If you can take care of this seemingly very boring topic, it can exponentially increase the growth of your business. And that stability, and that free money that keeps coming back will let you advertise more aggressively and put your competitors where they belong which is in your rear view mirror.
Practice Perfect: Actionable business information to take your medical practice to the next level. Now, your host, Nick Dumitru.
Nick: [00:00:31] Welcome back to another episode of Practice Perfect. The show for medical professionals, plastic surgeons, and anybody running a professional services practice as opposed to a bricks and mortar store. This is episode number 7. And today we’re going to talk about how to keep patients coming back to your practice. We are of course talking today about attrition. It’s sometimes referred to as churn rate. And I’d like to talk to you about why it’s important.
Nick: [00:00:58] The first thing that we need to understand is that plastic surgery practices will lose about 80 percent of their patients over a four year period if they do nothing. What that means is that of the people coming into your practice, 80 percent or more will not come back after a four year period. So they may stick with you for a year or two. Year one you might lose 20 percent, 30 percent. Year two, you’ll lose another percentage of the ones that stayed. And by year four you can pretty much bet that the majority of them are gone. And I would say that in the practices that I’ve seen it’s even higher than 80 percent. I’d say the vast majority probably approaching about 95 percent based on the numbers that we’ve seen don’t ever come back if you don’t do anything about it. So why does that matter. Let’s get into that. If in your practice you add about 100 new patients a month and you lose 80 of them, 80 of them never come back. It will be very very hard for you to grow your practice. It means that you’re fighting for new patients every single month because you don’t have the advantage of a predictable income and having them come back to your practice. Now factor in the fact that it can cost as much as a thousand dollars to land and sell a high quality high ticket surgical patient. I’m talking about someone that may be spending multiple of thousands of dollars for things like a breast augmentation or a facelift. Right. When you getting into the tens of thousands, it can cost a good deal of money because those patients are doing the research. You are paying for leads depending on your close rate and the cost per lead. It can cost you about a thousand dollars to bring them into your practice. Now if you’re losing 80 of them every single month you’re basically throwing away about 80000 dollars a month. Now yes, they did have surgery with you. They did pay once and it was profitable. But to reacquire someone of that quality and have them do additional things in your practice can cost you an additional thousand dollars. These are people that care about their looks. They’re people that are willing to spend money with you. They’ve had a relationship with you. They’ve built one through the surgery, through the experience that they’ve got. And for you to get another high quality patients like that, it would cost you an additional thousand dollars if they don’t come back. When it would be a lot cheaper for you to just try to keep the patients that you’re already getting. Now let’s assume that you recover just 20 of those patients. 20 out of the 80. You’re not only saving that 20 thousand dollars in new patient acquisition costs but you’re also getting additional funds from those patients. If the lifetime value of that patient is, you know, an additional 5000 dollars and cosmetic services such as Botox, juv a germ, dermal fillers, cool sculpting, cool tech, whatever it is that you’ve got in your practice. Lasers. Those 20 people spend an additional 5000 dollars with you. That’s a lot of money that you can use to acquire new patients. To give your staff bonuses. To acquire better staff. Right. And it doesn’t cost you anything extra. It doesn’t have to cost you anything to keep them there. So I want you to understand that that’s why attrition is important. Understanding your attrition rate is important. In my experience most doctors have no clue what their attrition rate is. They have never calculated attrition. They’ve never looked at their churn rate. They’ve never checked to see how many patients never bothered to come back. And they sit there and they are just perplexed as to why they’re having a hard time growing when the competitors are not. And attrition rate is one of these topics that’s kind of boring on the surface but it’s the secret sort of underlying foundation that allows people to grow. It’s what makes the biggest difference but it isn’t flashy it’s not exciting. It’s not, you know, as fun as a new advertising campaign that just brought you in another three or 400 leads that month. It is not sexy, to put it plain, but this is the salt of the earth the stuff that really really matters to your practice. The stuff that’s going to catapult you to the next level. So let’s keep going. If you managed to keep those 20 additional patients what happens is that you start to get compounding revenue. Right. You’ve got the revenue coming in from new patients and then you’ve got the returning revenue. And the same as it would in a bank like compounding interest, you get more the year after the year that you’ve collected the interest. It’s the same with this. You add 100 patients, let’s say you keep 50, next month you’ve got 150 patients. And it keeps compounding and compounding. Those hundred that came in, you keep 50 of those, now you’ve got hundred. Plus another 100. Now you’ve got 200 patients and your income starts to stabilize. Now stability is the foundation for growth because it lets you advertise more and let you hire better people and it lets you make calm rational decisions because you’re not scrambling every month to get new ads up and get new business and you’re still going to do that. You’re still going to advertise, you’re still going to get new business but it’s not going to be from a place of unnecessary stress. Because you’ve got that foundation there. And you know, it can slowly build up over time. Like if you’ve got to practice you’ve been at it for 15, 18, 20 years. You will notice some of that stability. Some people will be coming back. And I said you lose about 80 to 90 percent. 95. 92. Depending on what it is. But every year you’re still keeping five to 10 percent of your patients. So in an older practice, you will still have a little bit of that base. But it’s going to be just a sliver of what you could have had if you really pay attention to it.
