Membership Metrics 2 hours
In this chapter we talk about the importance of knowing your metrics for your dental membership program.
When your practice implements a dental membership program you need to approach looking at the revenue and profit differently. You will need to change the way you look at it, as changing to a monthly subscription is technically changing the business model. Subscription models may seem scary to the P & L statement when you first start but in the long run it will generate more cash. It is a strategy that works the longer you have a patient subscribed. Here are some tips
1. Use ACH in BoomCloud to collect payments = less declined cards
2. Make sure you have an agreement with the patient, they pay monthly but it is a yearly contract
3. In a subscription business, understanding your financial performance requires a new set of operating statistics. The foundation of your subscription business is built on your monthly recurring revenue (MRR). This is the recurring revenue listed in the BoomCloud Dashboard. When a patient subscribes to a membership plan for $300 per year But pays monthly, the practice gets to recognize that revenue on its P&L at the MRR rate of $25 ($300 divided by 12).
The next number you need to understand is the lifetime value (LTV) of a subscriber. LTV is calculated by multiplying your MRR by the number of months your patient stays with you, less the cost of serving them during the life of the subscription. If your average subscriber stays with you for 60 months, then the LTV of a subscriber is 60 × $25 = $1500. Make sense? You need to look at the above mentioned metrics in addition to the profit and loss to fully understand the profitability of a dental membership plan, this is why it’s important to track the different set of metrics in the BoomCloud dashboard.
A new survey about dental membership performance shows that practices still lack a clear view of vital membership statistics like retention, cancellation rate, active members, recurring revenue, and lifetime value.
If you went on a diet but you didn’t know your own weight, you’d probably have a hard time knowing whether the diet was working or not. You need that basic info as a baseline against which to measure your progress. One of the greatest problems with manually managing a membership program is that practices are not measuring and collecting metrics or data about their program. If you own a business and don’t know your profit and loss statement your are working blindly in your business. Same thing applies to managing and growing your dental membership program! You need to know the metrics, Too often I speak to practice owners about their membership program and they have no idea, how much revenue it is generating, how many active patients and the cancellation rate or retention rate. Remember, a membership program is a powerful tool for your practice, members typically spend between 104% to 240% or more than non-members. With that in mind, it is critical to know your metrics. Here are the most important metrics when managing a dental membership program.
Member churn rate or cancellation rate
Understanding your member churn rate is valuable because it has a direct affect on your dental membership’s profitability. If you’re looking to grow your program, your rate of member acquisition should exceed your member churn rate. Subscription based businesses show the average churn rate of a healthy business to be around 5-7% annually. A high churn rate is an indication that you should implement strategies to make your members “stickier”. You can do this by adding more value to your program, maybe a bigger discount, It is recommended that you discount between 10% – 20%. If you have a cancellation problem, start asking your cancelled members why they are cancelling and you should be able to learn what to change to improve your retention.
Think of the lifetime value (LTV) of your members as the net amount of a customer contributes over the lifespan as a customer. This metric shows you what your customer is “worth” to your company, while also informing how much you can reasonably spend on acquiring new membership patients. When measuring this metric, I would calculate the total monthly or yearly fees plus any revenue from treatment to find the value of your patient.
Monthly recurring revenue
Monthly recurring revenue or MRR is one of my favorite metrics and a crucial metric when it comes to your dental membership program. Once you acquire a new member, you can rely on recurring revenue and worry less about one-off sales. MRR is one of the most significant indicators when it comes to the health of your Dental membership program because being able to forecast next month’s revenue makes it possible to make informed sales and marketing decisions that impact the trajectory of your practice’s growth. I love recurring revenue, BoomCloud runs off of this metrics and budgeting each month is a breeze because everything is predictable and easy to manage! How would it feel if you knew you had 35,000 or more of revenue coming each month? It would freakin rock, right?
Active Patients (AP) is another crucial metric to know as a practice owner or manager. If you don’t know how many patients are actively paying for your dental membership program then you are missing out. Knowing this number will help you understand if your membership program is working and if your team members are signing up patients or not.
Failed charges happen. Your practice will need to know which patients failed payments so that you can either help them update the card or talk to them when they come into the practice for an appointment. This metric is important to know each week or each day so that your patients can update their card online, if your practice is using BoomCloud.
New members this month
New Members this month is essential to track growth of your program. if you have a cancellation rate of 10 members and only signed up 5, then you have a problem. If you set a monthly goal for your team to sign up 20 patients per month, based off of the uninsured patients in your practice and you only sign up 5, is your team doing their job, do you need to train them on signing up patients or maybe you just need to market better or have a marketing strategy that actually works.
Knowing all these metrics allows you as the practice owner to hold people accountable, fix marketing that may not be working and understand the value of your membership program. I would encourage you to check out BoomCloud as the software will help you efficiently track the mentioned metrics of your dental membership program! you can schedule a demo after this video is finished!
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Jordon Comstock is the founder and CEO for BoomCloud. He focuses on teaching dental practices about the importance of creating membership programs to generate recurring revenue, build patient loyalty, increase external marketing and increase case acceptance.