now!

So, what goes into our calculation of the lifetime value of a dental patient?

The variables for the lifetime value of a patient are as follows:

Total revenue over period (TR)
Number of active patients over preceding period (PP)
Number of active patients over current period (AP)
Average revenue per new patient visit (ANR)
Number of new patients over period being measured (NNP)
Your direct costs over the period (DC)
Total number of patient referrals over the period (PR)

In the worksheet, we’ve provided some provisional numbers, however, please plug in your own figures to get your results. Below we’ve outlined an example to set you on your way. We’re basing our calculation on a 12 month period:

TR = £600,000
PP = 1,000
AP = 1,150
ANR = £150
NNP = 175
DC = £102,000
PR = 50

We then need to account for a number of different variables:

Churn rate. (The percentage of patients that leave your practice)
Profit Margin (How much you keep)
Referral Rate (How often your patients refer new patients)
Average revenue by Active Patient (excluding new patient revenue)

In this scenario and jumping ahead a little (as all the formulas are available in the worksheet), the Customer Lifetime Value is £11,030.62

The final formula for how to calculate the lifetime patient value is:
((Live cycle * Average Collections by Active Patient) * profitability + ANR) + ((Live cycle * Average Collections by Active Patient) * profitability + ANR)*referral rate*life cycle

There you have it, it’s not so hard after all.

With this number at your disposal, you are now ready to make far better and more informed decisions about where to put your marketing spend, how much and what you need it to deliver in terms of return.

Any growth strategy will need you to spend money to make money. Digital advertising is no exception, however it is a channel where what you spend can be easily monitored, tracked and it’s return calculated.

Knowing how much your customers are worth to your business makes it far easier to work out an acceptable or profitable CPA or “Cost Per Acquisition” for each new lead and customer and if we know that, we are far more able to calculate an optimum ad spend for your campaign.

The benefit of working with us, is that our experience allows us to get new patient enquiries for practices at a predictable cost for most treatments. We can help you bring new customers onboard, manage on-going communications to keep them and help attract and retain a loyal following to generate those all important referrals, all at an acceptable rate to what those customer are worth to your business.

Our services cover Google and Facebook ads, SEO and social media. We are taking on new clients at the moment. If you'd like to learn more just schedule a convenient time using the link below.

In next week’s blog, we’ll look at what strategies you can adopt to maximise your dental patients lifetime value.

UK +44 (0) 203 745 5551
IRE +353 (0) 766 805 551
US +1 (650) 665-5551
SA +27 (0) 87 551 7851

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