Nick: [00:06:41] On this episode we’re going to get into some practical advice. Some things that you can go back and implement. And I’m going to tell you a few stories that I think you’ll find very interesting. We’ll get to that in a minute. But before we do that what I want to do is get into some statistics. And I want you to understand the number one factor that contributes to a bad attrition rate. And that is not doing a good job. So first and foremost, do a great job servicing the clients that you get. But you can only do so much. You can only go so far yourself. And it’s very important that you’ve got a team around you that understands the importance of this and that they look at the big picture and they’re in it for the long run. I’m going to throw some statistics out at you. 89 percent of consumers in the U.S. start doing business with competitors after having a poor customer experience. Right. So if your staff is making mistakes, if your staff is not treating people right, that is probably one of the biggest reasons why people will go to your competitor. There’s more and I’ll get into that in a bit. There’s actually an even bigger factor but 89 percent of consumers that get a bad experience, and if you’re not managing that right, if someone is doing a poor job, so if you’ve got a bad apple,if you’ve got somebody that’s consistently not taking care of the patient, what’s going to happen is that 89 percent of the patients that they deal with will just go to your competitor. Plain and simple. So staffing is a big issue that is not an easy topic to tackle but it’s something that you need to pay attention to and it’s something that your office manager has to be on top of. And you yourself have to make sure that your office manager’s top notch that she really understands what’s going on in the practice and the importance of this churn rate.
Nick: [00:08:30] So talking about the industry as a whole. The economy as a whole. In the United States, an estimated 83 billion is lost each year due to poor customer experience and customer attrition. So this is a big problem across multiple businesses. Which is why if you can take care of this you will have an unfair advantage over your competitors. So what I’m talking to you about now is I’m shedding light on something that’s a little bit of a secret in a lot of practices. It’s something that people simply don’t pay attention to. And if you can just start paying attention to it and recover those patients and pay attention to the compounding nature of your revenue, you can get much further ahead than any competitor in your area. Because you will plain and simply have more money to work with. And whoever can afford to spend more on advertising, whoever can afford to treat the clients better because they’ve got a better profitability as a result of these, that customer experience and that ability to advertise will make you the leader in your area. Right. So understand that it’s not a trivial matter. Sixty percent of customers end their relationships with companies when they perceive indifference on the part of sales people or staff. So again, it’s not just about doing the basics. It’s not about going through the motions. If your staff is there with a solemn look on their face and indifferent attitude to what’s happening, even though they’re going through the mechanics of delivering the service, it’s all about managing those perceptions. And notice I said ‘when they perceive indifference’. And if the client perceives indifference, if you or your staff makes them feel like you don’t care whether they stay or go, they’re just going to go. People don’t want to be where they’re not wanted. Plain and simple. Now 80 percent of churn customers identify themselves as being satisfied or very satisfied just before leaving. Now again, the importance of customer service there is it doesn’t matter if you did a great job for the past two or three years. If that person has a bad experience, they could have been very happy up to that point. You could make a bad hire and that person doesn’t come back. Which is why it’s crucially important that you track when people come and go in your practice and when they should be coming back and that you’ve got a mechanism for dealing with that. You’ve got to identify them and you’ve got to reach out to them either by email, phone, text message, or whatever it might be, you’ve got to reach out to them personally. If they were a great client and then they left and didn’t come back when they were supposed, to it’s on you to contact them. Because when people are unhappy they tend not to speak up if they’ve got alternatives. Or if they’re characters such where they just don’t like to complain. And it’s not on them to contact you and complain. It’s really up to you and your staff and your responsibility to get in touch with them, value their business, and find out why they didn’t come back.
