How costly are no-show appointments?
- $150 billion yearly loss in the medical industry
- Small businesses lose roughly 21 percent of potential revenue to no-shows
- Impacts lead acquisition costs
Appointment no-shows are no fun — both from an emotional and financial point-of-view. For a small business alone, appointment no-shows can cost over 21 percent of potential revenue. While there isn’t a magic wand you can wave to stop no-shows from happening, you can reduce them significantly by using business texting to send appointment reminders.
It sounds simple, but a single appointment reminder text has the potential to stop a no-show from happening, either by confirming an appointment or giving you a chance to reschedule. This article will do a deep dive into the actual cost of no-shows for various departments and industries and show how business texting can cut back on them to earn a business more revenue.
Why do no-shows happen?
There are a few reasons why appointment no-shows happen, but the most common one is forgetfulness. Yup, sometimes people merely forget that they have something scheduled. Texts are a great way to remind patients or customers of their appointment gently; Fifty-five percent of the respondents to a Twilio survey said they would like to reply to reminder alerts to confirm, ask for details, reschedule, or cancel an appointment.
Logistical issues are another reason no-shows happen. People have last-minute conflicts, like a flat tire or illness, that renders them unable to attend their appointment. The daily mishaps of life are inevitable, but customers can communicate last-minute cancellations with texting’s ease and convenience. That way, your business can reschedule them, or if there’s time, fill the appointment slot with another person. Rescheduling is an effective way to keep appointments on the calendar to ensure revenue isn’t lost by prospective customers not converting.
Top industries that lose revenue due to no-show appointments
A no-show appointment is a problem for any business, but some industries struggle with no-shows more than others. The sector that suffers the most considerable financial loss is the medical field, where no-show appointments account for over $150 billion in lost revenue every year.
Here’s a breakdown of the percentage of appointments that result in no-shows for industries within the medical umbrella, according to Solutionreach:
- Endocrinology: 14 percent
- Dentistry: 15 percent
- OB/GYN: 18 percent
- Primary care: 19 percent
- Ophthalmology: 22 percent
- Optometry: 25 percent
- Oncology: 25 percent
- Neurology: 26 percent
- Pediatrics: 30 percent
- Dermatology: 30 percent
- Sleep clinics: 39 percent
Considering the high cost of procedures within these industries, it’s no wonder that the medical sector suffers billions of dollars of loss over patient no-shows per year.
Consumer services is another industry that relies heavily on completing appointments to make money. Consumer services can include businesses like salons to gyms, and more. Salons have an average of five no-shows a week. If the cost of a service at a salon is $50, five missed appointments result in a loss of $250 per week. That’s a $1,000 loss per month and $12,000 loss per year from no-shows.
Home service businesses also struggle with no-shows, but the difference between home services and the medical and consumer service industries is that home service businesses have to send team members to a job site. A no-show can look like a customer not being home for a scheduled appointment in the home service industry. The average cost for labor for a home services business is $75 to $125, and most companies have to pay their employees even if a no-show occurs.
How no-shows affect customer acquisition and operations
Within the industries mentioned above, customer no-shows have a domino-like effect that impacts individual departments, like marketing, sales, and operations.
The effects of no-shows on customer acquisition
Customer acquisition is the first crucial step to getting prospects on the calendar, but the hard work is only worth it if a customer completes and pays for a service. As the years go on, customer acquisition costs are increasing rapidly.
Here’s how much the average cost per lead is for each industry mentioned above:
If a company sees too many no-shows, it may indicate that the money invested in customer acquisition strategies brings in bad leads. Not only are companies losing money from not being able to complete a job when a no-show occurs, but their acquisition costs will significantly increase. To simplify the rise of the expenses, let’s look at the math:
Let’s picture we have a home service business called Manny’s Electricians. Manny’s buys 100 leads at a rate of $200 cost per lead and spends $20,000 on lead acquisition.
100 leads x $200 cost per lead = $20,000 spent on lead acquisition.
Now, let’s say that 20 percent of these leads schedule an appointment; that’s 20 out of the 100 acquired leads and a $1,000 cost per appointment (CPA).
