In this month’s Insiders’ Insight Report the monthly management survey asks some important questions about active clients and monitoring client retention. I found the survey results interesting and worth commenting on.
Client Retention is very important to veterinary practices, or it should be. When Elise Lacher, CPA and I speak at national veterinary conferences on the topics of financial literacy, budgeting and monitoring KPI’s, this topic often comes up. Time and again, many people in the audience do not know how to track client retention.
Dr. Felsted recommends a really quick simple way to obtain your client retention rate. At our practice we look at our retention rate as a percentage. We find our active client percentage rate by comparing our active client number measured at the beginning of the period to the same active client base measured at the end of the period.
For example, at the beginning of year #1 you have 3,000 active clients (defined however you want). During year #1 you receive 720 new clients. At the end of year #1 you have a total of 3,100 active clients (using the same definition for active clients you used at the beginning of the year). In order to determine your client retention percentage, you need to know how many of the active clients you had at the beginning of the year are still active at the end of the year. This gives you your client retention rate/percentage.
3,100 - 720 = 2380; 2,380/3,000 = 79%
OK, so what does this tell us? It tells us that your practice is retaining about 4/5 of your active clients. If this is the case, you’re doing pretty well by the industry norms I’ve come across. However, I believe the most important question is: How does our current client retention compare with your previous client retention? I have been tracking data and KPI’s for many years and long ago came to the informed realization that ultimately the best comparison any practice can have is itself. By tracking metrics such as client retention, we do become better able to identify how our practice is doing in bonding clients to our practice.
Dr. Felsted makes some very good recommendations for reconnecting with clients who have gone missing. To be honest, as we’ve tracked client retention over the years at our hospital, we’ve often fallen into the group along with about 60% of the respondents who report tracking client retention but not doing any active marketing with the information obtained. However, from experience, I can tell you that those times when we’ve actively sought out the missing in action, we’ve realized some positive gains while also discovering some of the reasons people have quit coming to our hospital.
Having access the industry benchmark data and knowing how you can determine these numbers at your own practice is important, however, getting the information is only part of the equation. What you do with the information helps define your future success.
Jon Cunnington, MBA, CVPM
VHMA President