Maximizing Your Marketing ROI: Calculating the Lifetime Value of a Dental Patient in 2022
How can you make the transition from stressed and worried to relaxed and thriving?
We believe the key is in dental marketing ROI — the return on investment you see from your marketing efforts. Every dentist who wants to build a successful and thriving practice should begin by calculating (and increasing) the lifetime value (LTV) of their patients.
“What is the average patient LTV of a general practice dentist?”
A survey of nearly 13,000 practices revealed that gross production per patient averages around $4,200. This number is likely significantly higher for specialty practices and general practices that emphasize higher-end cosmetic and restorative services. In fact, the general dentists :Delmain works with have reported average patient LTV of $5,500 to $7,500.
“How do I increase the profitability of my dental practice?”
Your intuitive response to this question might be to just get more patients. But the truth is a bit more complex.
As many practitioners in the early 2010s who offered $49 Groupon whitening deals will tell you, all new patients are not created equally. When reviewing their finances, some dentists who aggressively offer low-price deals for one-off treatments are shocked to discover some new patients are actually costing them money.
The key then is to get more of the right patients. The right patient for every practice varies but tends to have these key factors in common:
- Financial stability — Either they receive dental insurance through their job or they are comfortable paying cash to a fee-for-service practice. They are ready, willing, and able to pay for the care they need.
- Health focus — Patients who care about their health are likely to need less of your time as a dentist. Their routine care and cleanings can be handled by a hygienist, freeing up your time for more challenging and profitable cases.
- In need of treatment — Patients with dental problems today are likely to be a great financial opportunity for your practice. They’ll need treatment right away and will be ready to get started ASAP.
- Reliability — You can set your watch by them. They schedule their next appointment before they leave your office and never no-show. They’re a steady source of predictable income.
You already know what I’m going to say next:
- These patients don’t grow on trees
- Every dentist in your area wants these patients
Dental practices grow organically through word of mouth, referrals, and foot traffic. But that alone isn’t enough to build a thriving dental practice. To acquire the highly sought-after and profitable patients that will help your practice grow, you must invest in a marketing and advertising plan.
“How much should I invest to acquire the right dental patient?”
Investing in finding the right patients can increase the lifetime value of dental patients, your practice’s profitability, and ultimately the sale price of your practice, as well as your and your team’s overall satisfaction.
“How do I calculate the lifetime value of dental patients?”
Calculating the lifetime value of a dental patient can be as simple as multiplying the number of visits you expect a patient to make to your office by the average value of each visit.
Let’s say a practice expects the average visit to produce $400 in value and the average patient to make 7 visits to their office (2 checkups a year for 3 years, plus 1 small routine treatment). In this case:
Dental LTV= $400/visit * 7 visits/patient
For this practice:
Dental LTV = $2,800/patient
If this practice has an average 25% profit margin, that leaves $700 in gross profit after expenses. So this practice must spend less than $700 to acquire each new patient.
“Is it possible to increase the LTV of patients at my dental practice?”
- Reduce patient turnover/churn – By doing so, you’ll increase the average number of visits a patient makes to your office
- Increase the average value of a visit – Be aware that high-priced treatments can also hurt your efforts for keeping patients long term
- Maximize recall – Great patients who walk in the door once, never to return are pulling down LTV. Increasing recall is a team effort and can be bolstered by improving your chairside patient interactions, your front desk and hygiene team encouraging booking before a patient leaves, and even high-tech patient communication tools that offer automated appointment reminders.
- Get more referrals – The more patients each patient refers, the more value they’re adding to your practice
Other numbers to keep in mind when evaluating profitability and LTV:
- Referral rate – How many new patients each patient refers to your practice. The higher your referral rate, the higher the value of each new patient becomes — like a multiplier effect.
- Recall rate – How many of your patients are in “maintenance mode” compared to those in ongoing treatment plans.
- Treatments offered – Treatments with a higher profit margin or that require a higher investment can increase your practice’s bottom line and financial health.
In particular, ongoing treatment plans that require more visits and high-investment procedures are going to lead to more profit for your practice.
For example, a new patient who needs a few cavities filled, an implant, and gum disease treatment may be worth $10,000 or more to your practice right off the bat. You should invest much more to acquire such a patient compared to one with healthy teeth who needs a simple cleaning every 6 months.
“What is a typical profit margin for a dental practice?”
When buying or selling a dental practice, the profit margin is a good metric for assessing the financial health of the practice. Depending on location, specialty, and a variety of other factors, a typical profit margin for a dental practice is between 25% and 40%.
“Can different marketing campaigns lead to different average lifetime values of my patient?”
The more specialized and targeted the marketing campaign, the more closely the results should be tracked and analyzed. Think about a specialist offering full-arch teeth replacement treatments that require an investment of $30,000 or even more.
When calculating the practice’s average lifetime value of dental patients, including these highly profitable patients can skew the overall practice’s patient LTV. The practice may benefit from calculating one LTV for full-arch patients and one for more general hygiene and restorative cases. This will give them a clearer view of their practice’s LTV than a single number.
But it’s always best to start with a single patient LTV calculation if you haven’t done so already. Start there and then break down revenue and LTV by marketing channel or procedure type in the future.
“What are the most profitable dental procedures and treatments?”
For many dentists, teeth whitening is immediately and highly profitable. The cost of material and labor is low and the price point is relatively high. Plus, because teeth whitening treatments aren’t permanent, they’re a good way to keep patients coming back to your practice, increasing their LTV.
Remember, to increase the average lifetime value of a dental patient, you must balance long-term value with short-term profit. Profitable services are good, but happy and healthy patients keep coming back (and referring new patients) for years!
More of the most profitable dental procedures include:
- Teeth whitening
- Root canals
- Implants
- Smile makeovers
- Full mouth rehabilitations
Ready to get more of the right patients?
We understand that growing a practice is hard. There isn’t enough time in a day for you to do everything and manage everyone. You need a marketing partner who can take the reins so you don’t have to.
At :Delmain, we’ve taken the marketing lead on over 100 dental practices, helping them reach their full potential by getting more of the right patients and maximizing their marketing ROI.
We’d love to set aside 30-minutes to chat with you. Let’s talk!
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