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February 2015

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Practice Marketing

How To Know If Your Marketing Is Working

Earlier this week I discussed the importance of finding your high value patients and crafting your practice around them. 

Today, I’d like to talk about some simple ways you can sort and analyze your marketing and other business data to see what’s working for you – and where you might need to improve.

It might seem a little boring – but it shouldn’t. These data points can have $100,000 impacts on your business. No exaggeration. I’ll prove it in the numbers. 

Working backwards from these numbers, you can begin to see which marketing efforts really are effective – and which ones might be bringing up the rear. 

For simplicity’s sake, let’s break down measurable practice data into 3 basic categories:

Conversion: the success rate you have in taking leads from ALL of your sources and converting them to patients. That includes everything  in this list and any other sources of leads you may have: Google AdWords, Email campaigns, social media, snail mail, newspaper, magazine, radio, tv, telephone.

Retention: the percentage of patients that stay with your practice from year to year. 

Billing: the average amount of profit your practice receives per patient billing.

These three categories together can give you a very simplified version of what Marketing Directors and Chief Revenue Officers would call a “Return on Investment” (ROI) report.

Why is ROI important?

According to the marketing firm, Hubspot, “[companies] who measure ROI are more than 12 times more likely to be generating a greater as opposed to lower year-over-year return.“

So, measuring and understanding ROI is one of the surest ways to become more profitable.

To prove it, let’s drill down into just ONE category of ROI – which could account for huge swings in your practice’s profitability over the long haul:

Retention

You might have a decent idea of your retention rate – but again, you might not realize how powerful of a data point it can be. 

If you  know what your average retention rate (r)  is, you can estimate how long the average patient will stay with you.

The formula is: 1/(1-r)  = average number of years a patient stays with your practice.

So if you have a 90% retention rate: 1/(1-0.9) = 10 years.

But if you have a retention rate of 95%, the average span extends to 20 years…

While at 80%, the span drops to 5 years. 

Over the lifetime of the average patient that could mean hundreds of thousands of dollars – not even counting the cost of replenishing patients…

Retention rates differing by just a few percentage points above and below 90% can mean huge swings in your practice’s long term profitability.

So if you’re not sure what your retention rate is – or if you’re not sure how to get it, you might consider taking a closer look at your data. 

The thing is, all 3 categories can make these kinds of profitability differences. If you don’t know where you stand, then you’re going to have a hard time fixing any big problems.

The Good News:

If you’re not sure where to start , or just want a frame of reference, we have ROI consultants who can help.

Just call (888)932-3644 to set up a consultation appointment. 

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Practice Marketing

Why You Should Focus On High-Profit Patients

Good dentists put people first – which keeps patients happy, and coming back. 

Of course, you should treat all of your patients with the same respect and professional bedside manner.

Of course.

But… at the same time, it doesn’t hurt to think about your high-value patients in specific ways – both to find more of those types of patients AND to make sure you retain the ones you have.

Knowing who these patients are and going the extra mile to keep them happy, healthy and in your practice could mean a substantial difference in your income.

It’s not cynical or unseemly to give extra thought to your more profitable patients – because:

  • It could help you extend your hours to see more patients in a timely manner. 
  • It can mean the difference between upgrading equipment (which benefits all patients) sooner rather than later.
  • It could mean the difference between hiring an extra hygienist or receptionist to improve your overall service – or not. 

In short, making savvy business decisions based on your most profitable patients can positively impact how you serve all of your patients. 

And it could mean the difference between having the option to retire at the time of your choosing – or facing the necessity to keep working for an extra year or five…

It’s impossible to make those kinds of decisions, however, if you don’t know which patients are high value. 

You might be saying to yourself, “my patients are all more or less at the same level of profitability.”

Depending on your practice, that could be true to a certain extent on an annual basis.

However, if you look at a matrix of your patients’ lifetime value, you might be surprised to see which patients are your most valuable. 

A lifetime value matrix sounds complicated, but it can show you the gamut of how much profit each patient is projected to contribute to your bottom line. 

