Why Knowing Your Chiropractic Practice's Lifetime Value is Crucial for Growth | Podcast Ep. 163

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Hello and welcome to the Evidence Based Chiropractor. I AM your host, Dr. Jeff Langmaid. This week is a super important episode. We are talking lifetime value of patient and how that could impact your decisions when marketing your practice, which is actually absolutely crucial. Additionally, I am super excited and proud to announce the first ever evidence Based Chiropractor live intensive workshop is happening June 7, 8 and 9 here in Tampa, Florida. This is an opportunity to come down. We are going to write emails together, we're going to improve your website on the spot. We're going to shoot professional video. This is limited to 20 docs because as I said, this is hands on. This is one on one work and it is going to be a blast. I've been planning this for probably almost close to two years and I'm going way over the top on the first one, that is for sure. And I'd love it if you would come down and join. I have already been selling tickets and there are a couple super early bird tickets left that not only give you a reduced price but they also give you the ability to get, not only get the normal swag bag that everybody's getting, but some additional items in there as well. This is going to be an awesome event. Ticket price includes breakfast, includes lunch, special event. We're going to have some open bar stuff going on. It's just going to be a really fun, really great time here in Tampa. The venue is absolutely killer. So check it out@the evidencebasedchiropractor.com events. Those tickets are going right now. Sales have already been good. 20 seats tops. A couple super early bird tickets left the evidencebasedchiropractor.com events. I'll also put a link in the show notes. But without further ado, here is today's episode where we're talking lifetime value of a patient.

What, what is lifetime value? So people see, you know, LTV or they see lifetime value. And, and I guess two questions with that. Number one, what's been your experience as far as how many chiropractors or service professionals actually know the lifetime value of their patients or clients? Number one. But then number two, what does it mean just in a, in an overall or overarching sense?

So maybe I start off with the first question there. The amount of chiropractors that I've talked to that have a, a definitive answer on that, a clear answer on that is probably close to zero. And I don't think that that's through any fault of their own. I think that it's you And I have talked about this before. It's a complex question to answer. It's not that simple. But the challenge there, and the reason that lifetime value is so fundamentally important, is it's how you can base your decisions on your marketing efforts. And I'll give you a case in point on this here. If you spend $1,000 on your marketing and you generate two new patients from that, let's just call it two patients. But you know that your lifetime value of a patient is about $750 on a rough estimate average. Now, you know that you generated $1,500 in revenue. That thousand dollars was worth an ROI of $500. So it's a good thing to continue on with that marketing at that point. But if you don't know that lifetime value, you're not going to be able to make those kind of decisions. That's a challenge. The other component to lifetime value as well, is it helps you assess the health of your practice in terms of patient retention. Are you offering enough services? Is there things that you should be offering in terms of ancillaries that you might be missing? Should you be getting your clients and your patients engaged more through social. If your lifetime value is low, do you come to find that you're not getting repeat appointments? Are you finding that you're not getting referrals from those particular patients as well? The tough part about this for me, I've been in medical for a long time, and obviously I work in marketing now, you kind of want to shy away from assigning a dollar value to a patient. You know, it's not why people get into medicine. But in terms of making decisions for the health of your practice, it is fundamentally important. It's probably the most important thing that you can actually do.

Yep. And one of the ways I know we were talking about it before we hopped on is, you know, there's kind of a. There's a few different ways to calculate it, which I think is where a lot of docs get, you know, pulled into the weeds. They're like, I don't know. And they don't want to, like, you know, incompletely, you know, define it. And then they feel like they're making a bad decision off a wrong number. But one of the ways that I know you and I discussed is a very blanket way to go about. It would be total revenue divided by number of patient visits within a certain time frame. Right. And that's kind of the easiest way. And I'll say that one more time. You know, total revenue divided by Number of patients seen over a specific set period of time. So there's still one variable there, right? Time. Oh, what does that, what does that mean? And we were kind of talking about it and it's like, you know, until your last day out of practice, there's still an opportunity to see somebody again. So it's, that's where I, you know, for the detail people out there, it's like, I don't know what to do. But I think it's an important thing because if you take, let's say you could almost do a comparative analysis, which I think it's really interesting, I'd love to know your thoughts on this, where you take, let's say last year and you say, okay, last year, what was the revenue, what was the patients, and what does that look like? Right. And then you were to do four years ago, if you've been in practice and pick that year and see, okay, one compared to the other, has it gone up or down your lifetime value over time? If you're doing a good job retaining, if you're doing a good job interacting with your patients, if they're coming back into your practice at different points in time, it should continue to ascend. And if it's flatlined or it's going down as the years progress, as you choose individual timelines, that, to me, and I'd love your thoughts on this, is probably a good indicator that in this case you're lacking long term retention, you're lacking interaction post.

