Closing sales: Check your batting average

You know the situation well: you’ve put in effort, time and money into getting a potential new patient to come into the office.  Now, that patient and possibly that patient’s parent/guardian stand before you waiting for you to make your pitch to tell them why they should sign up with you and not that practice down the street.  You know the practice down the street: it’s the one with the waterfall and first run Pixar movies on 24-hour loop.  Sign this patient and that means good reviews on Yelp, Angie’s List and other social media; referrals which lead to another network of referrals which leads to reduction in reliance on media advertising.  That leads to more patients, more profit and less administrative headache.  Lose this patient and the flow of potential patients slows as this one tells all of his and her friends about the way your practice just didn’t add up.  Combining this patient, reviews and referrals, letting that patient walk out of the door means the loss of this year’s Christmas bonuses. 

Okay, it’s probably not that dramatic, but when you get a patient in for a consultation, you want to close him or her.  An orthodontic practice is not like a Macy’s, where thousands of people walk through the doors on a given day and you are trying to get a strong enough percentage to make a purchase.  You will get a select number of new patient visits during a month and you want to make as many of them count as possible.  And despite the extremes of the example above, one extra closed case can seriously have a multiplier effect on new patient activity in the future and you want to get as much of that 

In the end, getting a patient to sign a contract is a reflection of the selling effort of the practice.  So, how do you improve on selling cases?  We begin our examination of that topic by determining if there is a problem.  From there, if there is a problem, how big is it?  And no matter the size of the problem, how do you go about improving on results?

Of the many ways to judge the practice’s performance in closing cases, the best is to use a number that we have affectionately titled the batting average.  After all, signing a new patient to a contract is a big positive “hit” for the practice.  As such, we think the moniker fits.  If you call it close rate or whatever else, the principles are still the same.

To compute the batting average, take the number of new contracts signed in a given month and divide that by the number of consultations seen.  And yes, to compute this number, we are ignoring two important facts: whether or not the patient showed up for their consultation appointment after scheduling it and whether or not the patient actually starts treatment after signing a contract.  For these purposes, we are simply focused on the selling of cases so those two important factors are considered in other statistics.

The number of new contracts signed is a pretty standard, unmoving definition.  If a patient signs a contract, count them.  For the number of consultations, some practices include any consultation that walks through the door.  Some practice take the total consultations (gross consultations) and subtract the number of patients who did not need treatment, those who were put on a recall to come back after further development and those who had to be referred out to another professional before treatment could commence.  The resulting number are net consultations.  In the end, it doesn’t really matter if you use gross or net consultations as the denominator.  Just be consistent.  We typically use gross consultations simply because it helps us doing analysis on the number (see more on that below).

The resultant number is the batting average.  Because it is called a batting average, we typically write the number in standard baseball notation.  Historically, here is how the numbers have broken down:

.750 – 1.000 – The practice is selling contracts very well (75-100% of all consultations are signing contracts).

.600 - .750 – OK, but room for improvement exists.  You’ve done the work to bring the patient in, but are missing out on some potential new patient dollars that should be yours.

.500 - .600 – Substantial opportunity exists for improvement.  You can make revenue increase substantially without another dollar of advertising invested.

Below .500 – A serious problem exists in the practice.  Immediate steps need to be taken for improvement.  

Before proceeding, let me make this point.  If you are closing 100% of every case that comes in, maybe the practice is doing great at selling cases, maybe the practice isn’t getting to a large enough patient market and maybe the practice has bad data.  You want to make sure to have every appointment and result of that appointment be recorded as accurately as possible (see our case study where this was not the situation).  That way, you can see exactly what is going on in the practice and find areas for improvement.

We also recognize that some patients may come in for a consultation on the 31^st of a month, take a couple of days to consider the offer/consult with a spouse and then sign in the next month.  To capture effects from that, we usually use a 4-month moving average to smooth out any individual timing issues like that. 

Once you’ve got a good batting average number and have reviewed the history of results (again, with prior numbers, you can review trends to see if things are improving or worsening), you can start digging down into problem areas and devise solutions to them.  See the next item in our series for more information on that.

Need to know more right now?  Have follow up questions about the computation in this post?  Contact us.