Nick: [00:11:30] Now customer satisfaction is a really big deal and we’ll touch on it in another episode. I don’t want to get too deep into that because there’s a lot of practical stuff that you can do and there’s an even bigger reason why people don’t come back and I’m going to get into that in just a second. So for this episode we’re going to get into those practical matters and here’s the bottom line. The fact of the matter is that most people leave because they just get distracted. Right. That’s the biggest reason why people don’t come back. Life gets in the way. Because you may be in a cosmetic practice and dealing primarily with women, you have to understand that women tend to put themselves last. And they put their family first. Right now, there is of course exceptions to every rule. I’m sure plenty of examples where women are putting themselves first. But as a general rule, women will tend to put their family first. Right. So they will take care of the kids, they’ll take care of their husband, they’ll take care of the job, they’ll take care of their business, before they take care of themselves. And you have to understand that if you are not engaging with that woman, if you’re not bringing her back into your practice, if you’re not giving her a reason to understand that you value her, she will attend to the things that are most important at that time. Child gets a scraped knee or gets a fever. That’s it. That becomes a priority. Life gets in the way. And she doesn’t show up for her Botox appointment. Or she forgets to book her next one. And then she may be online and sees a competitor’s ad. It’s been 12 months maybe? She’s put herself last for 12 months. Now she decides that it’s time for her and she happens to be on social media. She could be on Google. Just googling around. Or on a website she sees a banner. clicks on that, takes the offer, goes to your competitor, you’ve lost that patient and that revenue forever. Because at the end of the day, people do what’s good for them not what’s good for you. And it doesn’t matter how you treated them. Don’t expect loyalty. Don’t think that they owe you anything because they don’t. Life doesn’t owe you anything and that patient owes you nothing. It’s up to you to go after her and get that business. So now the question becomes what do you do. How do you go about getting that business. Before we get into that I want to tell you a little story.
Nick: [00:13:52] I want to teach you about something called the Zeigarnik effect. And what a Zeigarnik effect is, there’s a mechanism in the brain that keeps you from burning the house down. And I’ll get into that in just a little bit. Before I do that I want you to know where the term came from. And if you’re Russian, I apologize if I butchered this name but I’m going to do my best. Now the name of the scientist that came up with this is a Russian female scientist, her name is Bluma Wulfovna Zeigarnik. And I apologize if I butchered that in any way. But in marketing, it’s known as there’s a Zeigarnik effect. And the story goes something like this. I’m going to paraphrase it to keep it short but basically it’s this. Doctor Zeigarnik went to lunch with her professor and other colleagues. And her professor noted something. They were at this restaurant and they were having a great meal. And there was a large table of students and doctors. Professors. And they had a phenomenal waiter. This waiter would take their orders. He wouldn’t write anything down. He’d go to the kitchen, put in the order, come back, and place the plate in front of everyone expertly. He would never make a mistake. He’d get everyone’s order right and place everyone’s individual meal in front of them without any faults. So the professor noted that you know he’s doing a great job. So they decided to just engage with him a little bit and ask him some questions. And after he took the orders he came to back with one or two plates and they stopped and they said ‘Hey, can you tell us what everybody ordered?’. And he looked at them and one by one, rattled off everyone’s order perfectly like an expert. They were extremely impressed and said ‘Wow, this guy must be the best waiter in the world. He’s doing such a phenomenal job.’ He then completed the orders and after he cleared the table, and brought the check, they asked him again and said ‘Can you tell us what everyone ate?’ And he looked at them and just drew a complete blank. He couldn’t remember anybody’s order once he had delivered it. Once he completed the task, he didn’t know what happened. He just looked around and was just baffled and they were shocked. ‘Oh my god, what happened?’ Like this guy was doing so well and all of a sudden he forgot everything. So Doctor Zeigarnik devised a series of experiments to identify what this phenomenon was. And you have experienced this phenomena over and over. And I’ll tell you why I say that it keeps you from burning the house down. It’s because if you put something on the boil, if you’ve got something cooking in the kitchen, and you get a phone call, and you get distracted, gave you ever felt that nagging feeling that you’ve left the stove on? Or have you left your house and thought ‘Oh, did I leave the light on? Did I forget to lock the door?’ If you felt that feeling at all ever, what you’ve experienced is the Zeigarnik effect. It’s a mechanism in the brain that helps you to recall unfinished tasks. So if you turn on the stove and you walk away, you could be doing something else, be completely engaged, and then all of a sudden you get the feeling that you need to go and check the stove because you forgot the stove on. That kind of loop, it just loops around over and over when you haven’t completed the task and it keeps us safe. All right. So that is the reason for that mechanism in the brain. Whether you want to believe that it’s evolution as I do or creationism. That’s up to you. I don’t get into that debate. But understand that your brain, for whatever reason, is wired in that way and it keeps you safe. And it’s there to make sure that you remember what you’ve forgotten.
Nick: [00:17:24] And in marketing we take advantage of that effect. So let’s talk about some real world examples. One of the simplest ones I can tell you is a quick little story. I take my daughter to get ice cream from time to time. And the ice cream shop gives us one of those little loyalty cards. I had a little stamp cards. You buy an ice cream, you get a stamp. They want you to come back. You finish all 10 or 20 or however many are on that stamp card, and you get a free ice cream cone. Now if you want to engage the Zeigarnik effect, right, that loyalty card, that little loyalty card is fantastic. But if you want to really engage the Zeigarnik effect, what you would do is stamp the first or second or third. Like one two three. And then you start people on that process. And if the ice cream shop does that, they’ll be much more likely to get people to come back over and over because people will remember that they’ve got this unfinished task. They got this loyalty card. It started them on a journey and it never finished. And they will, every once in a while, the brain will kick in and you’re like ‘Oh yeah, the ice cream place. Well, maybe we should get some ice cream.’ It is very subtle but it’s always there. Another example if you’re a little bit older and this may not be remembered by some but when I was younger, they were always ads on television for these little model cars, and I forget the exact company that had the ads at the moment, but I remember you could get a car. This little replica car. And you would get a free case with it. Right. So that was the sales pitch. They would give you this perfect replica for this unbelievable price and you get a free display case. And what it was is the car came in and the case came in. But the case had maybe 10 or 15 spots for the other cars in the collection. And if you wanted to finish that, right, if you wanted to stop that looping cycle, you would of course, sign up for this subscription and get a new car every month to finish up your case. So that you can easily afford it. But you would finish up your case. Now that was proven to increase sales for that company and they did very very well by taking advantage of the Zeigarnik effect. So what can you do in your business? Very simply, you could copy the ice cream shop. You could set up some sort of loyalty program that when people have gotten their Botox, or a certain number of juvy derms syringes, or laser treatments, cool sculpting cycles. Whatever it might be, you can take advantage of the Zeigarnik effect by putting people on a journey. Such as a little card or a membership program or letting them earn points toward something and moving them along to a pre-determined goal. You have to show them where they’re going to go and put them on this path to completing that journey. If you can do that, if you can start implementing those kinds of programs in your practice, you will immediately improve your churn rate. You will reduce the number of people that go to competitors because the competitors won’t have what you have. If somebody is 50 percent of the way, 80 percent of the way. You know even 70, 60, 30. Doesn’t really matter. But if they’re halfway to getting something for free, right, 20, 30, 50 units of Botox. Whatever it might be. An extra laser treatment. Skin tightening session. If they’re earning points towards something and you remind them of that and they’ve got that very clearly outlined, there’s no reason for them to jump ship. There’s no reason for them to go to the competitor. There’s no reason for them to leave your practice. So that’s one practical thing. I promised you something practical. That’s one practical element. one practical program. That you can implement in your practice this week. You can do it with something as simple as a stamp card or a loyalty card. Get something nice. Print it out. Work out something with the staff. Where they sign it or whatever. And keep track of how many the person’s got. And for not a lot of money you could implement that. Then you can get fancier and get a points program in. You can get full blown software and plastic cards. And get that all implemented in your practice and then start keeping a loyalty program for them. But you don’t have to go that extreme. You can try it immediately. This is something that I want you to take back to your staff and look at ways to implement it immediately. Because it doesn’t take a lot to trigger the Zeigarnik effect and the benefits are exponential.
