Key Performance Indicators (KPIs) evaluate the performance of your practice based on specific data points that are selected based on overarching success indicators. The use of KPIs can help you track what strategies are working, and where you have an opportunity for improvement!
Common KPIs in aesthetic practices include:
- Profitability by SKU or Product/ Service Category
- Staff Performance
- Marketing Campaign Performance
- Patient-based data points such as Acquisition, Retention, and Revenue Per Patient
In this article, we’ll focus on patient-centric data points that can be used as performance indicators: patient acquisition, patient retention, and average revenue per patient. Focusing on these KPIs can help you establish tangible goals, improve patient loyalty, and evaluate opportunities for increased profitability. Understanding your KPIs will help drive your marketing strategies.
#1 KPI: Patient Acquisition: Measuring your patient acquisition metrics can support your practice growth goals and will help you determine your marketing budget. Metrics to analyze:
- Cost to Acquire a Patient: Customer acquisition costs (CAC) is calculated by dividing acquisition expenses by the total number of new patients. For example, if you run a Facebook advertisement for $1,000 and you gained four new customers, your CAC was $250. Ideally, over the lifetime of a patient (LTV), you’ll make 3 times the amount of money it cost you to acquire them.
- Example of a 3:1 ratio: If it costs you $250 to acquire a patient, you should make at least $750 over the lifetime of that customer’s journey (total historical visits) in your practice.
- Lifetime Value of a Patient: To determine the lifetime value of a patient, calculate the total revenue generated from their all-time visits. Take your analysis a step further and evaluate the profit margins associated with the patient’s purchase history.
- Formula to calculate LTV: Per-visit revenue x Number of annual visits x Number of years as a patient = Patient LTV
- Example Calculation:
- Per-visit revenue: $600
- Annual visits: 2
- Number of years as a patient: 5
- Projected patient LTV: $6,000
- Targeted per-visit profit: $200
- Projected patient lifetime profit: $2,000
- Projected patient LTV: $6,000
- Example Calculation:
- Formula to calculate LTV: Per-visit revenue x Number of annual visits x Number of years as a patient = Patient LTV
- Number of New Patients Acquired Per Month: Look at your historic benchmarks and use this information to set small incremental goals. If you can attract just 2 new patients per month, how will that impact your annual practice growth? Based on the analysis above, 2 new injectable patients per month could grow your practice by $28,800 annually.
- Number of New Patients Acquired Per Year: Back into annual goals by setting smaller monthly and weekly milestones.
SCHEDULE A MEETING TO DISCUSS YOUR KEY PERFORMANCE INDICATORS.
#2 KPI: Patient Retention: Measuring patient return rates will highlight opportunities to improve patient retention. Look for similarities in patients who don’t return and get specific — ie. 20-year-old female patients seeking lip filler who are solely price motivated. If you can identify this data, you make adjustments, such as rolling out a Kiss Club lip filler membership program for these target patients. Remember, it typically costs 5 times more money to attract a new patient vs retaining an existing one. Keeping an existing patient will help drive more long-term revenue and allow you to build better relationships with your patients — and attract more referrals.
Metrics to analyze:
- Retention Rate: A 2% increase in patient retention has the same effect as decreasing costs by 10%.
- Referral Rate: Your referral rate is the volume of referred patients as a % of your total patients.
- Top 3 Procedures for Recurring Customers: This information can help identify which procedures to focus on.
#3 KPI: Average Revenue Per Patient: Understanding the average revenue your practice earns per patient will help establish growth goals and identify how many new patients are needed to achieve your business objectives. Analyzing this metric over time will allow you to identify trends. Metrics to analyze:
- Per Visit: What is your average revenue per patient visit? If you’re bringing in too little revenue per visit, consider implementing a membership program to increase revenue per visit.
- Per Year: What is your average revenue per patient per year? This will uncover opportunities to improve annual revenue per patient.
Harnessing your KPIs will help you benchmark your practice against itself and reveal growth opportunities. Setting KPIs will help you develop upsell/cross-sell opportunities, retain and attract patients, and increase profitability. Establish a core group of KPIs and evaluate them weekly, monthly, and annually for optimal success.
At Synergy Aesthetics, we are here to support you. Our team is available to speak with you should you have any questions, contact us today—Your Success is Our Success!
Sources:
1. Gallo, Amy. “The Value of Keeping the Right Customers.” Harvard Business Review. October 29, 2014, https://hbr.org/2014/10/the-value-of-keeping-the-right-customers
2. https://www.practicebuilders.com/blog/8-proven-patient-retention-strategies-that-work/
