Growing your practice: What is one referral worth?

Referrals make up the bedrock of your private practice and therefore should be treated like gold. Unfortunately, many therapists take their referrals for granted and do not handle them with the care they deserve. Often, a referral will be given to a therapist and the referral source is left wondering whether the client information was received by the therapist and whether or not to select another professional in the future. EVERY TIME someone gives you a referral, they are evaluating whether they have made a good decision, and whether to refer to you again. Thus it is well worth your time to let the referral source know that you appreciate the fact that they chose you.

No matter where the referral comes from, be sure to follow up and let the referring party know that you are handling the matter professionally. Also inquire about any information that might be helpful with your treatment plan (after you have obtained your client's approval). Always follow up your referrals with a thank you postcard and a call. Then, after your first session, if appropriate, let the referral source know that the referral was appropriate and that they made a correct selection in choosing your services. These efforts will help the person referring to you to feel involved in the process and he or she will be more likely to continue referring to you in the future.

When a client comes in for the first time, passing through your door is a potential lifetime of business. Consider that one client paying $80 a week for a year can increase your income by $4160. If this client refers 2 new clients to you and they in turn each refer 1 client, then after a year, your income can increase by a total of $20,800 just as a result of that first referral. This won't happen with all clients, but some will show up at your office who CAN afford your fees, who WILL come to see you for many years, and who WILL refer their spouse, children, and friends. In a business sense, each new referral should be viewed as the top of a large pyramid or as a potential gold mine of new business and income.

Each inquiring phone call is an important commodity because it can generate income EVEN IF it does not directly result in a client entering your office. For instance, if you refer the caller to an agency or another professional, you can expect referrals back in the future. Specifically, if you are a psychologist and send 5 referrals to a psychiatrist over a period of time and received no referrals in return, then you should discuss this with the psychiatrist. If this doctor does not want to or cannot refer clients back to you, then give your future referrals to professionals who will refer to you.

What could ONE referral from 1-800-THERAPIST.com be worth to you over the life of your practice?

Our members were asked this question, and listed below are their responses.  Note that many responses discuss the income generated over ONE YEAR and not the life of the practice.  Quotes are from actual members of our network and are on file at our headquarters in San Diego.

This is a complicated question but one might assume that a solid referral who one sees for between two and three years might bring in between 10 and 15,000 dollars, accounting for vacations. Clearly some people will be seen for much longer, and some for only a few weeks. Then some of these people will end up being referral sources themselves, generating quite a lot of business. If one only receives one such referral a year, that becomes a tremendous source of business.

We've had one person who actually came for individual counseling, then marriage counseling, then brought in the entire family for counseling (which they needed), then referred her adult son to therapy as well as her ex-husband, his wife and their kids. (Our secretary once scheduled the two families following each other---didn't know they were ex-spouses because she doesn't know the personal info about clients...only their billing...when we ran over on the first family so they happened to meet in the office building...one coming, one going...it was not a good thing...but was a learning experience!).

The best case scenario would be full fee $85 for 40 weeks per year for 5 years=$17,000. More realistic is one self pay client fee of $50 for 40 weeks for 5 years=$10,000. 

Most HMO's want us to have an average of 4-6 sessions per client and they do watch us with regularity. If one has a specialty then one might get more. Self Pay clients can bring in $600 to $1000 per year since they can come as long as they want.

One cash paying patient would generate generate $3,400.00 per year based on a fee of $85.00 on a weekly basis with an estimate of 40 weeks per year. I use forty weeks to account for my vacation time and an estimate of missed session on the part of the patient. Assuming the patient continues for a second year, we would be talking $6,800.00.

Gee, you're probably better than I am at making those kinds of estimates.  Hopefully one good cash client would refer two other good cash clients who would each refer two more. I'd estimate one cash client to be worth $4,000 a year easily. The increase year by year based on referrals, of course, would be exponential.

The approximate worth of a cash client is $3500.00 dollars (per year) but much more in terms of the reduced hassles in dealing with an MCO.

$10,000 or more. But we have a practice where clients go into
groups and some stay for years and years.

A simple answer based on one client I have is approximately $2000 (per year).

I would estimate - "a good cash patient" - would pay a $120 fee for each of 6 initial visits and probably return for "recharge" or additional therapy for 4 sessions during the next months or year. Based on practice history, I would also expect to see that person a few more times in the next few years........................so my estimate is $1200 - $2400 over the course of therapy.

A client paying $80.00 per session and staying in therapy for 1-2 years  would bring in $5,000 - $10,000 over the life of my practice.

Here's an example. I had one self pay that started many years ago. I had about 30 sessions with him. He referred his wife who is still coming to see me and she is at about 40 sessions and will be continuing. She referred a friend who is self pay but I give her a significant discount due to her financial situation. All total, I have earned $8,850 from the original contact.

My best long term clients end up paying me over 5K over a number of years.

I am a Gestalt therapist and I usually see clients for 2-3 years.  so one client paying $100 coming coming 42 times a year is $4,200 a year--in 3 years that would be $12,600.  

I have new "regulars" who will probably be coming for a year
by the time we're done, @ $125/hr, say 40 weeks with missed weeks, should be $5,000 each per year.

In answer to your question of what one client could generate, I would estimate about $4500 (per year).

A good short term person brings in less than $1,000. I have had, however, many long term clients who have each brought in perhaps $20,000, perhaps more, over the years. (gross income).

My full fee is $110 for 50 minutes. It would not be unusual for a client to come weekly for 3 months, twice a month for the next 6 months, and then monthly for the following 12 months. That adds up to 36 sessions or $3960. This does not count the fact that a satisfied client is likely to come back later if they ever need additional help.

My fee is $100.00--average number of sessions per year 45. $4,500.00. Clients usually stay 2-5 years, which generates between $9,000 - $22,500.

As you can see, every referral to your office is a potential for networking. Although many therapists are uncomfortable with the marketing aspect of building a successful practice, a person who is referred to your office is much easier to handle than approaching members of the community without any introduction. So realize that calls to your office are openings and invitations for you to build connections. If you cultivate your referrals, then your practice will continue to grow and prosper.