Why No Shows and Cancellations Can Destroy Your Practice

Don’t Let No Shows and Cancellations Destroy Your Practice

You need to think of cancellations and no shows not just as a client not showing up but as a business killer.

For every client who walks through your organization’s doors, there is a cost of acquiring that client. After they walk through your door as a client, there is a cost of meeting their needs. The way to be sustainable is to make sure the revenue from your clients covers the cost of acquiring them, as well as meeting their needs. Keep in mind that not every potential client you spend money to acquire whether through ads, or your time and resources will become a client. The goal is to ensure that enough of them become clients to cover the overall cost.

What is Customer Churn

This is always a tough topic for therapists who are in the business of caring for people. The tendency is to focus on positive and better outcomes for your clients.

We have had our share of customers who loved their clients, but still had to close shop or drop the dream of a private practice because the business side just didn’t work out, or the non-profit who just didn’t know how to show value or raise funds.

If you are thinking as an organization that needs to survive – and obviously TheraNest has a vested interest in your survival and growth – then you need to put the cost of no shows in the proper perspective. It is churn. The loss of a client without recouping the cost of acquiring the client. You can only take so much of it.

Here is the truth: Your cost of acquiring your customers increases with every cancellation and no show.

Customer Lifetime Value

There is also a lifetime value for every customer. The lifetime value to your organization can be calculated in terms of total revenue generated from that customer while in your care minus the total cost of acquiring and serving the client.

No shows reduce your average lifetime value per customer. Of course, we are in the business of changing lives so we can’t always look at things in terms of dollars and cents. However, it helps to quantify it especially since a client who cancels or no-shows is not only using up valuable and limited resources, the customer is also reducing the chances of a quicker successful outcome.

While there is a tendency to focus on acquiring clients, you have to equally focus on retaining them and making sure they show up. It’s for their good, but also important for the sustainability of your organization.

The proven way through research is to screen clients properly to make sure they are ideal for you, otherwise, they need to be referred to another organization.

You also need to double down on your effort to reach out to clients about their appointments through voice calls, text, and emails. To make sure you don’t continue to increase your customer acquisition cost, find solutions like TheraNest that automate this process for you.

Think about this: Assuming you charge $100/hr and have 60 sessions a month, then a reduction in no-show rates from 5% to 2% will increase your revenue by over $2,000 without adding a new client. That is the reason why you need to take it seriously, find ways to help clients who continue to cancel or no-show and implement processes to help you significantly reduce your no-shows. As of this post, a text message service through TheraNest for those 60 sessions will cost you less than $2 a month. Adding a voice reminder will cost you less than $12 for the whole month. So $144 for the year to save $2,000 in lost revenue makes business sense. I think the math is clear.

Keep Clients Coming Back

You should also look into incentives for your clients to pay ahead of time. Don’t call it a discount so it doesn’t cheapen you, but look for creative ways to push clients to pre-pay before a visit. Sometimes, just asking is enough. Something as simple as, “So do you want to go ahead and pre-pay today? In case you have to re-schedule, there won’t be a charge, otherwise we charge $X for reschedules or cancellations 24 hours before the appointment.”

I don’t know if that approach will work for your particular demographic, but it’s worth trying.

The point is to take action today. There is no need to continue on the path of wasted time, effort, and money.