It Takes a Lifetime to Appreciate New Dental Patient ROI

The long-term value of a new patient is one of the most important — and misunderstood — metrics in dentistry. Determining how much the average patient spends in your practice over the lifetime of the relationship is critical because it enables you to make data-driven decisions about your marketing, including how much you should be willing to spend to acquire a patient, which campaigns are actually paying off, and whether you’re getting the best return on investment (ROI).

roi1In many areas of healthcare, the value of a new patient is relatively easy to determine. Ophthalmologists, for example, know that they will earn approximately $4,200 in revenue for each new LASIK case. One visit, one amount. Simple. It’s more difficult to measure in dentistry because you don’t really know what treatment the patient is going to need, or what they’ll spend. For this reason, many dentists have trouble projecting the true value of a patient.  

Calculating the Value of a New Dental Patient

The mistake dental practices often make when running their practice numbers is looking only at what a new patient spends in the first visit. This view is shortsighted because it’s unlikely you’ll do any major treatment on the patient for 18-36 months. If you only consider the initial visit, you’re overlooking the important, ongoing production that only comes over time, and this will significantly skew your calculations. Marketing expenses should always be viewed against the long-term value of the patient.  

It’s important to consider the average timespan that a patient stays with your practice. For most offices, 10 years is a conservative number, so we’ll use that for our sample calculation below. Feel free to write in your own number if it differs. Next, what does the average patient spend over that period?

For the purposes of our example, we’ll use a low estimate of $650 a year (assuming some restorative work and regular prophys). Again, use whatever average number you think is accurate for your practice, but $650 is probably on the low side – especially when you factor in whitening, cosmetic treatment, and implants. Using these numbers, a single patient is worth $6,500 over their life in the practice.

Sample Calculation One

Average Years in Practice 10 Years
Average Amount Spent Per Year $650.00
Value of One Patient $6,500.00

But this is just the first step. After you’ve determined the value of that one patient, there’s a second, more critical part of the calculation (and it’s one that most dentists miss): secondary referrals.

If your team is actively asking for referrals, and providing a good dental experience, a typical new patient is estimated to refer five new patients over the next five years. That means, if a new patient spends an average of $6,500...and goes on to refer five additional patients (each spending an average of $6,500), that’s another $32,500.

Sample Calculation Two

Value of One Patient $6,500.00
Average Number of Referrals 5
Production of Referrals $32,500.00

As before, feel free to write in whatever number of referrals is true for your practice. But don’t skip this step! You should consider production from secondary referrals as part of the value of that first patient. Afterall, you never would have seen any secondary referrals without the initial marketing that attracted your first patient. So add it all up. The total lifetime value of this sample patient is $39,000.

Sample Calculation Three

Value of One Patient $6,500.00
Production of Referrals $32,500.00
Total Lifetime Value $39,000.00

It bears repeating that $39,000 of production for your practice all stems from a single new patient – and all you have to do to achieve this is give them a good experience and ask for referrals – things successful dental practices do as a matter of course. 

If you feel your practice is not currently doing a good job of this, consider this a wakeup call to focus on increasing patient loyalty and case acceptance. The numbers truly add up. It’s also important to note here that the numbers used in this sample are conservative; the actual production figure could be significantly higher.

Always Track the Source of New Patients

In order to be able to track results accurately, your office first needs to systematically track the source of every patient in your practice management software (whether that source is your website, social media, word of mouth, etc.). If it is word of mouth, you want to attribute it to the original marketing that brought in the original referring patient. This helps you paint a picture of long-term value. Otherwise you may not even realize something is working until it’s too late.

How Much Should You Spend to Get a New Patient?

Now, what should you be willing to invest in acquiring a new patient? Some dentists make the mistake of using the cheapest marketing cost they ever experienced as the benchmark for what a new patient should cost. Perhaps they did a promotion that cost $1,000 and brought in 20 patients. Even though it was a once-in-a-lifetime situation (and they’ve never been able to replicate that cost in any other marketing), they still think that finding a new patient should cost $50. This just isn’t the case, and it’s certainly not sustainable. But fortunately, as we’ve seen above, it doesn’t have to be.

Even before you consider secondary referrals, a typical new patient is generating approximately $6,500 in production over the lifetime of the practice. Keep that number in mind when evaluating your advertising and marketing costs. If you can find a marketing channel that consistently delivers new patient leads for even several hundred dollars each, that should easily be worth the investment. Ask any other business owner whether they’d be willing to pay $500 to earn $6,500 (or $39,000!) and they’d take that deal every day of the week.

The bottom line: Remember what a new patient is actually worth to your practice and be realistic about what you’re willing to spend to attract them.