Transcript of Video:
Hey guys it's Justin the dental marketing guy here to talk about the lifetime value of a new patient. If you're an ophthalmologist, you know that $5,000 is the cost of LASIK. So if you're spending $500 set to gain a new patient that makes sense as an ophthalmologist it's a much more predictable model.
Do you know the lifetime value of a new dental patient?
For dentistry, it's not so clear. What we want to do is we want to talk about some of the variables of different patients. Whether you've got a delta dental patient who just comes in for cleanings and moves away in three years different lifetime value than a patient who comes in restorative $20,000 cosmetic and restorative work and refers ten patients of the same kind obviously a big difference so what we want to figure out as we want to outline what makes the difference between gaining the patients that you want most in your practice. And so, to do that we're going to look at the different variables one of the variables is patient loyalty.
And right there if you're if you're a dentist who says you know in certain areas we've got college towns where people move in and they moved out a lot so you're gonna have to gain new patients on a higher basis than you would if you're in a town that's a little slower moving and people don't move away as much. But for the average dentist that's what we're gonna do is talk about a common dentist patient loyalty rate.
A lot of dentists with say maybe fifteen years or more for patients with the majority of them. I mean I'm gonna say ten years to be conservative ok so we've got a patient loyalty of ten years then that gives us kind of a barometer. And it may be more or less. Adjust these figures according to your practice. Internal marketing is gonna make a huge difference in these numbers as well so that's something that you always want to have on your mind, is good patient experience. Because that's going to make a big difference in how long they stay. It's also, the next thing we want to look at is referrals. And in referrals that that can be a huge variety.
So if you're attracting the patients who are referring ten, twenty people to your practice, obviously has a higher lifetime value there, Now some patients will refer no one, but once again you have your internal marketing setup in place - a reliable figure I found is about 5 referrals. Five friends will be referred to your practice and so what we want to do is we want to take these numbers client referrals and over the course of ten years and I what we want to do is we want to figure out ok based on the average in your industry if you could attract the patients that you want, or if you are attracting those patients, what's the number that they'll spend per year ok and conservatively - and this may be an aggressive figure for some.
So once again adjusted according to your practice. But I'm gonna say conservatively for many dentists $500 per year. Ok, so if you've got $500 per year times ten years that's $5,000 ok so so if you say the value of a patient is $5,000, but then we also aren't considering the 5 referrals. We add that to the equation that's $25,000 lifetime value. From referrals. Does that sound too good to be true? Not really, because the math actually lines up. The problem is internal marketing is so huge! If you are not providing kind of patient experience whereby these kinds of figures are are predictable, than it's too good to be true. But if you are providing even better than these figures the new patient generated through search engines or a referral service or direct mail or through whatever method; that actually has a higher lifetime value than the five friends that were referred. Why is that? Because these friends of this person tends to know each other and so, as you go through these five friends, each time you go through a degree of separation you get less referrals. So maybe like three referrals from one of those five friends and then from there you might get to and then one eventually.
But when you do it through say like search engine optimization you're bringing in a whole new tree of people. A person who otherwise would have never heard about you. And therefore a whole new branch people to bring in five referrals so not not to say that referrals number will bring you more more patients they certainly could. But fact is, here is if they come through search engine optimization come through pay per click management if they come through direct mail, or some sort of dental marketing that has has stepped outside the social sphere of your already existing patients. Then you're gonna see more referrals you're gonna have a higher value her lifetime, especially when you start getting granular, and you start focusing on just the highest value patients. So the highest value patients for your practice might be a cosmetic case Invisalign. And you start there and you start the relationship based off of a high value procedure, where there's high profit margin. So that's these are all things to consider.
As far as these numbers go they are reasonable. But the variable is they have to be media generated. They have to come from an outside source outside of being referred from existing patients. And your internal marketing has to be spot on. If you can do this, these two things, generate media generated patients who have an amazing patient experience, they're gonna tell people about it this figure $30,000 reasonable figure for the lifetime value of a patient in a dental practice like yours that is spot-on with internal marketing.