Nick: [00:21:49] The next thing I want to talk to you about is the second bit of practicality that you can implement. I want to start talking to you about reactivation. Now remember earlier in the episode I told you that the number one reason that most people don’t come back over time is that they just forget. They get distracted. Life gets in the way and they move on to other things. I want to tell you a little story about a doctor that I spoke with that didn’t understand this. And I want you to get this. By the end of this, I want you to really understand what the important notes are from that story and what you should do about it. So I sat down with this doctor. I went to meet him and I sat across from his desk. He had a large mahogany desk between him and me which we will get into in another show in terms of creating trust between you and the patient and maybe that may not be the best way to do it. But I was speaking to him and he was just beside himself because he had a patient that he had just seen. And he was conveying the story to me. And he said that he was talking to this patient who came in and she wanted to have breast augmentation. And he asked her if she’d had surgery before. Now this woman told him that she actually had surgery before. She had a tummy tuck before. Maybe about 10 years previous to that. And he asked her who the doctor was to which she said ‘I don’t remember.’ And as he was telling me this story, he was getting more and more worked up. He’s saying ‘How could she not remember who she had surgery with? She did surgery with these guy and doesn’t even remember his name.’ And I just sat back in my chair and I just smiled because I knew that that doctor would never really get it. And I did explain it to him and I’m going to explain it to you. But I can tell you that his practice was floundering. He was not getting the leads that he wanted. He was doing OK. He had family money so it’s not like he was hurting or anything. But his actual practice, even though it was located in a great area, was doing very poorly in terms of revenue. I mean he did a great job. He was a good doctor technically. But in terms of business and marketing, and at the end of the day, that’s why I’m here. I’m here to help you understand how to grow your practice in terms of business and marketing, he did not do very well. And the point that he didn’t understand, and the point that I want you to understand, is that it’s not up to the patient to remember you. It’s not up to the patient to stay in touch with you. A patient doesn’t owe you anything. A patient came in, she paid you, you rendered a service, and she moved on. So you have to understand that in that example that I was given. That Doctor was blaming the patient for not remembering her physician from before. Right. Her past physician that did the tummy tuck. In my mind, I blame that physician for not keeping in touch with this patient because that’s the real crime. He lost that patient. Right. One plastic surgeon. He did a job. He was still in practice. He didn’t keep in touch with his patient. And that patient went to the physician that I was speaking with. So his attrition rate went up for the simple fact that he just couldn’t be bothered to send out one e-mail or a phone call periodically, maybe once a month, so that that female would remember who he was. His patient that he operated on, he couldn’t be bothered to stay in touch with her. He had so much contempt for his craft and his practice that he just didn’t care to send out an e-mail. Let that sink in a little bit. If you’re in the same position, if you’re so negligent that you’re letting your patients go to your competitors, you’ve only got yourself to blame for your practice failing. And that’s some tough love. I’m trying to purposely tell you the truth here because there’s no way to sugarcoat that. If you’ve got people telling you that it’s the market or competitors or the economy, it’s not. It’s you. If you’re letting 80 to 90 percent of your patients leave over four years, you’ve only got yourself to blame. In this day and age. There’s e-mail that’s very inexpensive. Text messaging that cost less than a penny to send. If You’re not taking advantage of those technologies, if you’re letting your competitors do a better job than you, look in the mirror because you’re the one that has to make a change there. No, not to quote Michael Jackson accidentally, but that’s where you need to start. Because here’s the good news. The upside is that this technology is easy to access. You can automate these processes. You can train your staff to use these tools. E-mail sequences. Text blasts. Automated Voicemails. All these things exist today and you can take advantage of them. There’s software that helps you call out