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Issue: 56 - Aug 15, 2013
Why Understanding Your Practices’ Demographics is Critical to Your Success
By: Jan Miller
Veterinary Best Practice

A large part of my consulting practice is conducting demographic (trade area) analysis.  There are two distinct clients for demographic studies:

  1. Potential new practice owners.
  2. Existing practice owners.

You can probably guess that the majority of my clients for these studies are the prospective new owner, because as we know, location is everything to the success of any business.  Getting started in the right location is paramount to starting off on the right foot.  The wrong location or the wrong service offerings and fee schedule to match your market will result in a continual struggle and even practice failure. 

I continue to be perplexed by how few existing practice owners do not request a trade area analysis to help them understand why they may be struggling financially or if they can increase their revenue.  Revenue improvements are not always about raising fees once a year.  Sometimes it’s about better understanding the market area in which you operate and discovering opportunities you didn’t know existed.

Often times I am called in to consult with a practice owner because their annual revenue is decreasing, stagnant or not increasing at a rate that it had in the past.  There are the usual suspects of course:  average transaction charge, fees, compliance issues, customer service, discounting, new client growth, etc.  We look at all of them and frequently find areas that can be productively addressed.  Increasingly more often, however, I include a trade area analysis with every consulting client where finances are a concern.  Why?  Because when we have exhausted all of the “low hanging fruit” opportunities, there are still significant aspects to a practices’ location that offer insight into marketing, service offerings, bundled services programs, hours and days of operation, on and on and on..

Let’s take a look at what a trade area analysis can do for an existing practice:

* Probably the most important thing a trade area analysis can show is what revenue a practice could expect to achieve[1].

* What are the growth projections for your area?  What have they historically been?  Is the area growing, in decline, or not changing?  Are new industries coming to the area or are long standing ones leaving? 

* Where are your patients coming from?  Most practice owners think they know where there patients come from:  the area right around the clinic.  In most cases this is either true or should be.  However, when client addresses are mapped and then overlaid with competitor locations, sometimes gaps appear that show a decrease or absence in market penetration.  When those gaps do appear, what is it about the consumers in that area that is causing them to seek veterinary care from someone else? 

* When you find out where your clients are coming from, it is important to find out everything you can about them so you can tap into marketing and service offerings that attract those clients:

  • Home ownership:  people who own their own homes spend more on veterinary care; people who rent spend much less. 
  • Age of the potential client base:  did you know the biggest spenders on pets overall are householders’ aged 45-54?  They spend 35% more than the average household on their pets!  There are other age segments that spend more on services such as grooming, boarding or daycare.  Do you have neighborhoods that are predominantly within this age group?  Do you have programs or services that target this age group?
  • Family characteristics:  families with young children at home will spend less than families with older children at home.  What do you know about the family characteristics in your trade area?
  • Educational attainment: households headed by college graduates spend more on pets, probably in part due to their income.  
  • Household income:  spending on pets rises directly with income.  Households with incomes of $100,000 or more spend nearly twice the average on pets.  What do the gaps in your market penetration tell you about household income in those areas?  Is a competitor who is perceived to be a higher end practice carving out lucrative clients from what should be your client base?
  • Professions and industries in the area:  are you in an area where businesses are growing?  Do you have industries around which there are clusters of multiunit rental properties and who hire college graduates into starter jobs?  Both are indicators of high turnover populations and lower pet ownership.

Did you know there are “best customers” and there are the “biggest customers” for veterinary services?  It’s similar in concept to the 80/20 rule, that is, 20% of your clients will account for 80% of your revenue.   But what if that 20% are not really the most profitable? 

Best clients are those who spend more than the average individual on products and services.  The biggest customers are those who comprise the biggest market share in your area.  Without understanding your trade area, it is easy to assume that your biggest are your best… it is simply not always true.  That assumption can lead you to make decisions about services, hours, fees, etc. that may be alienating a more profitable segment of your client base.

Understanding, really understanding your trade area, that zone in which the about 80% of clients come from, is critical to your current and future success.  Demographics are not just for new start up practices.  If you have questions please feel free to call me at 503-648-7777 or email


[1] Veterinary Best Practice has developed proprietary formulas to identify annual revenue in its demographic/trade area analysis reports.  This information is not available from other demographic resources.