$20,000 lead acquisition / 20 scheduled appointments = $1,000 CPA.
Now let’s take a look at how no-shows can increase a company’s CPA.
Out of the 20 appointments that scheduled service with Manny’s Electricians, 30 percent of them resulted in a no-show or six appointments that no-showed. So ultimately, Manny’s Electricians only completed 14 appointments.
20 scheduled appointments x 30% no-show rate = 6 no-shows.
20 scheduled appointments x 6 no-shows = 14 completed appointments.
Remember, Manny’s Electricians originally spent $20,000 on lead acquisition but only converted 14 leads due to multiple no-shows. So their actual CPA is now $1,429 or a $429 increase due to no-shows.
$20,000 lead acquisition / 14 completed appointments = $1,429 CPA.
$1,429 true CPA - $1,000 pre no-show CPA = $429 increase in CPA.
The effects of no-shows on operations
For operations, a no-show squanders not only money but also valuable time. Companies pay employees to execute a job every time an appointment is on the calendar, and the average Employee Cost Index (ECI) has only increased in the past decade. If a no-show occurs, then there is no profit to put toward paying the employee’s salary. A no-show is a waste of an employee’s time, too, since they could have invested that time toward higher priority items.
As mentioned earlier, home service businesses have to pay for their field worker’s time. In recent years, a shortage of specialists in the home services industry has led to a sharp increase in salaries. For example, the top 10 percent of electricians now make close to $90,420 yearly.
When a no-show occurs for either industry, they still have to pay for their worker’s time. As the costs for employing staff increase over the years, the need to cut back on no-shows is imperative to a business’s bottom-line.
How business texting can reduce no-shows and earn revenue
Now that we’ve extensively discussed the cost of no-shows for specific industries and teams, let’s talk about a solution that can help your company reduce no-shows and earn more revenue: business texting.
So, why is business texting a great way to reduce appointment no-shows?
Ultimately, the best way to reduce no-shows is to follow-up with a customer and receive a response. Most people prefer text most for scheduling or changing appointments. From a business perspective, sending appointment reminders to customers through SMS can reduce missed appointments by 26 percent.
That’s likely due to the two-way communication that texting offers. Companies can reach out to customers (with their consent, of course) or vice-versa to either confirm, cancel, or reschedule an appointment.
To illustrate the amount of money lost by no-shows and gained from texting, let’s imagine we have a hypothetical pediatric clinic, St. Peter’s Children's Clinic.
St. Peter’s has an average of 75 appointments per week, and each patient generates $300 per visit. Out of these 75 weekly appointments, 30 percent of them resulted in a no-show or 23 no-shows per week. This results in a loss of $6,900 per week in lost revenue due to no-shows.
75 weekly appointments x 30% no-show rate = 23 no-shows per week.
23 no-shows per week x $300 per appointment = $6,900 in weekly lost revenue due to no-shows.
That’s a total loss of $27,600 monthly and $331,200 yearly due to no-shows.
After realizing how much no-shows cost them, the staff at St. Peter’s implements business texting (with HIPAA compliance) to send out appointment reminders to patients.
After sending out appointment reminders, St. Peter’s was able to reduce no-shows by 26 percent from 23 no-shows a week to 17.
17 no-shows per week x $300 per appointment = $5,100 in weekly lost revenue due to no-shows.
$6,900 in weekly lost revenue (not texting) - $5,100 in weekly lost revenue (with texting) = $1,800 additional weekly revenue from reducing no-shows with texting.
That’s a total gain of $7,800 monthly and $93,600 yearly.
The bottom line
No-shows cost a company money, time, and other valuable resources that rack up high costs over time. There isn’t a way to completely eradicate no-shows, but using business texting to send appointment reminders can significantly reduce no-shows by encouraging response from prospects. Companies can reschedule on the spot over text to keep the appointment if someone can’t make their original appointment time. Using business texting to get confirmation from people can help you get a better sense of your expected revenue – making your calendar an accurate representation of your transactions.