Clients Cost Money: In, Out, and Everything in Between

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customer retention

Natalie Chew, a pet owner in Helena, Montana, travels over an hour and a half, one way, to take her dogs to the vet. Sure, she could visit a practice in Helena, where she lives, and she has. But it’s not her first choice.  

“They truly love your animals,” Chew says of Hardaway Veterinary Hospital in Belgrade, Montana.

She first utilized the clinic years ago when her family moved to Belgrade. She explains that their Labrador retrievers were in poor health — one had almost died months earlier while under the care of a vet in another town. Chew explains that the veterinarians at Hardaway took extra time with her dogs, got them on the path to health, and charged far less than she’d expected based on what she’d paid at other clinics for disappointing results.  

Chew’s experience illustrates both sides of the customer coin: retaining the loyalty of happy, satisfied customers and patients, as well as the cost of losing patients after a lackluster experience.  

Customer Retention: Relationships over Revolving Doors

An article by Mike Paul, DVM, explains: “As options for clients grow seemingly exponentially, retaining existing clients becomes necessary for any healthy business — even more so than attracting new customers.”  

Paul’s article quotes David Wallace, CEO of Search Rank: “85 percent of retained clients are willing to pay more for great service and value — it’s important to them. In fact, 27 percent of them are willing to pay 10 percent more. Plus, repeat customers spend 65 percent more a year than new clients and have a larger average transaction.”  

As a veterinarian, your practice is nothing without a thriving client base. Certainly, you must focus on providing exceptional medical care to your patients, but that is only one part of the equation. The quality of your relationships with those clients is the difference between a solid clientele willing to refer you to others and a revolving door of customers who are less than satisfied, costing your practice business and profits.  

Numerous factors contribute to the “stickiness” of your client base — marketing efforts, advertising methods, incentives, discounts, referrals, quality of care, location, the surrounding market — but overall, relationships surpass all. If you care well for the customers you have, you’ll not only retain those and increase business from existing clients, but you’ll likely gain new clients through referrals.

Make Them “Sticky”: Create an Experience That Is Above and Beyond

If you focus on retaining happy clients, you won’t spend as many sleepless nights worrying about clients who’ve walked out the door. Customer service, then, should be a prime focus of your practice.  

“The patient is not the only customer,” says Adam Toporek, president of CTS Service Solutions. “One of the advances we’ve had in our understanding of customer experience in the last 20 years is understanding how important human emotion is to customer experience.”  

Toporek continues: “Veterinary practices have this incredible opportunity because they have a service that is so deeply connected to the customer’s emotions. If they can focus on the customer’s emotional experience, as well as the patient’s physical health, that is going to go a long way toward helping them retain clientele.”

“[Customer retention is] about follow-up after the appointment is done and the client has left,” says Jen Bruce, practice manager at Wellesley Animal Hospital in Toronto, Ontario. “It’s more about the experience they have with people.”  

Making a client feel important is crucial to customer satisfaction, Bruce continues. New clients receive an emailed intake form prior to their first appointment. The form gathers pertinent information about the pet and, perhaps most importantly, allows the front desk staff to recognize the patient and greet the pet and its owner by name when they walk through the door.

She notes that if follow-up after an appointment is left to the client, no matter the service, the client misses out on a crucial piece of care: connection with the people who care for their pet.  

Bruce says that in their practice, most of their clients prefer text messaging as a way to stay in touch. When a pet’s procedure requires a stay at the clinic, Bruce’s staff sends updates and photos to keep the owner informed of their pet’s progress. Her practice assigns a specific vet technician to follow the pet throughout their entire stay as a contact person. Even though the practice is comprised of multiple veterinarians, her staff schedules pets with the same vet as often as possible to provide consistency and continuity of care and, most importantly, relationship.  

Practice management software can play an important role in managing retention and attrition.

Bruce stresses the importance of connection with clients: “Foster relationships with your clients and have a way to track the clients of your practice,” she says.  

Bruce’s office uses Avimark software. She suggests monthly reports and tracking to identify clients who have left the practice, noting why a client has left. If they’ve moved, it’s one thing, she says. But if you notice client after client leaving the practice because they’re switching veterinarians, that’s a problem that should be addressed, and quickly.  

Avoidable Attrition: The Cost of Lost Business

Toporek says that a certain amount of attrition is unavoidable in any business. However, avoidable attrition is where owners should place their focus — what revenue is walking out the door unnecessarily, and how can you fix it? Lost business, Toporek explains, causes several significant losses. Losing the business and the revenue is the most obvious. However, business lost that could be avoided deals a blow to your brand’s reputation, which could lead to loss of referrals and negative word-of-mouth in your market. Thirdly, Toporek says, loss of clients can affect staff morale — if your staff watches client after client leave the practice, their confidence decreases as well.  

