What is patient lifetime value and why is it important?
Patient lifetime value is the total worth of a patient to a dental practice over the whole period of their relationship. Put another way, it’s the average amount of money patients spend with you between their first and last visits. Patient lifetime value is a really important metric because it costs less to retain existing patients than it does to attract new ones, so increasing the value of your existing patients is a great way to grow your practice.
How to calculate patient lifetime value
Here’s how you calculate patient lifetime value:
Step 1 – Calculate the lifetime value of a single patient
To calculate the lifetime value of one patient, you should multiple the average number of years a person is a patient at your practice by the average amount of money a patient spends each year. You will ideally know these numbers or you can guesstimate rough values.
Value of one patient = Average years at your practice x Average amount spent per year
On average, if a person is a patient at your practice for 5 years and they typically spend £250 on treatment each year, then their lifetime value to you is £1,250.
5 years x £250 per year = £1,250 lifetime value
Step 2 – Calculate the value of secondary referrals
Word of mouth is still one of the best ways to grow your dental practice. If you and your team are actively asking for referrals and providing an excellent patient experience, a typical new patient is estimated to refer five new patients over the next five years.
How many referrals do you think the average new patient brings to your practice?
Value of secondary referrals = Value of one patient x Average number of referrals
If a new patient spends on average £1,250 and goes on to refer five additional patients (each spending an average of £1,250), then that’s another £6,250.
£1,250 lifetime value x 5 referrals = £6,250 secondary referral value
Step 3 – Calculate the total patient lifetime value
The total lifetime value of a patient takes into account the lifetime value of a single patient and the value of secondary referrals.
Total patient lifetime value = Value of one patient + Value of secondary referrals
Combining the values from step 1 (£1,250) and step 2 (£6,250), gives us a total patient lifetime value of £7,500.
£1,250 lifetime value + £6,250 secondary referral value = £7,500 total lifetime value
By knowing how much an average patient is worth to your practice, you’ll more accurately be able to plan how much you need to spend to attract and retain them while still covering your costs and making a profit.
Ideas for increasing patient lifetime value
Now you understand what patient lifetime value is and why it’s important, the rest of this article is going to give you some practical advice for increasing the lifetime value of your patients.
When a patient is ready to book a treatment, there is an opportunity to recommend additional treatments that they might be interested in. This is a popular tactic on eCommerce websites like Amazon. When buying products online, you have undoubtedly seen features like ‘Customers also brought’ or ‘Products commonly purchased together’. These are examples of upsells.
In the context of a dental practice, a simple upsell might be getting patients booking a checkup with the dentist to also book an appointment with the hygienist. Almost instantly, you’ve nearly doubled the value of that patient’s visit.
Hopefully, you already try to upsell hygienist appointments, so what other treatments or products can you upsell?
Promotional offers are a great way to get existing patients to spend more money. Everyone understands the value of a sale or promotion and you’ve likely experienced success with promotions in the past.
A great promotion for a dental practice is including free teeth whitening with every teeth straightening treatment. With teeth straightening costing £3k+, throwing in free teeth whitening will help you convert more leads because the perceived value of your offer will be greater.
What other promotions could you offer your existing patients?
3. Email Marketing
Email marketing gives dental practices the opportunity to build and nurture relationships with their patients. By sharing regular content with patients via email, you’ll keep your practice top of mind and build trust.
It’s easy getting started with email marketing. Simply sign up for an email marketing software such as MailerLite or Mailchimp, and send emails on a consistent basis; either weekly, monthly, or quarterly. You could send a newsletter to keep patients informed of everything happening within your practice or some useful oral health tips. Remember to always collect patient consent and never spam your mailing list. If you’re worried about email marketing taking up too much time, most email marketing platforms allow you to easily schedule emails in advance.
In between your newsletters and tips on how to maintain a healthy smile, you could send emails about upcoming offers or simply remind patients to book their next appointment. If you do this consistently, you will boost your patient lifetime value.
4. Loyalty Schemes & Referral Rewards
Setting up a loyalty scheme is a smart way to encourage patients to book appointments on a regular basis, while offering rewards for referrals is a great way to keep your existing patients engaged and acquire new ones.
Loyalty schemes or reward points are often used by coffee shops. Every time a customer purchases a coffee, they get a stamp on their loyalty card. When they purchase enough coffees, say 10, their next coffee is on the house. Now, you may not want to give away free checkups, but you could offer a discounted checkup after five full-price checkups or give loyal patients an oral care hamper filled with toothpaste, floss, and interdental brushes after a certain amount of visits.
Incentivising referrals with rewards is a good way to acquire new patients, but isn’t a substitute for a great patient experience. You might choose to give both your existing patient and their friend money off their next and first appointment or reward existing patients with a free treatment after a certain amount of referrals.
What could you do to promote patient loyalty or encourage more referrals?
5. VIPs (Very Important Patients)
Not all patients were created equally. Within your practice, you will have a hand full of patients that spend the most money with you. If you’re not already doing so, you should treat these patients like VIPs. Building strong relationships with these patients is really important. Treating them well will either lead to them spending more or raving about your to their friends and family. Either outcome is great for increasing your patient lifetime value.
You could send your VIP patients birthday and Christmas cards, invite them to special events at your practice, or provide them with better pricing options. Anything that makes them feel special. I’ve even heard of some practices giving patients who consistently attend regular checkups and hygienist appointments for 15+ years, free checkups for life.
How can you make your VIPs feel extra special?
It should now be clear why patient lifetime value is an important metric in your practice as it has a huge impact on how and how much you spend to attract and retain patients. You have also learnt about 5 different ways you can boost the average lifetime value of your patients.