An important component of your marketing strategy should be patient retention. One of my business mentors hammered into my brain “Justin, keeping your established customer base will be significantly CHEAPER than obtaining new ones. Do what you can to keep your established customer happy.” What did he mean by this?
When you have established patients/customers, you have a repeat customer, and you can sell them new products and services. These individuals are already interested in what you provide, therefore, why not capitalize on this? It is cheap to do so because they are already coming through the door. Obtaining a new customer on the other hand is EXPENSIVE.
Marketing is not cheap. Let’s face it… Putting ads on social media, radio, billboards, newspapers, etc. can get expensive, very fast. There is a concept called customer acquisition cost. This is the cost of obtaining a new customer or patient that purchases a product or service from you.
How do you figure it out? Basically, divide the amount of money you are spending on marketing by the number of patients you acquired within that time period.
You spent $2,500 one month on marketing and obtained 10 new patients that month. $2,500/10 = $250. It cost you $250 to obtain each patient.
Of course, these numbers aren’t 100% accurate because 2 of those patients could have been by word of mouth, but this should be able to give you a rough estimate on how much it is costing you to obtain new customers.
As you can see, it can be EXPENSIVE obtaining new patients. Some practice owners have told me it costs them about $50 to obtain a new patient, and others, it costs upwards of $400… This is determined on how well your marketing campaign is set up, the population of your area, your target market, etc… Ultimately, if it costs you $200 to obtain a new patient and you only make $200 off of them, then you broke even and did not make a dime. This is not good. For this reason, it is CRITICAL you are spending your marketing dollars wisely and ensuring you are pricing your services to where you are making a profit. This is another reason I continue to say, MARKETING IS THE NUMBER ONE FUNCTION OF YOUR BUSINESS!
You must spend money marketing to obtain new patients, but its just as CRITICALLY important you do what you must do to keep the patients you already have. This is called customer retention. Similar to the concept of customer acquisition cost, there is another concept called customer retention cost. This is the amount of money you need to spend keeping a patient. Unfortunately, it is complex and there is no agreed formula for doing so. What it comes down to is this:
How much does it cost you to keep your patients happy, content, and loyal to you?
I give away a free month of HCG or tadalafil/sildenafil to my men’s health patients at Christmas. Everyone gets a fun little post card in the mail that says we appreciate their business and to show you our appreciation and to wish you a Merry Christmas, your next month of HCG or tadalafil/sildenafil is on us, just bring this post card in on your next refill. The patient brings it in with a big smile on their face come January, and we give them a free months’ worth of HCG or ED medication. This builds LOYALTY and helps keep our established patients happy and coming back.
So, what is the customer retention cost in this particular situation? About $5-$10. It does not cost me much at all to give away a free months’ worth of ED medication or HCG.
I also provide free B12 injections at my men’s health practice. Per patient, this costs me approximately $2 a month. Big deal…
I also have bottled water available in the lobby and Netflix playing in the lobby. I would estimate this cost me MAYBE $3 per patient a year.
My estimated YEARLY customer retention cost is about $37. Whoopdie do.
Now, let’s compare that to the cost of obtaining a new patient.
I spend about $1,000 a month on marketing the 1st location for my men’s health practice monthly. On average, we have about 14 new patients a month. $1,000/14 = $71.
My average customer acquisition cost is $71.
You tell me, is paying $71 to obtain a new patient better than spending a whopping $37 to keep the ones you already have? It is a no brainer folks… Especially when you factor in that those established patients are paying you money on a near monthly basis for treatment.
$37 = $1,500+ a year in profit from the established patient.
$71 = MAYBE a $200-300 profit from a new patient. You never know if they are going to stay or not.
This is what I mean when I say, “Keeping your established customer is cheaper than getting a new one.”
How do you keep your customer retention rate high then?
- Provide excellent customer service.
- Provide excellent patient care. Go out of your way for the patients.
- Provide discounts on various services and products for established customers.
- Give out “freebies” 1-2 times a year during holidays such as Christmas, July, etc…
- Develop a loyalty program where patients receive special discounts on services and products after purchasing “X” amount of a product.
It does not take a significant amount of effort or money to keep your established patients and customers happy. It is a worthwhile endeavor on your part as a nurse practitioner entrepreneur because obtaining new patients through marketing can be down right expensive!