In MedSpas, there are many ways you can gauge the health of your business; weekly patient counts, average treatment costs, treatment acceptance rates, upsell opportunities, marketing campaign tracking metrics, patient satisfaction surveys, etc.
But there’s another metric out there—one that may not get the attention it deserves. A metric that we believe outweighs the importance of all the rest.
It’s called Customer Lifetime Value (CLV). In this post, we will explain why it’s the single most important metric for understanding your business. We will also demonstrate how you can calculate CLV and use it to make wise investments, build loyalty programs, and drive increased revenue and growth for your MedSpa. Ready? Let’s get started.
What is CLV?
Defined roughly, CLV is the projected total economic value a customer brings to your business over their “lifetime.” At the heart of understanding CLV, is the recognition that there is more value in a long-term relationship with a customer than there is in a single transaction. The more often a client buys and the more dollars they spend each visit increases Customer Lifetime Value.
Many medspas are achieving greater CLV by bundling treatments, services, and products together over a defined period – taking roughly a year to create a comprehensive treatment plan. Then, with PrimaHealth Credit’s payment platform, they can easily provide one easy monthly payment that covers the treatment plan. This allows patients to add all their aesthetic /cosmetic dreams and goals into one affordable monthly payment.
This allows you to secure more patient appointments and reoccurring revenue throughout the year, greatly increasing repeat visits to your MedSpa and profits you would have never realized! Most importantly, your business starts developing a consistent cashflow stream as more and more clients are enrolled; eliminating inconsistent treatment starts which causes stress on both you and your business.
Let’s give a quick example. Patients are walking in your door daily for Botox – what we call the gateway drug. Those patients, on average, are spending $1,200 a year on Botox ($300 a quarter). You now enroll 100 clients in a membership plan with an additional $2,400 in treatment, products, and services – that’s an additional $20,000 a month of consistent cash flow! Now, instead of worrying about how to make payroll, rent, or any other business expenses, you can concentrate primarily on building your business by increasing new patient starts, allowing you to add additional products and services or upgrade to the latest equipment!