Calculating the Lifetime Value of a New Patient for Your Medical Practice
When it comes to marketing your medical practice there is a distinct value you assign to new patients. This value is used to help you set marketing budgets and make marketing decisions. Ultimately, you want the greatest possible return on investment. However, you could be using skewed numbers to make these determinations.
Why is knowing the actual value so important? The more you know about the lifetime value of gaining new customers for your practice the better prepared you are to set goals for your practice. This is not only for obtaining new patients, but also for extending the value of each new patient gained.
When placing a specific dollar amount to each new patient gained, it will help you decide what kind of marketing budget your practice can tolerate.
Determining the Value
So, how do you come up with the numbers to calculate the lifetime value of your customers or patients? Begin with the basics. While you want the number to be as close to exact as possible, it’s perfectly acceptable to use close estimates for the following information:
- Average cost of office visits.
- Number of times the average patient receives treatment.
- Likely number of patient referrals.
- Recurring revenue generated from patients.
- Revenue from procedures.
For instance, if you charge $80 for an office visit and the average patient visits your practice 5 times per year then you can safely guess that each patient is worth a minimum of $400 per year for your practice.
However, if all of your patients refer at least two others to your practice, their values double. That’s without even considering recurring revenue and revenue generated from procedures. Those are just the results of normal office visits.
Then there is the lifetime factor. The longer the patient remains with your practice, you’ll continue earning the same or more yearly revenue year after year.
Improving the Lifetime Value of Your Customers
It’s great to know the lifetime value of each of your patients to your practice. What’s even better though is the knowledge that you can improve these values if you’re willing to make a few changes to the way your practice operates.
Make your medical practice a patient-focused practice. This creates loyal patients, improves patient retention, and generates an atmosphere where recommendations to friends and family become the rule rather than the exception. The dollar value of this kind of free advertising is immeasurable in today’s competitive medical community.
Most importantly, it costs much less to retain existing customers, as it does to seek out new customers so this helps your practice manage marketing resources even better.
The more you know about your patients, including the lifetime value they brings to your business, the better able you are to plan the business side of the practice. This is key in that it helps you to focus your attention on providing exceptional care, treatment, and patient satisfaction service when they are in your office rather than stressing over the business aspect of your medical practice.
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