Do You Know The Lifetime Value of Your Patients?

Your patients are your most valuable asset. But what matters is not only the number of new patients who come to your clinic - it is the total value that these patients bring over time that your clinic can do or dismantle.

To start a successful marketing campaign, you need to know what each patient is worth to you (Customer Lifetime Value, CLV).

But how do you determine what is the lifetime value of a dental patient? And what does it really mean for your clinic?

In this article, I break down everything you need to know about your patients' lifetime value so you can maximize income and scale your practice, while building meaningful relationships with your patients. I'm going to focus on dental patients to illustrate the concepts.

What is the Customer lifetime value

Customer lifetime value (CLV) is a prediction of the total value of a customer for a company throughout its relationship.

CLV is a crucial marketing measure for any business, but especially for relationship-based businesses like dentistry.

Think of your ideal patient. They don't just come in for a routine checkup and then they go away. Instead, these patients come to you for all their dental needs, in the case of dentists, throughout their lives. They depend on you to keep your smile healthy for years and that can add up to serious money.

What is the lifetime value of a dental patient?

No two dental clinics are the same, and as a result, the lifetime value will vary for each clinic based on location, services offered, and the effectiveness of your digital marketing strategy.

You will often hear $ 10,000 as the magic number of a dental patient's lifetime value. Derek Naylor, a dental consultant, claims a slightly more optimistic estimate of $ 22,000. At the top of the spectrum, True Dental Success believes that a dental patient's CLV drops around $ 45,000 over a 20-year lifespan.

Given the large variables between the estimates, I suggest taking the time to calculate the CLV for your particular dental practice. This is what you should consider:

• Lifetime relationship: What is the total time (in years) that the average patient spends with you?
• Average Annual Value: What is the income you get from each patient annually? To get a rough idea, you can start by dividing a year's total income by the total number of patients received that year. Example: $ 300,000 billed / 250 patients = $ 1,200 average annual value per patient.
• Customer referral value: How many patients does the average customer refer you to?

To calculate the lifetime value of your average patient, use this formula:

Average annual value x Lifetime ratio + Customer referral value = Customer lifetime value (CLV)

Let's put it into practice. First determine how much the average patient spends per year. If most patients come twice a year for hygiene / exams, for example, and spend € 300 each time, your patient's average annual value is € 600.

Now we need to know the lifespan of your average dental patient. If you are not sure, use an industry average of ten years. We can include that in the first part of our Lifetime Value Calculator and see that so far the patient's lifetime value is € 6,000.

Average annual value ($ 600) x Lifetime ratio (10 years) = $ 6,000

But that’s not it yet. Let's say that the average client refers two new patients throughout their lifelong relationship with your clinic. Each new patient is worth an additional $ 6,000. For two patients, our client referral value is $ 12,000.

Let's go back to our calculator:

Average annual value ($ 600) x Lifetime ratio (10 years) + Customer reference value ($ 12,000) = A lifetime value of $ 18,000.

While you won't be able to predict a patient's lifetime value down to the last penny, as long as you know the average behavior of most of your patients, you can get a realistic idea.

Are you still with me?

Pulling out your numbers isn't always fun, but taking the time to monitor your new patients and get a prediction of their total life value is critical to your clinic's success.

Why is the lifetime value of the customer important?

Once you know the lifetime value of a patient, you can make more informed marketing and advertising decisions to acquire new patients. Never spend more money on acquiring new patients than the lifetime profit they bring to your clinic.

Knowing how much each new patient is worth to your clinic now will also give you a number that you have to work to overcome. Improve the lifetime value of your patients and your clinic will be more successful and valuable.

Pro Tip To Maximize the Lifetime Value of Your Patients:

Never underestimate the value of exceeding the expectations of your services and fostering a relationship with your patients. Treat each patient like a VIP, and you can be sure that they will continue to come to your clinic for all their dental needs.

Now that you know the true value of your patients, your clinic can make more informed marketing decisions that will lead to your highest return on investment. And if you can increase the lifetime value of each patient, your clinic will experience steady profit growth.

Ready to start attracting the patients your clinic needs to grow?

Contact me, and we'll set out a clear action plan to increase profits in 30 days or less.