Which is more effective for growing your dental practice - patient retention or new patient acquisition?
The reality is that both are essential to the growth of your business. However, many practices tend to emphasize new patient acquisition, assuming that it will bring a higher ROI. But is this assumption correct?
Let's dig into it.
The ROI (return on investment) of patient retention refers to comparing the cost of retaining patients with the lifetime value of the revenue your practice receives from a particular patient.
The concept of patient retention is tied to the quality of services your practice provides, coupled with the overall patient experience – including patient interactions both inside and outside the practice.
These costs break down in two ways:
It’s always a good idea to know how the money you spend on gaining or retaining patients pays off in terms of incremental and new revenue generated.
To truly know the value of a patient, you need to know how much that patient is worth to you over their lifetime. This data point is critical to understanding how much you should be spending on marketing to acquire a new patient. We’ll explore that relationship now.
ROI isn’t as simple as subtracting the money you spend to acquire or retain a single patient from the amount of money they ended up spending. It’s much more effective to consider the average lifetime value of many patients to get a better sense of whether your efforts are helping your practice reach its goals.
Dental practices typically have more recurring revenue than one-time patients, so the lifetime value will take into account these recurring visits and not just an individual service or transaction.
To calculate the average lifetime value of your patients, you will need to determine:
Then, multiply your average total annual revenue per patient by the average number of years a patient stays with you. This number is your average lifetime value of a patient.
For this, you need to add together the total costs of your efforts to get a patient to book an appointment with you, which will usually include marketing efforts such as:
These are the costs of all the efforts your practice makes to reach its target audience. Once you have this figure, you can calculate the revenue generated from patients acquired through those efforts to determine the acquisition ROI for each channel.
The ideal marketing cost per new patient will be different for each practice based on its competitive landscape and resources. It’s up to you to decide what is acceptable marketing spend based on your retention rates and average lifetime value. For example, practices with high lifetimes value customers might be willing to pay more to acquire new patients. In contrast, practices with high turnover will likely shy away from expensive outreach tactics.
With patient acquisition, you have a clearer view of costs - the costs of your marketing efforts.
This is not to say that acquisition is less costly, however. There’s a common business mantra that it’s cheaper to retain current customers than acquire new ones. It’s a broad-brush statement but remains true in many industries and individual businesses, dentistry included.
When you acquire a new patient, some form of marketing or sales tactic gets them in your door. If you’re lucky, it was a word-of-mouth referral (more on that later), but other tactics like paid ads and special offers eat into the profitability of your service.
Your existing patients, on the other hand, regularly come back for various reasons, including:
It’s difficult to measure the importance of these factors, but the investments you’ve made into your office, engagement tactics, loyalty programs, and more all drive these essential connections.
When it’s all said and done, though, your current patients share the “cost” of retention, rendering it more sustainable and less expensive than acquisition, where each patient that comes through can be tied back to a particular marketing expense.
Every practice owner knows a personal recommendation from friends or family, otherwise known as word-of-mouth marketing, is your secret weapon when it comes to new patient acquisition.
This presents an interesting dynamic in the acquisition versus retention conversation. It’s almost always the case that by providing excellent service to your current patients (thus retaining them), you’re also creating a supremely effective acquisition arm in the way of referrals.
A word-of-mouth recommendation sets the perfect stage to get a new patient because:
With all this said, there is clearly significant value to creating a rich patient experience for retention and as a marketing tool to gain more new patient business. The question now becomes, how can I impact my patient experience? What tools are available?
Modento assists dental practices to enhance their patient engagement by balancing two critical components of this process: the in-office and out-of-office experience.
The patient experience is not strictly limited to what happens while someone is physically in your practice. Your online reputation, new patient intake process, and ongoing communication efforts all impact a patient’s impression of your office.
What happens before they visit your practice or after leaving it also factor in significantly, such as:
Modento can assist your practice with integrating all of this impactful technology, plus offer an easier way to stay on top of your ROI.
It’s essential to calibrate your efforts to acquire more patients and retain the ones you already have. But remember, your current patients are already connected and can provide your best form of marketing in the way of word-of-mouth. It’s much less expensive and more scalable to focus more of your resources on delivering your patient base the best experience possible, leading to more organic patient acquisition.
Engaging patients more effectively will help generate referrals, upsell to more valuable services, and reduce the pressure to replace outgoing patients with new ones constantly.
This is a joint blog post with our friends from Wisetack. How many times has the following scenario happened to you?Read more
The New Year is always a great time for change. It marks the beginning of a new chapter and a new chance to be the best versions of ourselves, both personally and professionally. As a dental practice owner, the new year presents an opportunity to review, reevaluate, and revamp your practice. […]Read more