So you developed a brand new website for your dental or healthcare practice. You spent several thousand dollars to get a new high-quality responsive website, and now you want to see a return on your investment.
The easiest and most direct way to see a payoff is by integrating an appointment scheduler on your site. From there the calculation seems pretty easy: X number of people booked appointments on your site, the average transaction of each appointment was $Y, so your website has paid back $Y/X.
The only problem with this picture is that it’s completely wrong.
What is your new patient really worth?
As every business owner knows, the actual value of a new customer is not equal to the value of his or her first transaction. The first transaction gets them through the door, but the idea is to make them a customer for life. As such, calculating the average lifetime value (ALV) for customers requires a few additional metrics.
For private health practices, getting a precise number can be daunting. A few years ago, New Patients, Inc. released a white paper with an equation to help dentists figure out what their patients are truly worth:
If you’re an advanced math aficionado, this probably made your day. For the rest of us, breathe easy: there’s a much simpler way.
t × r × l = ~ALV
If you are looking for quick and easy ROI analysis of your marketing efforts, calculating the precise ALV with a huge equation isn’t necessary. Simply gather three metrics:
- Average value of each patient transaction (t)
- Average number of repeat transactions a patient has per year (r)
- Average retention rate of your patients in years (l)
The product of these numbers will give you a good estimate for the average value each patient brings to your practice!
Let’s say a new patient walks in the door and spends $250, which is the average amount for your practice. Patients on average will visit twice per year for 4 years.
$250 × 2 × 4 = The average lifetime value of each patient is roughly $2000
With that in mind, a new website that costs $5000 will begin to provide returns after only three new patients complete appointments that were scheduled on the site. Of course, there are other factors that alter the exact value (profit margin rate, referrals, etc.), this is a good baseline for any practice that considered the true value of its patients beyond the earnings from the first visit.