How to Calculate the Value of a New Dental Patient
Do you know how to calculate the value of a new patient? How much does the average new patient contribute to your bottom line over the course of his or her relationship with you? And, how can those dollars be extended exponentially? Let’s look at some answers to these significant questions.
Understanding the value of a new patient is more than just interesting information. This knowledge enables you to make better-informed decisions about marketing and advertising to acquire new patients. It’s fundamental to how you grow and shape your dental practice.
What’s the average patient lifetime?
In their white paper, Calculating the Value of a Patient, Futuredontics, parent company of 1-800-DENTIST, suggests that 10 years is a conservative number for the average length of a dentist-patient relationship.
How much money does the average dental patient spend during that lifetime?
Futuredontics uses a low $500-a-year estimate. This will be much higher for many dental specialists, but is a useful figure for illustration purposes.
So, for a patient who spends $500 a year for 10 years, that patient’s lifetime value is $5,000. Again, that’s a low number for many specialists.
But that’s just the beginning....
Let’s go deeper and look at referrals. How many new patients does each of your existing patients refer to you each year? If you are actively asking for referrals, rewarding patients for making them and providing excellent care, new (and current) patients will continue to refer others. Let’s say you receive five new referrals from a single patient over the next 10 years. Using the same metric of $5,000 × 5 patients, that comes to $25,000, all from that original new patient.
From this example, you can see that the total lifetime value of the average patient is $30,000.
If your practice is using marketing tools such as referral-generating newsletters, five new referrals may be low. If you’re working proactively to grow referrals, you’ll be able to make more predictable projections of additional referral profit.
Track new patients
Does your office have a systematic way to identify the source of every new patient? If not, you are missing out on critical data that can tell you what marketing and referral-generating efforts are working and which are not. And, you will miss opportunities to thank those who are making referrals, which can be costly to your practice.
To calculate the value of a new patient, substitute the numbers that apply to your practice to understand the lifetime value of a patient.
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