New market dynamics are reshaping veterinary practice as the industry reemerges in a post-coronavirus pandemic environment. Although many practices are busier than ever, now is not the time to remain in survival mode.
Instead, savvy practices recognize that now is the time to capitalize on the surge in pet patients by offering wellness plans. Here are three top reasons why:
1. Post-Pandemic Trends
The growth of pet ownership more than tripled during the Covid-19 crisis. Today, two-thirds of U.S. households have at least one pet, according to recent data from AlphaWise and Morgan Stanley Research.
Despite pandemic-related lockdowns, veterinary practices generally reaped financial gains over the last year, although some animal hospitals fared worse.
Visits plunged early in the pandemic, but one year later, 90% of practices are reporting an increase in appointments. Relatedly, between January 2019 and March 2021, total veterinary practice revenue climbed 9.1%, according to recent data from American Veterinary Medical Association and VetSuccess.
Revenue growth was largely driven by increased per-pet spending, coming from an influx of new clients who adopted pets during the pandemic. The willingness of existing clients to spend more on their pets also helped propel financial growth.
The positive revenue trend is likely to remain with us. Research tells us that younger pet parents — now the largest share of pet owners in the United States — dote on their pets more than older generations. Given this, average annual household spending per pet could expand from $980 in 2020 to $1,292 by 2025 and rise to $1,909 by 2030, Morgan Stanley forecasts.
2. Loyalty Is More Critical Than Ever
The rosy news, however, comes with caveats. A recent report noted growing competition among animal hospitals. According to an IndeVets survey, “although the greatest driver of revenue growth was new adoptions of kittens and puppies, a close second (with more than 50% of hospitals reporting this driver) was demand coming from another animal hospital.”
As AVMA Chief Economist Dr. Matthew Salois recently pointed out, fostering client loyalty will become even more critical to the success of veterinary practices in the post-pandemic world. And, given the wave of pandemic pet adoptions, wellness plans also educate new pet owners about the healthcare needs of their furry friends.
Strategic thinking about client retention and brand building is now more essential than ever. Savvy practices are already taking steps to capture the loyalty of new clients and nurture their bonds with existing ones. Many of them are doing so by launching wellness plan programs.
3. The Subscription Economy Is Here to Stay
Implementing a club-like wellness plan program is effective on multiple fronts. For starters, consumers favor membership-style programs. For evidence of this, consider that Amazon Prime added a whopping 50 million subscribers during the pandemic.
In the veterinary industry, the benefits of membership-style programs discourage pet owners from shopping around. Well-run programs also incorporate additional offerings to prevent the erosion of revenue to online retailers like Chewy.
A wellness program can build a practice’s relationship with clients and help to set it apart from competitors large and small. Ideally, the wellness plan program should be sufficiently robust to integrate other product and service areas — to encourage clients to take advantage of all of a practice’s offerings. Consistent usage of the practice’s products and services builds relationships and loyalty.
Similarly, a full-fledged wellness plan program should extend throughout the practice, allowing veterinarians to personalize plans to include grooming, boarding, specialty medicine, chronic illness plans, and much more. VCP has found that customizing add-on services to each pet can boost the value of a wellness plan program by 20%.
Wellness plans are a potent tool to set up practices to succeed in a post-pandemic economy. With wellness plans, veterinarians can differentiate their practice to gain clients for life — and accomplish the overarching mission of providing quality care to more pet patients.
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