COVID-19 forced many veterinary practices to pivot in terms of how to operate and where to invest time and resources. Rotating staff, curbside service, and telehealth are among the many adjustments practices have adopted. According to VetSuccess data from the Veterinary Industry Tracker, most practices have not only bounced back from the initial dip in revenue and invoices in March but are now experiencing year-over-year growth.
Whether this growth matches your practice’s reality or is a far cry from it, with so many changes this year it’s wise to take a step back and evaluate your results. Measuring your ROI (return on investment) can help you determine which of your efforts are worth continuing and which you should consider retiring.
How to go about measuring ROI
According to Investopedia, “Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.”
In the simplest of terms, ROI is the amount of return on a given investment, relative to its cost, or:
For example, if your active patient count increased by 300% last month, that’s amazing, but what did it cost you to get there and what’s the long-term value of those new or returning clients?
How to measure the value of a client
After analyzing data from over 3,000 VetSuccess practices, we see that on average the value of a client is typically around $1,300 if they stay with a practice for a little over 3 years or $2,300 if they stay for 6 years.
To calculate your own client value, follow this formula:
Once you have a sense of what each client is worth to your practice, you can then compare that to the results of the time, money, and effort you’re investing to attract and maintain clients.
Perhaps you find that your costly billboard advertising isn’t worth nearly as much as the new app you recently invested in. Or you might find that the time and money you dedicated to set up an online pharmacy and home delivery this year was absolutely worth the 140% growth in pharmacy sales.
Managing with metrics means measuring ROI
No matter what your goals were this year or what you and your team had to do to manage the impact of COVID-19, be sure to measure those results and take a moment to reflect on this extraordinary year. Arm yourself with data heading into 2021 and set your practice up for continued success.
Struggling to pull data from your practice management software? Fear not. VetSuccess is here to help. Our visually appealing reports and dashboards are easy to interpret, empowering you to make informed, data-driven decisions. See what’s possible.
With permission, a version of this article appeared in AAHA NEWStat December 2020.