Patient acquisition is critical for any aesthetics practice to grow their business. Building long-term patient retention strategies and nurturing your existing patients is equally as important and oftentimes easier as there is already the know, like, and trust factor established.
Understanding and tracking your metrics is fundamental to building a highly successful practice. We hear over and over again from our clients, “How can we grow our business and become more profitable?” It’s like an architect designing plans for a building--you have to have a very strong foundation in place, or the additional floors won’t be supported.
Did you know only 10% of aesthetic practices actually track their metrics? That means 90% don’t know things, such as:
- How much money does your patient spend on the 1st visit?
- Do they return to your practice?
- How often do they return?
- If not, why?
- Do they come back for the same procedure (for example, toxin injections) or another procedure you offer?
- What is that additional spend on product sales or other procedures?
- What is the average interval between procedures?
- The Lifetime Value of a surgical or non-surgical patient?
What is the Lifetime Value of a Patient?
Lifetime Value (LTV) is the present value of all future profits generated by a patient--or in other words, the average revenue that one patient brings into your practice for every visit spread out over several years. The bottom line, it’s a measure of what a patient is worth to your business.
How to Calculate LTV
In general, the simplest way to calculate LTV is to multiply the profit per treatment (you can do this with one of the financial optimization calculators within Clarity's Practice Performance System) with the estimated number of visits per treatment plan (there is a whole lesson on creating treatment plans in my sales training course ) with the estimated number of years they are likely to stay with your practice.
LTV = Profit Per Treatment x # of visits per treatment plan x # of estimated years they will stay in your practice.
When you calculate LTV, here are a few guidelines:
- Make sure you use profit per treatment instead of total revenue otherwise you may overvalue clients
- If you don’t have accurate data to use (a challenge many practices face), use reasonable numbers and you can re-evaluate as you go along. Using a general estimate of LTV is better than nothing, but the true value comes in when you can segment your patients according to demographics, purchasing behavior, and other characteristics so you can gain specific data and insight and then redirect your marketing efforts in a more targeted way.
It's so important to have accurate data and learn how to use it to make informed business decisions. In the Practice Performance System analytics dashboard, you can use competitive benchmarking data to compare your practice to the national, state, or local market and use those benchmarks as a guideline.
Recalculate often. The products and services you offer will likely change over time. Your LTV will vary but it will allow you to make informed business decisions to grow your practice. Usually, once a month is a good rule of thumb to check and re-calculate your LTV.
Remember, we're always here to help. The Clarity Community gives you weekly live weekly coaching opportunities with me and my team as well as educational webinars. To learn more about the Clarity Practice Performance System, we invite you to book a discovery discovery call today.
