Understanding the Lifetime Value of a Patient

As owners and leaders in your business, you know that having longstanding, loyal patients is positive – we all want our patients to come back and see us. While we know returning patients are the ideal, consider whether you’ve truly explored the Lifetime Value of your patients. What’s more, have you explained it to your team? Lifetime Value (LTV) is pivotal for growth, as it helps quantify a patient’s financial contribution throughout their relationship with your practice.

What is Lifetime Value?

In the context of dental practices, Lifetime Value refers to the net profit attributed to the entire future relationship with a patient. LTV is not only about the revenue gained from that patient but also factors in the retention costs and rate. Understanding the LTV helps your practice maximise its marketing strategies, service offerings, and patient retention tactics.

Why is Lifetime Value Important?

Understanding LTV empowers dental Practice Owners and Managers to make informed decisions on where to allocate resources for marketing, customer service, and patient care enhancement. It shifts the focus from short-term gains to building long-term relationships. Knowing your patient’s LTV can lead to more effective spending to acquire new patients and improved patient satisfaction through tailored services and care.

How to Calculate LTV

The formula for LTV can vary, but here’s a simple method to start with:

LTV = (Average value of a treatment) x (Number of repeat visits per year) x (Average number of years a patient remains with the practice). You can also factor in the value that patients may bring if they refer other patients with similar spending to the practice. For example, LVT x (Number of patients referred).

For a more refined calculation, subtract the costs incurred to service the patient over that lifetime.

Five Tips to Increasing a Patient’s LTV

• Build Strong Patient Relationships: Excellent service and personalised patient care go a long way in patient retention. Remembering patient details, or We Know You’s (WKY’s) as we call them, and showing genuine interest can set your practice apart.
• Implement a Referral Program: Empower your team to encourage patients to refer friends and family, which increases the LTV of the current patient and brings new patients with their own LTV.
• Educate Your Patients: Patients who understand and own their conditions will value your services more and will likely invest in the type of treatment optimal for their oral health. We’re fortunate in Dentistry that what’s good for the patient usually also tends to be good for the business.
• Focus on Preventative Care: Educate your patients about the importance of having regular examinations and cleaning (what we call Active Maintenance) to prevent major issues from occurring. These regular visits also increase the patient’s lifetime value.
• Foster Community: Getting involved in your local community can increase your practice’s visibility and lead to new patient acquisitions and longstanding relationships. In addition to enticing new patients to your practice, it’s also essential you acknowledge your community of existing patients for their loyalty.

Calculating and understanding the Lifetime Value of your dental patients allows for more intelligent, more strategic decision-making in all areas of your practice. By pivoting your practice strategies to foster long-term relationships, you can ensure your practice’s steady growth and financial health. Investing in the long-term management of your patients is not just good dental practice but sound business practice as well.

Remember, at the heart of LTV is your quality of care. Continuously strive to enhance patient experience and satisfaction; the value will naturally follow. The formula for success is simple: Happy Patients = Healthy Practice!

Ready to elevate your patient experience and solidify your practice’s competitive edge? Don’t miss out on our Strategies to Improve the Patient Experience Live Online Training. Master the art of creating a patient-focused culture, understanding patient behaviours, and implementing systems that will have a lasting impact. Walk alongside your patients in their healthcare journeys and develop connections that turn them into loyal advocates for life.

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