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Why Lifetime Value of Patients Matters!

May 7, 2021 7:47:43 AM • Written by: Terri Ross

Patient acquisition is critical for any aesthetics practice to grow their business. Building long-term patient retention strategies and nurturing your existing patients is equally as important and oftentimes easier as there is already the KNOW, LIKE, and TRUST factor established.

Understanding and tracking your metrics is fundamental to building a highly successful practice. We hear over and over again from our clients, “How can we grow our business and become more profitable?” It’s like an architect designing plans for a building--you have to have a very strong foundation in place, or the additional floors won’t be supported.  

Did you know only 10% of aesthetic practices actually track their metrics? That means 90% don’t know things, such as:

  • How much money does your patient spend on the 1st visit?
  • Do they return to your practice? 
  • How often do they return? 
  • If not, why?
  • Do they come back for the same procedure (for example, toxin injections) or another procedure you offer? 
  • What is that additional spend on product sales or other procedures?
  • What is the average interval between procedures?
  • The Lifetime Value of a surgical or non-surgical patient?

What is the Lifetime Value of a Patient?

Lifetime Value (LTV) is the present value of all future profits generated by a patient--or in other words, the average revenue that one patient brings into your practice for every visit spread out over several years. The bottom line, it’s a measure of what a patient is worth to your business. 

How to Calculate LTV

In general, the simplest way to calculate LTV is to multiply the profit per treatment (you can do this with one of the financial optimization calculators within APX, my launched business intelligence and growth platform) with the estimated number of visits per treatment plan (there is a whole lesson on creating treatment plans in my sales training course ) with the estimated number of years they are likely to stay with your practice. 

LTV = Profit Per Treatment x # of visits per treatment plan x  # of estimated years they will stay in your practice. 

When you calculate LTV, here are a few guidelines:

  1. Make sure you use profit per treatment instead of total revenue otherwise you may overvalue clients
  2. If you don’t have accurate data to use (a challenge many practices face), use reasonable numbers and you can re-evaluate as you go along. Using a general estimate of LTV is better than nothing, but the true value comes in when you can segment your patients according to demographics, purchasing behavior, and other characteristics so you can gain specific data and insight and then redirect your marketing efforts in a more targeted way.

I cannot stress enough the importance of having accurate data and learning how to use it to make informed business decisions. In the APX Platform dashboard, you can use competitive benchmarking data to compare your practice to the national, state, or local market and use those benchmarks as a guideline.

Recalculate often. The products and services you offer will likely change over time. Your LTV will vary but it will allow you to make informed business decisions to grow your practice. Usually, once a month is a good rule of thumb to check and re-calculate your LTV.

Remember, my team and I are always here to help. The COMMUNITY component of APX Platform gives you weekly live weekly coaching opportunities with me and my team as well as educational webinars. To learn more about APX, we invite you to book a discovery call today

Terri Ross

Terri Ross is a world-renowned practice management consultant, international speaker, and founder of APX Platform. Terri has spent 15+ years working for Fortune 500 companies in the aesthetic industry, leading sales teams to over $20M. She spent 5 years as managing partner for a high-profile medical spa in Beverly Hills and has been helping hundreds of medical aesthetic practices launch, grow, and scale upwards of $1M and beyond. Terri is a leading speaker attending over 20 annual aesthetic conferences and hosts a podcast, Intouch with Terri, where she teaches industry best practices.