Yeah, yeah, absolutely. So, you know, there's a couple of different ways that you can look at this as well. From a practice standpoint, if your lifetime value within the past year is less than what it was four years ago, am I focused enough on ancillaries? Did I stop sending out emails for patient retention? Did I stop sending out emails to get those Google reviews and keep people engaged? Yes, I did get myself to a point where I had a ton of Google reviews. So I shut down that campaign and I'm not doing that anymore. But here you go, last year and your revenue numbers for lifetime value is less than what it was four years ago. You obviously have an issue, and so that's one way to look at it. The other way to look at it as well is, I think so not just the ancillary side, but the marketing side of it as well. And again, email campaigns, getting people engaged through social, that kind of stuff is how we really start assessing the health of the practice from a lifetime value standpoint.

And when we bring it specifically to where Your guys expertise is which really is deep into that pay per click and the Google Ads and the search. How does lifetime value play into making good decisions in that realm?

Yeah, it's huge. So it's paramount for us because again we have our own proprietary CRM. We encourage all of our clients to use this not just for the sake of. And it is free by the way. We use this because it's fundamentally important for our clients to be able to grow their practice, but when it comes to having a lifetime value assigned to a particular patient and then they're going back to a particular click which developed into a lead. When we're optimizing your campaigns, we want to be able to optimize towards an actual sale happening in revenue being generated above and beyond just a new or a lead being generated, which is where most marketing companies fall short. Who cares if a lead has been generated if it generated no revenue for you? So when we look in our CRM and we see all these different lifetime values that were assigned to this particular campaign which generated that particular click in that lead, now we can say that thousand dollars instead of spending it upon the spread of what amounted to all these leads here, let's just focus those dollars on what the marketing dollars. On what actually amounted to revenue for you. That's the importance behind it. Because then you're getting the most bang for your buck when it comes to your marketing.

Yep. What are some individual factors that you've seen that can affect lifetime values? It's not going to be the same. If you are in Manhattan, for instance, it might be different than if you're in Arizona, than if you're in LA or Beverly Hills. So I've probably let in on one of those geography. But what are some of the varying factors where not everybody's going to have the same lifetime value and that's okay. So what are some that you've seen?

I really wouldn't be able to answer that question. And the reason for that is because when I speak to chiropractors about knowing the lifetime value, they don't know the answer to it. So I don't have anything to actually assign it back to. Demographics and geographic location would be a huge part of it. But insurance reimbursements are different across the country. But that's important to know that. Right. Because if I deal from a marketing sense with somebody who's got $1,000 budget and has a lifetime value of $300 per patient and we get them three new patients while they're in the red, I Mean, they only generate $900 worth of revenue at that point. Whereas if I talk to somebody in a different location that is saying, well, I make about a thousand dollars off of every new patient and I spend that same thousand dollars, well, now they're double their money. And so that is a necessary component to your marketing. I talk to a lot of chiropractic physicians out there that say, well, I spent all this money and I have no idea what I actually got for it. Yeah, of course you do, because you don't know necessarily what the lifetime value of that patient is. And that's what's fundamentally important. Because then as a marketing agency, I can tell you if you're going to spend $1,000 with us and you're telling me that your lifetime value is $300 per patient and $1,000 is your limited budget, I'm going to tell you, hey, our conversion rates are typically around 30%. We're not going to get you anything more than three patients. I don't think this is the best option for you right now. Maybe do a little bit more social, maybe do things that might be, you know, a little bit more organic in terms of, like, B2B referrals and getting out there and doing B and I groups, you know, and stuff like that. But, you know, it's really important when you're going to be investing money into marketing dollars.

And I think that gets back to some of the points that we've chatted on on earlier episodes, where also, you know, understanding not only the lifetime value that's going to set the anchor right, that's where you can make good decision on how much can or should I spend. But the secondary component of that is then having good keywords, you know, having the ability to have negative keywords, so you're not competing at a level that's beyond the scope of what you can do to increase your ultimate conversion rate, there's a lot of steps along that, obviously, making sure that your staff is, you know, picking up the phone in a timely manner that they are accustomed to, know what's going, everybody's in line and knows what's going on. But at the top level of that, even just the amount you pay per click, paying a ppc, advertising, the amount that you're paying per click is within the realm of as the patient goes down the funnel of acquisition, so to speak, as they click to the website, as they pick up the phone, then to make the call or whatever the lead magnet may be or the action step for them that you have a reasonably good expectation now that based upon the overarching percentages, you're going to be in good shape. But getting back to today's episode, if you don't know the lifetime value to start, man, that makes things really arbitrary as you start going. And you can figure it out as you go along, as many docs do, because now it'll start to come into focus. But the sooner you get that information, the better you can make decisions.