 

Annual Billing

Lifetime Value

Average Patient

$500

$15,000

High-Profit Patient

$1,500

$60,000

So the key is to understand who your high-profit patients are, to understand where they came from, what they require, why they’re high value, and hopefully to get and/or retain more of them.

The real issue: not knowing for sure.

If you don’t know which patients are your most valuable, you might make subconscious detrimental business decisions.

For instance, some dentists believe the “good” money is in cosmetic dentistry. They see a per-procedure fee that’s 10 times higher than regular check-up and prevention appointments. What they don’t see is that a cosmetic dentistry patient might be more fickle, or to put it bluntly, near the end of their life-cycle as a patient.

A giant one-time fee for a complicated, multi-step cosmetic procedure doesn’t always stack up against the lifetime value of a younger patient who is likely to stay with your practice for decades to come. 

Even if you’re near retirement age, your practice’s value certainly reflects the estimated total future value of the patients it could retain. 

I’ve populated a (very) simple lifetime value matrix to show you what I mean:

 

2015 Billing Value

Projected Lifetime Value

Cosmetic Dentist Patient
(age 78)

$10,000

$600

“Regular” Check-Up Patient
(age 31)

$600

$60,000

 

So if you focused on the $10,000 billing, you’d need to get 5-times the number of cosmetic patients to equal just one “regular”check-up patient’s lifetime value.

That’s just a hypothetical scenario, but it shows how initial estimates could be misleading. 

The answer really begins with the data points you already have about all of your patients. 

It can be relatively onerous to dig through and sort your data to find meaningful information, but doing so gives you the tools you need to make your practice better – and to improve your personal finances. 

If you’d like help with figuring out your important data points, I will cover the typical ways you can do so in the next blog post.

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Practice Marketing

Where to Get Your Next High Value Patient

There’s an old salesman’s adage – that you begin losing your customer on the very first day they buy from you.

Good patients move, pass away, change insurance or just drop off the map.

But the breakdown on why people leave might surprise you.

According to Dr. Donna Galante, an orthodontist, author and advisor, here are the numbers on why patients leave:

  • 1% die
  • 3% move away
  • 5% leave and do business with another company because of a recommendation from a friend or relative
  • 9% leave and do business with another company because they think the other company has better products, services or prices.
  • 14% leave because they are dissatisfied with the product or service.

So that leaves a whopping 69% of departed patients unaccounted for…

Now, there are always new patients to be had.

And when you ask Google “how can I find more dental patients?” you get lots of ideas.

Almost every piece of advice includes, “have a good website, use effective SEO, and participate in community outreach.”

That’s like saying if you want to make a cake you need flour, sugar, and baking soda. It’s true, but not particularly helpful.

The fact is, no single blog post, magazine article, or cocktail party anecdote can tell you the best place to find new patients.

Every practice is different. What works for someone in Boston might not work for a dentist in Texas. In fact, carte-blanche advice could waste your time and money.

While you’re focused on sponsoring a fun-run (which could be a great idea!) maybe your time would be better spent auditing your phone system to prevent dropped calls.

Reading a blog post (present company included) in and of itself can’t give you the answer.

That’s because the answer likely already hides within your practice.

It begins with understanding WHY those 69% leave.

You might be saying to yourself, “my turnover rate isn’t THAT bad…”

That might be true, but it IS likely that unaccounted for prior patients add up to a pretty substantial number.

The key words here are “unaccounted for.”

Imagine finding a hole in your practice where even 5% of high-value, high-profit patients are leaking out of.

What if that number was 10%? Or 20%?

Instead of having to find new patients to fill your office (which can be expensive if not difficult), wouldn’t it be better to keep the good ones you already have?

If you can’t effectively measure, audit and ultimately improve your patient experience and sales efforts through every point of contact, you could be missing out on lots of revenue.

I realize that’s a big pill to swallow – but knowing your practice, its strengths, weaknesses and your patient life-cycle can help.

Next week, I’ll be discussing some ways to find those patients who can best improve your bottom line and help keep them in-house. 

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