However, you ignore existing clients at your peril. The veterinary industry is highly competitive, and your loyal customers are ripe for the picking by competitors if you fail to look after them adequately.
In fact, an IBISWorld report on Veterinary Services comments that “Veterinary practices compete with each other on the quality and range of services and facilities provided, including opening hours. Customer loyalty appears to be low in practices in the cities. Industry competition is increasing due to an increase in the number of practices, which limits pricing increases and reduces profit.”
Aside from this increasingly fierce local competition, online retail operators are also challenging veterinary practices, with their low-margin pricing. On top of this, veterinarians tell us they are increasingly coming across pet owners who seek treatment advice from pet stores, or ‘Doctor Google’ online.
In this competitive environment, it’s understandable that retaining existing clients should be a big concern for practice owners and managers. However, more than 30% of practices surveyed experienced a reminder success rate of less than 70% in the previous 12 months.
Further research reveals that less than 50% of new clients return the following year and 60% of existing clients may not have visited the clinic in the previous 18 months or more.
Veterinary practices significantly undervalue client retention
But, despite the importance of this vital factor in practice growth and success – and the angst it creates in veterinary professionals – evidence suggests that its value is still not being tapped into by many practice owners.
Our survey, for example, found that 66% of practices don’t attempt to recall clients who haven’t visited for 24 months. A further 70% don’t attempt to routinely re-book clients after each visit, and only a small number say they’re diligent at sending appointment reminders. These survey results beg some important questions. Why are so many practices not taking full advantage of the benefits of client retention? And, most importantly, is your practice doing enough?
The value of customer retention speaks for itself.
According to a Bain & Co. report, a 5% increase in customer retention can increase a company’s profitability by as much as 95%.
Other research, by Lee Resource Inc, reports that attracting new customers will cost your practice five times more than keeping an existing one. Let’s attach these numbers to a real-life scenario: Imagine that someone offers you $100 for an hour of work. You accept their rate and you do a great job, so you get another offer. This time, however, if you put in a bit of extra time and effort, you have the opportunity of earning $2,600 or 26 times that rate. Not many people would turn the second proposition down. Yet this is essentially the logic of client retention that many veterinary practice owners miss. Assuming that a pet owner needs to bring in their animal twice a year, over a lifetime of thirteen years at a cost of $150 a visit, that’s $3,900 gained from retaining a single client. Multiply this by 600 retained clients and this generates $2,340,000.
A changing industry brings fresh challenges
To understand the scale of the problem better, it’s important to look at some of the larger forces affecting veterinary client retention in recent years. Over the past decade, the industry has undoubtedly been confronted with a series of challenges.
The 2009 global financial crisis placed considerable financial pressure on many pet owners, resulting in some worrying trends for the veterinary industry. Many practices experienced longer intervals between customer visits, with clients either postponing routine appointments or stopping attendance altogether. While the industry has recovered reasonably well in recent years, the impact from the crisis hasn’t been fully neutralized yet. And the overall financial stress also hasn’t been helped by the increasingly competitive market that has put additional strain on local veterinary practices. These dynamics not only present fresh challenges, they also emphasize the importance of client retention for veterinary practices. In an increasingly competitive marketplace, re-engaging with customers must be a priority, particularly for small, independent practices. With large, business-focused corporate practices entering the market in greater numbers, small practices that don’t adopt a business mindset run the risk of being squeezed out of the industry.
It’s important to note that while market forces may place added pressure on vet practices, these challenges are not insurmountable. What they do demonstrate, however, is that practices need to adopt clear, best-practice strategies and utilize technology successfully to address client retention and keep customers regularly flowing through their doors.
Closing the knowledge gap
While practice owners may not be able to single-handedly influence large factors like the economy, they can address the way in which they run their practice.
A consistent theme was found in the surveys: Many practices do not have a clear strategy for monitoring and assessing client retention. A key statistic from the research, for example, was the finding that 45% of practices don’t measure Key Performance Indicators (KPIs) at all (including reminder statistics). Similarly, when asked how many reminders they sent out a month, 14% of 336 practices said they don’t know how many reminders they send out monthly, and the same percentage indicated they don’t monitor recall effectiveness at all.
In another telling statistic, 44% only send one appointment reminder, regardless of success – presumably (and mistakenly) confident in the belief that just a single reminder will do the job of luring clients back for a follow-up appointment. This lack of monitoring represents a major barrier to maximizing client retention. If practice owners are unaware that a problem exists with their recall and reminder processes, they see no reason to act. This has given rise to many practices who have taken no steps to address the issues created by poor recall effectiveness.
So, how is your practice doing?
The hard question is: What is your practice doing to address client retention? Do you have software that automates your time-consuming manual tasks? What are your processes for sending recalls and reminders? Are they automated? What are the frequencies you are sending at? How long do you continue to send reminders for if a client doesn’t rebook? Are you measuring your KPIs? If you are putting time, effort and expense into investing in client acquisition, it makes sound business sense to also put strategies in place to retain them.
Interested in more information? Contact us today.