How to be the ‘Amazon Prime’ of Dental Care
One of the most incredible shifts in the customer/service realm has been the success of Amazon Prime. Amazon took what was merely a transactional relationship with its customers and flipped the relationship into what is known as a known asset.
Once an Amazon customer becomes a Prime member, Amazon can predict each Prime member’s value based on reams of historical data on their behavior. Each Prime member is no longer a “one off” transactional customer, Amazon knows that each Prime member will spend an average of 2-3X1 more than a non-Prime Amazon customer. Because Amazon Prime customers have some “skin in the game” with a membership, Amazon is guaranteed to double or triple their revenue on each member.
Amazon also knows exactly what percentage of Prime members will fail to renew their Prime membership each year (retention/churn). This information allows them to easily predict Prime member revenue years into the future.
How does this relate to me?
How can a dental practice replicate Amazon’s genius? Easy. Offer your patients a similar “skin-in-the-game” membership. Here is the deal. We all have those fee for service patients that are unpredictable and as un-loyal as they come. BUT, by offering these transactional patients an opportunity to be a known asset (and get them a great deal on care) you can easily increase your regular patient base and have predictable behavior.
In-house monthly subscription membership plans get practices off the transactional hamster wheel.
How does it work?
Dental practices can use the same power of subscription membership to build a predictive growth model with FFS patients. Instead of offering discounted one-time deal transactions to gain new patients like every other practice in the neighborhood, membership practices focus on building a base of patients with an in-house membership subscription plan, such as KeySmile. Once patients are converted to membership they become a predictable asset for the practice, with current KeySmile patient retention at 93%.2 Simply by getting a patient to put some “skin in the game” with a KeySmile membership, practices can double or triple their patient lifetime value on each patient.3
The lifetime value of patients can double or triple because not only is retention increased, but practices see increased treatment acceptance from membership patients. Pattie Grove, Business Manager at Kutsch and Renyer Family and Cosmetic Dentistry said of their KeySmile program, “We have also seen (FFS) patients accept treatment plans more readily when they are covered by KeySmile Membership and/or KeySmile Credit.” KeySmile is a powerful tool for practice growth because members buy more dentistry!
As the number of patients with dental insurance and per-procedure insurance compensation continues to decline,4 developing a base of FFS subscription patients will become essential for independent dental practices’ long term growth and profitability.
Think a KeySmile in-house membership plan may work for your practice? Check them out at KeySmile.com.
- Brad Tuttle “Amazon Prime: Bigger, More Powerful, More Profitable than Anyone Imagined, Membership in Amazon Prime, which offers unlimited free two-day shipping, has doubled in less than two years. Analysts predict it’ll double again by 2017” Time Magazine, March 18 2013
- Compass membership data as of 10.13.15 (does not include referrals)
- John Warrillow, “The Automatic Customer: Creating a Subscription Business in Any Industry” Penguin Group 2015
- 53% of the US population have dental insurance (down from 60% in 2002) http://www.deltadental.com/AmericanOralHealthRoleDentalBenefits.pdf