Every business needs to attract new customers to grow. Historically, in the veterinary industry, some practices have been reluctant or unsure of how to achieve this. Attitudes are changing, but it unfortunately took the global financial crisis 10 years ago and the subsequent downturn to bring the importance of acquiring new clients into sharp focus. As a result, the majority of practices now undertake some form of action to increase client numbers.
New clients are vital to a practice’s health; they replace natural attrition caused by death, relocation or lack of motivation and in so doing help to breathe new life into a practice. New patients often also require more veterinary attention than those who attend regularly and are already on an annual checkup schedule. However, new customers with patients who require little immediate treatment also have a role to play, as contributors to a steady and reliable client base.
Despite the importance of new clients, few veterinarians have in-depth knowledge of how to improve results in this area. The cause is a significant gap in knowledge, which, if not corrected results in ill-informed decision-making, misallocation of resources, lost revenue and low patient numbers.
We understand the importance of gathering data to determine the strategy of a business. Without robust systems to collect and monitor data it is impossible for veterinary professionals to obtain insight into their practice performance.
Our research shows there is a significant discrepancy between what veterinarians think is happening within their practice and the reality. Practices who fail to log and track results run the severe risk of being left behind or going out of business in an increasingly competitive environment.
We regularly and systematically collect and analyse data from the industry and gather anecdotal feedback from frontline staff and practice owners. This data helps to identify the aspects of practice operation that affect profitability and efficiency as well as providing insight into why and how the best performing practices outperform the rest.
Our Annual Survey canvassed 336 practices in 2016 and 254 in 2017 with questions designed to provide insight into practice operations. Specifically, they were designed to get a gauge on how and to what success practice’s market to their customers.
This white paper outlines the results of our research and the conclusions as to what ‘Best Practice’ processes might look like.
Section One – Seize the moment
Confidence is vital to encourage business investment and consumer spending. Following the GFC and subsequent downturn, we are now seeing the return of confidence across various business sectors, including the veterinary industry. The rise of ‘Pet Parents’ or ‘Fur Babies’, combined with increased consumer confidence, is helping to fuel an upturn in practice visits in the veterinary sector.
According to the Australian Veterinary Association (AVA), there are more than 24 million pets in Australia. At 62%, Australia continues to have one of the highest household rates of pet ownership in the world, with around 5.7 million of Australia’s 9.2 million households hosting a pet.
AVA notes there is a marked increase in the way cats and dogs are viewed, with 65% of households with dogs and 66% of households with cats regarding them as ‘part of the family’. This has resulted in a change in thinking about the role of veterinarians, with pet owners increasingly viewing the role of their vet as aimed at keeping their pets healthy (71%), not just treating them when they are sick (72%) – presenting a considerable opportunity for practices.1
The 2016 IBISWorld Veterinary Services in Australia Industry Report puts the revenue for the Veterinary Services sector at $2.6 billion annually. This reflects 2.7% growth between 2011 and 2016, with a further 1.8% growth predicted for the period from 2016 through to 2021.2
Despite the rising challenges of corporates and online stores, optimism about the future is gradually increasing and with it, practice priorities are changing. The previous focus on reducing costs, business consolidation and maintenance is fading, and there is now both a willingness and need to embrace new opportunities and employ expansion strategies that attract new clients and can help to strengthen practices.
Attracting new clients is not only about promoting services, although this is an important aspect of the marketing mix. It is also about identifying available capacity, understanding which types of clients grow the practice while maintaining the delicate balance between new and existing clients.
A significant factor in acquiring new clients is removing any obstacles, a key way to do this is to allow them to book appointments at a time and place that’s convenient for them. The current pace of technology means that customers expect to have access to information and services at a time that fits around their busy lives. This includes being able to make a booking at any time and receive immediate confirmation – a practice now widely adopted throughout service industries, with customers now expecting it. Veterinary professionals should be aware that if they do not provide such a facility, their potential and current clients may look elsewhere for a practice that does.
Section Two – New clients – the lifeblood of every practice
Anecdotally, practices should work off the assumption that to grow every full-time equivalent veterinarian in a practice needs 18-22 new patients a month. It is suggested that this number would account for organic attrition and allow for modest growth. The number does vary from practice to practice depending on their specific customer attrition, which in turn is influenced by their practice type, client demographics, and reminder/recall strategy.
To gain insight into how practices were performing vs the recommended amount, our research canvassed the industry to investigate how and to what success new clients were acquired. While mouth-to-mouth referrals remained the most popular source, concerningly, more than 10% of those surveyed said they ‘don’t know’ the source of their new clients.
Around 26% of those surveyed said they attracted no more than 10 new clients per month per site, with a further 9% saying they obtained only 11 to 15 new clients. The average Australian practice has two full-time equivalent veterinarians and, using the formula above; the practice needs 36-44 new clients a month. The results of our survey show then that 35% of practices could be falling significantly short of this target.
While nearly 87% of those surveyed indicated they want to grow their practice, there is a gap in measuring how they are tracking towards this goal. Just 52% measure how many new clients visit monthly and only 20% track the number of lapsed clients. (lapsed client – customer who has visited the practice in the last four years, but not in the last two).
These figures demonstrate a lack of appreciation of the importance of essential business data and a lack of awareness of the potential for new business from within a veterinary practice’s client database.
Section Three – Strategies to attract new clients
The difficulty in attracting new customers becomes more evident when considering that 25% of respondents indicated they found the task ‘challenging’. Although with 11% unaware of the source of their referrals, it is easy to understand why some of this group finds it difficult to identify which marketing activities are working or not.
The most popular method to attract new clients was identified, with data revealing 71% of practices received the majority of their new customers from referrals from existing clients. Practice websites, search engines and social media marketing ranked highly.
Eighty-nine percent of all respondents currently use social media, but only 5% list it as their most successful method of attracting new clients. Market experience suggests this is a significant opportunity for further growth. Of the practices which attract a higher than the average number of new clients per month, most consider it a critical part of their marketing mix.
Our survey revealed that other than referrals, practices use three main channels of communication to attract new clients – each of which demonstrates the growing popularity of online (digital) marketing. Eight percent suggest the majority of their new customers come from their practice websites another 5% suggest Search Engine Marketing (SEM) such as Google AdWords and a further 5% suggest social media marketing provides the best results.
Although practices increasingly rely on digital channels to attract new customers, print advertising still tops the list for marketing spend overall with 26% suggesting this is their most substantial marketing cost. Interestingly, this is despite the fact that less than 1% suggested it provided the best results. The group who indicated their largest spend was on Search Engine Optimisation received the best results, with this group having more than double the average number of occupants in the highest performing band. Sixteen percent of the group did not know or measure what their highest spend marketing channel was.
An increasing focus on digital marketing is visible in the online communication tools and platforms which practices use to reach out and interact with clients. 88% percent of those surveyed indicated they had both a website and a social media presence, although only 25% accept fully integrated online bookings (not just an online form).
Spend on marketing activity was spread significantly across those surveyed. At the top end of the scale, 3.5% spent more than $20,000 per annum, through to 24%, who spent less than $1,000. The latter figure represents a minuscule investment in marketing and promoting practices by a full quarter of veterinary professionals. In another telling statistic, 30% were unable to quantify their marketing spend.
On the other end of the spectrum, of the 24% of practices that spend $1,000 or less on marketing each year, 42% attract less than 10 new clients monthly, and only 1.5% attract more than 50. This shows a correlation between increased marketing spend and new client acquisition.