and leave a voicemail automatically. There’s all sorts of tools that are extremely affordable. And if you’re not doing anything about it, if your marketing manager isn’t doing it, if your office manager isn’t looking into that, after you’re done blaming yourself and you’re done crying in the corner a little bit. It’s all right. It will be OK for you to do that. I wouldn’t blame you. No judgments here. But after you’re done doing that, get back to work. Get into the office and jump on all this stuff because you’ve got a lot of opportunities there. So reactivation is crucially important. Once you start tracking, right, tracking is the number one. Start tracking your patients, see when they come back, look for the patterns, identify the ones that haven’t, and send out reactivation sequences. So this is the next practical item that I want you to take advantage of. Identify the people that haven’t been there for 6, 8, 12, 24 months and reach out to them. Either by phone individually. Get your staff to call five or 10 a day. If that’s too much for them, they’re too lazy. Whatever the case may be, a quote unquote busy, which you know, I’ve got a little bit of a tender spot about that because I just find that a lot of people could be doing a lot more than they are and they like to use the word busy as an excuse for not doing it. But if they for whatever reason refuse or cannot do that, take advantage of your e-mails. Set up a sequence. Not one e-mail. Right. You don’t reactivate with one. Because only about 15 to 20. If you’re lucky, you’ll get up to 40 as we do at some of our e-mail blasts will penetrate the inbox so you can’t assume every e-mail is getting through. So you have to have a sequence. Right. So set up a reactivation sequence. If the calls and the e-mails and the text blast didn’t do the job but you know that that patient still happy, right. so you know that no one’s treated them badly and they’re still in the market, you can also try good old snail mail. So we’ve done reactivation with mail. Just putting it in the post. And we’ve seen people come back after not having been to the practice for two, three, and even four years, that you know, they’ve just forgotten or life’s gotten in the way or the e-mail kept going to spam. Right. So you can’t assume that any one medium is going to get through. You have to have multiple channels. But those people came back and that is just free money. E-mail doesn’t cost a lot to set up and send. It’s negligible. It cost you to keep your database. Most practices have small databases of under 5000 people. That kind of cost you’re looking at maybe ninety dollars, 30 dollars a month depending on the service that you’re using. So all of this opportunity is available to you if you can just take advantage of it and actually get up. Get off your hands and get your staff to do the work and start contacting the people that haven’t been back. Because it doesn’t cost you a thousand dollars per head to bring that individual back. Right. If you can bring back 10, 20, 30, 40 people that haven’t been there for the past 12 months. And if you can do that ongoing and then reduce your attrition rate, increase your reactivation rate of the ones you lost anyway. You can’t keep everybody. Like I said, life gets in the way so some people you’ll just lose. But they may be ready to come back after 12 to 24 months. If you can bring those people back, you’re adding a thousand dollars every single time. You’re basically finding money in what you’ve already got and there’s nothing better than that for a business. If you can take care of this seemingly very boring topic, that can exponentially increase the growth of your business. And that stability, and that free money that keeps coming back, will let you advertise more aggressively and put your competitors where they belong which is in your rear view mirror.
Nick: [00:30:24] I’m Nick Dimitru. This has been episode number seven. I will see you on the next episode. What I want you to do now is go out and take some action. Make a change in your business. And I will see you next time.
Outro: [00:30:38] Thanks for listening to Practice Perfect. I hope this episode’s given you a lot to think about. I hope you’ve got actionable ideas that you can take back to your practice and go back and make changes, make improvements, and take it to the next level. If you want show notes and additional help and advice and articles on how to grow your practice, visit us at thinkbasis.com Where we hold the podcast. That’s t h i n k b a s i s dot com. Or just google the Practice Perfect podcast and you should be able to find our podcasting page. Have a great day. Have a wonderful week. And I wish you all the best with your practice. Go out there make a change and make it happen.