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COST PER PATIENT or product from your practice as a result of that marketing e���ort. Te resulting number will tell you the cost per acquisition. For example, if you ran an ad in a local newspaper for $1,000 and you gained four new customers, your CAC would be $250. Not too surprisingly, there are di���erent opinions as to what constitutes an acquisition expense. For example, rebates and special discounts do not represent an actual cash outlay, yet they do have an impact on cash ���ow. Pro���t Per Patient Cost Per Acquisition Marketing and advertising are integral expenses for medical cosmetic practices, and more media and marketing agencies than ever before are vying for your advertising dollars. Most small businesses use a combination of guesswork, the amount of funds available and gut feeling to set their marketing budgets. However, understanding the lifetime value (LTV) of a patient and the cost to attract a new patient provides a more concrete view of the most and least successful marketing avenues. Once you���ve determined the CAC, you need to know if that cost justi���es the pro���t realized per patient. If one new patient costs $250 to acquire and she purchases $1200 in products and services at a pro���t of $400, you have identi���ed a successful campaign. You spent $250 and made $400. Because medical aesthetic patients are often repeat visitors who come to your practice every three to six months for injectables, facials or IPL treatments, you also want to consider the LTV of new acquisitions when examining costs. In order to determine the LTV, you need to compute the gross pro���t margin expected to result from that customer over the lifetime of the relationship. For example, if your typical Botox Cosmetic patient stays with your practice for ���ve years and spends $600 every six months for injectables at a pro���t of $200 per treatment, the lifetime value of a patient seeking Botox Customer acquisition costs (CAC) are calculated by dividing acquisition expenses by the total number of new patients. 58 MARCH/APRIL 2013 | MedEsthetics Cosmetic injections is $6,000 and the lifetime pro���t to your practice is $2,000. Tese examples o���er a basic overview of CAC and LTV. Tere are several online tools that practice owners can use to determine the CAC and LTV of their patients, including the Harvard Business School Customer Lifetime Value Calculator at: http:// hbsp.harvard.edu/multimedia/���ashtools/cltv/index.html. The Most Pro���table Patients Te above calculations give you a general overview of patient pro���tability, but as practice owners know, not all patients require the same amount of support. A patient who visits your facility only sporadically and does not require a lot of service may be a good �� ISTOCKPHOTO.COM Customer acquisition costs (CAC) are calculated by dividing acquisition expenses by the total number of new patients. Step 1. Track your expenses for every advertising and marketing campaign you launch to bring in new patients. Tis includes the cost of salaries for personnel or outside agents organizing and implementing the campaign, as well as any materials or ad space purchased. Step 2. Track how many new patients book a procedure as a result of that campaign. You can do this by asking���and training sta��� to ask���new patients how they heard about your practice. Step 3. Divide the cost of each campaign by the total number of patients who actually purchased a procedure