Paul writes, “The costs of losing, replacing and bringing an employee or associate up to speed are well understood. But the real cost impact of losing a client is often unappreciated. The cost of developing a new client to the same level of profitability as a lost client is very high. It can be 10 times more costly to get a new client than it would be to retain an existing one. Increasing customer retention by a mere 5 percent increases profits by at least 25 percent. A 2 percent increase in customer retention can equate to decreasing costs by 10 percent.”

As for the exact cost of attrition, Toporek says it is possible to put a number to client loss. First, he says, you must understand what it costs to acquire a client. For a specific time period, divide your marketing costs by the number of clients acquired in the same time period.  

The second piece of the puzzle, explains Toporek, lies in determining your practice’s Customer Lifetime Value.  

“This is probably the most important number in any business,” he says.  

An article on his website, Customers That Stick, explains in detail how to calculate the lifetime value of a client. First, calculate your retention rate: how many clients did business with you last year, and how many are still doing business with you this year? If you had 100 clients last year and 45 are doing business with you this year, your retention rate is .45. Client lifetime, then, is 1/(1-.45), or 1.8 years.  

Calculations for precise costs of retention and attrition are fairly detailed. However, if you know your average client lifetime, which can be further segmented based on customer demographics, you can roughly estimate the cost of retaining clients, based on expenses such as discounts, rewards programs, referral offers, and marketing costs. These analyses may lead to changes in marketing dollar allocations or a better understanding of where new business comes from and how to most effectively acquire it.  

Your practice must know how much business is walking out the door, Toporek explains, and what it costs to get clients to walk back in.  

Reel Them In: How to Fix It When You’ve Messed Up

When a customer suffers a bad experience, you must be willing to fix the problem. Toporek developed a three-step process for fixing mistakes with customers. His 3S Customer Service Process begins with step one: soothe the psyche. Toporek says this step is often skipped but that its importance cannot be overlooked.  

“Address the customer’s feelings and emotions before trying to resolve what happened,” he says. “The natural tendency is to fix the problem. What we now know about customer emotions is that you want to resolve how they feel first.”  

Step two of the process is solve the screw up.  

Step three, Toporek explains, is set up the success. Often, business owners believe a situation is remedied, when in actuality it is not. Toporek says that in order to have a successful customer service experience, especially with a dissatisfied customer, you must “close the loop” and ensure that both operationally and functionally, the customer’s issue is resolved.

People Talk: Give Them an Experience They Won’t Forget

Picture this: you’re a new pet owner. You’ve added a six-week-old puppy to your busy household. He’ll need a round of vaccinations in the next few weeks, and at some point, you’ll schedule him to be neutered. As a mom of young kids with a job and a home to care for, you don’t really have time to research the options for veterinarian care in your area. You do what makes the most sense: you ask a fellow dog owner for a recommendation.  

Her referral leads you to the veterinarian and clinic she trusts for her dogs. As it turns out, the clinic, and the veterinarian, are a perfect fit.  

It would be hard to precisely quantify what investment the clinic made in acquiring you as a client, but the bottom line is this: you trusted a friend and her recommendation. She referred you to a veterinarian she likes and trusts, explaining one of the oldest truths in business: take care of your clients and they’ll take care of you.

The key to referrals, Toporek explains, is word-of-mouth.  

“Do you have a customer experience that is so much better and so differentiated from anything else in your market that people can’t help but talk about it?” says Toporek.

Toporek explains that in a medical practice, much opportunity exists to differentiate and stand out from your competition. Providing amazing service and care will set your practice apart.  

For referrals, Bruce suggests a follow-up to thank an existing client for sending a new client to the clinic. Additionally, her clinic offers a discount on spay and neuter procedures completed before the pet is six months old. If a client schedules and completes a recommended dental cleaning within 50 days of the vet’s recommendation, a discount is offered for the dental procedure.

Customer Retention Is a Team Effort

The satisfaction of your clients depends on many factors: some relating to the medical care of your patient (their pet) and some relating to non-patient experiences with your practice: scheduling, check-in and check-out, billing, and follow-up.  

No matter your exact numbers, the cost to retain clients will always be lower than the cost to acquire new clients if you’ve lost business. Management and staff empowerment go a long way in creating a positive experience for customers, which leads to increased retention and referrals and decreased customer loss.  

“[As an owner and manager], embody the principles and behaviors you expect from your team,” Toporek explains. “Walk the talk.”

2 COMMENTS

  1. It’s definitely a lot harder to acquire new customers from scratch than it is to bring in referrals or previous clients. We like to schedule the next checkup before they leave and offer incentives for referring someone before that next visit.

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