When you think of various marketing tools for dental practices, which one(s) would you expect to be most successful? A robust advertising campaign? Glossy, high-resolution brochures? An attractive banner?
A study by Reichheld in the Harvard Business Review found that a company’s growth can be predicted based on a single factor: whether or not a customer would refer someone else. Why? Enthusiasm for referring a friend demonstrates brand loyalty. As Reichheld notes, “A recommendation is one of the best indicators of loyalty because of the customer’s sacrifice, if you will, in making the recommendation.”
Compared to every other marketing asset, loyal patients who refer others to your practice are the most valuable. Patients who refer people to you practice attract quality leads in a cost-effective manner who have a higher lifetime production value than new patients who find you through other means. Let’s take a closer look at these benefits:
Your patients’ social circles tend to consist of people similar to them, meaning many referrals come from your most satisfied patients. As Duskin notes, “People tend to interact with people like them. So good customers, in general, will know other people who can become good customers.” Focusing on gaining referrals from your target customers means you’ll expand your practice with more ideal patients, the kind of people you’ve built your practice for and who love to sing your praises.
How much do you spend to gain a new client? When you add up the prices for advertising, marketing campaigns and promotions, the investment can get pretty steep. Your costs may include banners, flyers, postage, events, and advertisements on radio, print and social media, plus the time you paid staff to focus on any of these endeavors. Don’t forget to calculate the expense of smaller steps, like hiring a photographer to take high-res images for your brochure or enlisting a graphic designer to freshen up your logo.
By contrast, the biggest expense for a referrals is generally a small thank-you gift. Further, Reichheld claims that profitable growth could depend on customer referrals:
The tendency of loyal customers to bring in new customers—at no charge to the company—is particularly beneficial as a company grows, especially if it operates in a mature industry. In such a case, the tremendous marketing costs of acquiring each new customer through advertising and other promotions make it hard to grow profitably. In fact, the only path to profitable growth may lie in a company’s ability to get its loyal customers to become, in effect, its marketing department. [emphasis added]
Not only does acquiring a new patient via a referral cost less than other methods, studies have also shown that referred customers generate more revenue for your company versus someone who comes unreferred. For example, a 2011 study focused on 10,000 new customers acquired by Germany’s third-largest bank over the course of a year. The findings showed that 33 months later:
- Referred customers were approximately 25% more profitable per year
- Referred customers were 18% less likely to churn than non-referred customers — and that difference remained over time
- Referred customers had approximately 25% higher customer lifetime values than non-referred customers
In short, referrals spend more and stick around longer! As an infographic notes, “Referrals convert better, close faster and have a higher customer lifetime value than any other type of lead.”
Loyal Patients Boost Growth
In contrast to happy patients, dissatisfied ones can undermine your marketing efforts by telling their social circles NOT to use your services. Providing your patients with top-notch experiences will turn them into your best marketing asset and eager to spread the word about your practice to their friends and family. Your most powerful marketing asset is your patients, and putting them on your team is vital for success in today's dental industry.
With Legwork's new Patient Experience Insights (PXI), you can automatically identify current patients who will promote your practice and put them at the center of your marketing efforts. Schedule a demo today and learn more about how PXI will accelerate your practice's growth today!