What’s a relationship worth to your business, whether your business is a medical practice or a healthcare facility such as an ASC or an imaging center?
Originally limited to marketing (where it remains a very powerful idea), the concept of lifetime value involves looking at the worth of a customer not as the one-off value of a transaction, but as the worth of the stream of transactions over the lifespan of the relationship.
So instead of looking at a transaction, say the value of some medical procedure performed on Sally Smith, as $1,200 in profit to the group, look at it in terms of the relationship with the average “Sally Smith.” If that’s 2 procedures and 3 referrals, returning, for example $4,700 in profit, then that’s the lifetime value.
But that’s not where the original use of the tool ends. Rather, the next step is to ask yourself how much you can spend (in money, time, etc.) to bring in a $4,700-in-profit customer and to ask yourself how you should treat a $4,700-in-profit customer.
But wait, there’s more.
As it’s often said, there are many “customers” in healthcare: the patient, the referral source, and, depending on one’s medical specialty, the facility.
I suggest that it’s vital to apply the same “lifetime value” concept to each of those relationships. For example, apply the tool to the relationship between an ASC and a referring surgeon. Or to the value of an exclusive arrangement at some facility.
For those hypersensitized to kickback concerns, note that I’m not talking about offering any remuneration for that lifetime value. Instead, I’m telling you to use the concept as a thinking tool in nurturing relationships in order to reap their long term value to you.
But wait, there’s more.
The concept also plays out in connection with relationships within your medical group or other healthcare business. What’s the lifetime value of a great employee? And, even beyond that, what turnover costs are avoided by not losing that great employee?
We all know what it’s like to be placed on hold by some call center. We all know what it’s like to be greeted at the reception desk with an unsmiling glance and a cold “yes?” or, even worse, a “next.”
The people who run those operations have no clue of the concept I’m sharing with you. The bigger the organization, the more clueless they generally are. Why should they care if you walk, they ask themselves, when your business or mine is “worth” just a few cents to the bottom line.
They can’t see the dollars for the cents.
Have more sense.
Customers of all sorts aren’t transactions. They’re long term relationships with a lifetime value.
Competing for business that depends on a relationships gives smaller businesses, those without layers and layers of bureaucracy, the advantage. And, all business depends on relationships. Develop deep and lasting relationships with your customers.
If you’re the leader of a larger organization, be afraid of what you don’t consider to be your competition. There might be economies of scale in terms of purchasing and administration, but customer service is one at a time.
Make sure that your hiring focuses on the skills required for customer satisfaction, train for it, fire for lack of it, and reward those who deliver it, not just for how many billing units they generate.