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Comparison has been called the thief of joy. And while that is true of most of its cunning forms, some types of comparison are incredibly helpful. Namely: benchmarking.
Benchmarking is a business term for comparing key areas of your practice to other companies of similar size and revenue. It can be beneficial to see how you measure up. For example, benchmarking might help you determine the answers to the following questions:
- Are you paying your staff competitive salaries?
- How satisfied are your clients?
- How does your pricing compare to your competitors?
All of these questions and more can be answered when you take the time to assess your veterinary practice and benchmark it against others.
But why is benchmarking your veterinary practice so important?
With a million other to-do’s filling your days, it can be hard to set aside time to analyze your practice. But this is the type of task that reaps benefits tenfold.
As one involved in practice management, you are (hopefully) already in the habit of tracking your revenue, expenses, and overall profitability. And by comparing your numbers to others, you will have a clearer idea of your practice performance, its strengths and weaknesses, and areas on which you need to focus.
Analyzing benchmarking data helps you to identify opportunities for improvement. You may discover that you need to change spending patterns or that it would be wise to develop new routines to bolster morale. Maybe you need to shake up your marketing strategy to attract new clients.
You are not meant to go the road of veterinary care alone. By looking around you, learning from other DVMs, and seeing what works well, you will become more efficient, focused, and successful. Sounds great, right?
The Difference between Benchmarking and Key Performance Indicators (KPIs)
It is important to note that while there are similarities between benchmarking your practice and measuring key performance indicators (KPIs), there are also significant differences. Benchmarking looks at how your practice compares to others, while KPIs measure how well your business is reaching its strategic goals. KPIs drill down into the numbers—total revenue, expenses in relation to total revenue, and the number of active clients, for example—to see just how close you are to your goals.
Both are incredibly important for tracking the health of your clinic.
Focus on the Benchmarks Most Important to You
While industry standards exist for the best KPIs to measure, industry benchmarks can be a bit more fluid. It is essential to name which areas matter the most to you and to focus on those.
You may find, for example, that you compare terribly with urban veterinary hospitals regarding the number of goods sold. But think about it—as a private, rural clinic, your main business is seeing farm animals, not selling products. However, an animal hospital in a city is set up to see small animals and sell many more goods. It then makes sense that they would “outperform” you in this area. And it also makes sense to ignore this area of benchmarking.
Think instead of areas in veterinary data that will give you greater insight into your practice. Here are some you might want to consider.
We all know too well that the veterinary industry is experiencing significant staff shortages. With demand for companion animal services continuing to rise, employee retention is a primary concern for most veterinary clinics and animal hospitals today.
Studies have shown that finding, hiring, and retaining a new employee often costs businesses between 50%-250% of the position’s annual salary. Clearly, it is advantageous for practices to focus on retention.
To drill down further, use these metrics to compare yourself to other practices:
- Compensation – Do you offer competitive salaries?
- Benefits – Do you have a robust benefits package?
- Work/life balance – Are employees able to strike a good work/life balance? Or are they overworked and under-resourced?
- Recognition – Do you have a culture that celebrates each employee in your veterinary community?
- Talent – Do you have strategies for attracting and retaining top talent? How do other companion animal practices go about this?
Seeing how your clinic compares to others in these areas will help you adjust your employee engagement strategies and effectively focus on retention.
It can be hard to benchmark something as nebulous as customer satisfaction. Still, it is especially key in the veterinary industry. Keeping customers happy is critical to a healthy, thriving practice with loyal clients.
There are a number of ways to track customer satisfaction. You can send out surveys that range from in-depth questions to a simple happy-neutral-unhappy rating. You can also ask how likely a client would be to recommend you to a friend or family member. And you can keep a close eye on your churn rates. How many customers do you lose each month? How many return?
All of these factors can be compared with other practices to see how satisfied your customers are with your clinic. After all, the whole purpose of the veterinary industry is to promote animal health and care.
Several critical areas make the culture of one practice healthier than another. It is crucial to keep tabs on your team culture and ensure that you are cultivating one that values open communication, collaboration, and trust. Here are some areas to focus on when benchmarking your team culture:
- How strong is your practice’s focus on its mission?
- How effective is your communication?
- Do you operate with transparency and trust?
- Does your staff feel supported and invested in?
- Does your team embrace diversity?
- Do you enjoy working together?
Okay, so how do you benchmark?
You now know why benchmarking is critical and have thought through some areas that might be helpful to see how others are performing. Now what?
First, pull your own financial data and clinic information and check that it is accurate and up-to-date. This is a crucial step. If your numbers aren’t correct, the whole process of benchmarking is useless. So make sure that all is squared away on your end before you turn to look at others.
Next, you want to compare your numbers to other practices of similar size and revenue. But how do you find those? You can find general numbers through the American Animal Hospital Association (AAHA) and other annual reports like those released by iVet360. But these numbers are often given in ranges. How do you know which end of the spectrum to compare yourself to? And what if you’re entirely off from the average?
When looking at the numbers on your own, it can be challenging to understand how your practice compares. But that’s where AmeriVet comes in.
Let’s Work Together
Benchmarking is not a one-and-done exercise. Nor is it one-size-fits-all. Rather, benchmarking is an ongoing process that needs to be revisited every month, quarter, and year.
AmeriVet has a network of hundreds of successful practices of all different sizes, areas of focus, and revenue streams. As such, you have exclusive access to all of their performance data. This gives you deep insight and helps you make better data-driven decisions when comparing your analytics.
We are well-versed in benchmarking and ready to help you tackle this vital process. Even more, we will work with your unique needs to help you identify the very best areas to focus on to grow and develop your practice.
We love veterinary economics, so you can leave the hard numbers to us and get back to what you do best, caring for animals. Partner with AmeriVet to learn how to successfully benchmark your practice today.