Oh, yeah, absolutely. So if you put this in a roundabout way, look, if I got two separate campaigns out there in this campaign here, I know if I spend $500, I'm going to get you 10 leads, but I know that the lifetime value and you actually tag this back and you have a conversation with your marketing agency, those 10 leads converted to nothing for you on the same token. But that was $500 for 10 leads. And so you're talking about $50 per lead. If I have another campaign over here, that is $250 cost per lead. And that's an expensive cost per lead. But on the same token, if it generates you actual two sales, two new patients, and you make $750, well, all of my money is going to be going back into this particular campaign. And that's the real decision that you, you need to start making. You need to stop worrying about marketing agencies out there that report on lead generation. Let's talk about sale generation, let's talk about revenue generation. Marketing agencies are fun, but we prefer to call ourselves revenue generating agencies.

I think that's well said. Well said. And some of what I know you and I have kind of talked about on the side as well is with chiropractors. I know a lot of times it's like, man, we gotta do more. But there's a lot of other competitors that are outside the chiropractic space that quite frankly, don't have fantastic data as well. It's not necessarily a chiropractic issue. There's a lot of health care companies that also get, you know, you know, stuck in inaction, or they get, you know, you know, the paralysis by analysis and they can't come to a good decision either. But with that being said, again, I view those always as, you know, opportunities where if other people in your marketplace, whether it's a pain management doc, whether it's a cert, whoever it might be, but, you know, people that are loosely competing in your space, so to speak, for somebody that has a musculoskeletal complaint, if their data isn't exactly up to snuff. Well, the sooner that you get yours in line, that's going to give you a competitive advantage. And that's a very important part of when you're doing paid search is any competitive advantage you can have that drives down the cost of that click or that acquisition is a really good thing because that enables you to scale.

Yes, absolutely. And you don't want to get to a certain point where you're so bought into it, you should be able to look back six months from the point of a new patient coming to your practice. I know exactly where this patient came from. I know if it was a referral, I know if it came from paid search. I know if it was organic and local that generated this patient. Because then you can start making the decisions that benefit your practice. You don't want to be in the situation where you're looking at your patients and all the information data that you have in for your practice and saying, I have no idea what to do going forward. So your data being clean is probably the most important fundamental thing. Anytime that we go into any relationship with any provider that we're going to be working with, any client that we're going to be working with, we want to make sure, how's your data? Do you know exactly where your sales are coming from? Do you know how much a sale is actually worth you relative to the source that it came from? Right. Because if you're making decisions and saying, hey, this is generating the most amount of cases for me, but you're in the red in terms of the marketing dollars that are being spent on it, that's not good. So don't look at things in the totality. Like if you're profitable, great, but you want to be profitable against your marketing dollars, if that makes sense. Get it down to that level.

That's a very good point. I think, you know, segmenting out what you know, what's working and what's not. And hey, sometimes you might run, you know, in the red on purpose in an area because you're like, hey, I just, I want to build, I want to grow. I'm investing in brand rather than sales.

Right.

Which is, which is a. Okay and good. There's long term strategies for that. But certainly to stay in business, you're going to have to balance those against short term strategies and making sure that you have some things, if you are running down in this category that you are at least offsetting that obviously just to break even in terms of other categories. And that's a good point as well, because if you're spending money on paid, if you're spending money on Facebook, if you're spending money on all of these other things and then you're totaling it together and just making blanket decisions, you're probably going to cut some things that are working and underserved some things that are working.

Absolutely.

And I think that's a tough, that's a tough situation as well, because I know, you know, it's the dilemma of the entrepreneur and the business owner is that many times you start doing things that work and then you stop doing those things, you know, for no good reason. And you might add on other things that don't work. And now you end up scrambling and saying, what the heck happened? Am I built on a house of cards? And it, it really wasn't. It just is. That's the way that the twig has grown.

Yeah.

You know, I'm sure that you see that all the time.

Yeah, absolutely. Again, and it becomes kind of a snowball effect. You get going down the path of having different systems and tangential ideas and you spin off in one direction and what have you. It becomes a very challenging thing to dig yourself out of it. It's a lot more of a lift. So the better that you can clean your data, know your sources for where your new patients are coming from, have a definable and assignable value to it. Never put a dollar sign on a patient. I don't like saying that stuff. But it's important for the, the growth of your practice. It's that plain and simple.

We appreciate you joining us for this episode of the Evidence Based Chiropractor. Learn more tips for explosive practice development at the evidence basedchiropractor.com youm can also join the Premier MD monthly membership, enabling you to use what you just heard to maximize results in your office.