How Much Should a Dentist Spend Per Lead?
Sources:
https://jemsu.com/lead-value-calculator/
http://www.ada.org/~/media/ADA/Science%20and%20Research/HPI/Files/HPIBrief_0516_1.pdf
Transcript:
Okay, we’re going to talk about how much a dental practice should spend on leads, uh, to get a good idea about how much you should spend on leads. We definitely need to have an understanding of some averages, particularly the lifetime value of each of your patients. So the best place we could get our data is obviously from the ADA, the American dental association. Um, and they put out, an analysis of dental spending among adults with private dental benefits. And in this analysis, if we scroll through here, we’re able to kind of see the average amount that a dental practice should be made. And it definitely varies pretty widely. It varies based on age group, um, and it’s gonna vary based on lots of different factors. Uh, but the average of value or yearly spending for dental patients ranged from $298 a year in the first quadrant to 3060 $9 a year in the fourth quadrant.
So definitely there’s a, uh, a very wide range of how much a dental patient might spend each year based on their age and their procedures they need. Um, and so that’s going to be the case with really any dental practice. So what we need to do here is we need to kind of take the average and the average in this quadrant was four 92 and or this age range. And the average in this age range was seven 85. So we’re going to, we’re going to go right in the middle and average it out. And we’re gonna say that the average amount that a typical dental patient pays is $600 a year. And that would be the average across all the quadrants across all the age groups. Um, you can kind of determine what your average is by doing some math, but we’re going to take this as our example.
So now that we have this example, we’re going to go over to, um, our lead value calculator and really determine, um, how much we should be spending on each lead knowing some of this information. So we’re going to scroll down to the calculator. Now we’re going to save that the average value of a single customer transaction, or in this case, we’re gonna use the yearly value. We’re going to put in $600. Now the next question is going to ask is what is the average number of transactions over the life of your average customer? Now definitely data varies on this as well. W sometimes a dental patient may stay around for one year, sometimes they stay with you for 10, 15, 20 years. And so the data on that varies widely. We’re going to be very conservative and say that your average dental patient stays around for five years.
So we’ll put a five there. So this is going to give us the average lifetime value of each dental patient is about $3,000. So again, this is just using some average data for typical dental practices. You can input your own data and really determine exactly what yours would be. Um, the next thing we have to determine is what the average conversion rate of a lead is. So if we get a good lead coming in from either a phone call or a form submission, we really have to have a good understanding of how well we turn that into a patient visitor into a lifetime patient. Um, I would say that it should be very high. It should be anywhere from 33 to 75% should definitely convert, um, from a good lead into a patient, 50%, one in two I might be pretty good. Again, it does depend on the lead quality.
So we’re going to assume that you get, are getting good leads, good phone calls. So, in this case, we’ll be, again, we’ll be very, very conservative and we’ll say that one in three phone calls or one in three form submissions that you get for somebody inquiring about your um, the dental services you convert into a patient. So we’re going to say one and three and that’s probably very conservative, could be significantly higher than that. Um, so that actually will output the average value of a lead for us, which would be $990 would be the average value of a lead based on those metrics. Um, the next thing we have to input is the percentage of gross revenue spent on marketing. Now for dental practice, this should be fairly high on the spectrum, um, of gross percentage, which can range anywhere from zero to 20 plus percent of gross revenue spent on marketing.
We’re going to say, um, we’re going to say 12%, which would be a pretty good range for a dental practice to be spending on marketing out of their total gross revenue. So if we, if we input 12% of gross revenue spent on marketing, then this will output the target cost per lead. So in this case, um, given these metrics, a $600 average customer transaction staying for five years and a 33% conversion rate of leads, we should be spending about $118 per lead. Um, and that would be across all channels, whether you’re doing Google ads, whether you’re doing search engine optimization, being ads, uh, traditional advertising, postcards, flyers, anything, every lead can be tracked and, and assigned a monetary value. So in this case, we’re looking at $118. Now it may vary by practice. You might come in here and have different conversion rates. You might have different marketing spend, but this calculator helps you determine approximately how much you should spend on each lead. Now, that goal should definitely be something that you’re very aware of, and if you’re working with any type of advertising agency, that is the goal you should hold them to, uh, to accomplish is to try to achieve all the quality leads out about that rate. Um, so that is how much dental practices should spend on leads. Thank you.
