I read an interesting question this week about a researcher wanting to know how to sell a patient's database... Then, the related question emerged in my brain: is there a set formula that is used to value the database ?
Effectively, a database owner may be asking himself for a price per client record - that is used to value your database when you are looking to sell your clinic or a Research Databse.
An interesting concept don't you think?
The idea being that is you have 1000 clients on your clinic database - when you come to sell the business - you simply multiply the number of clients by a set dollar amount - say $10 per contact - meaning that your database would be worth $10,000 of your sale price.
However - as I a sure you can appreciate - this simple calculation method is not that easy - or accurate for that matter.
There are many things that can impact on the value of your database - so a simple "dollar amount per record" would not work in many cases.
One of the variables that impact on the value of your database is how responsive this list of people are to your marketing messages.
If you have 1000 contacts in your database - who - when you email them an offer - you get a 50% email opening rate - and 20% of them take you up on your offer - then this is a valuable list.
If your 1000 contacts - have an email opening rate of 10% and 1% respond to your offer - then this list is not as valuable.
Another variable in this valuation process is the lifetime value of the contacts on your list.
If your 1000 contacts are all high income clients who regularly attend your clinic and buy lots of extra products and services- then they are much more valuable than a list of people who attended for a single "lead generation" low price offer - and never return.
Another value determining factor in health business databases is the concept of "Recency" - that being - when was the last time these clients actually attended your clinic for a paid service.
If your business has been established for many years - there may be a large number of past clients who no longer live in your area , have swapped to a new health provider - or sadly - may have even died.
So of your original 1000 contacts - there may only be 500 who have actually visited your clinic in the past 5 years.
Again - this lack of recent buying activity will also impact on the value of your database when it comes time to sell your clinic.
So what is the take home message for you as a current or future health business owner?
If you are looking to buy a clinic - ask lots of questions about email opening rates, age of the database, responsiveness to marketing messages (assuming any marketing messages are even being sent by the current owner) , buying habits, purchase frequency and recency of last visit.
If you are selling a business and want to get maximum value for it - make sure you are in regular contact with your client list and can demonstrate a solid and recent buying history for these clients.
I have personally seen practice databases with over 10,000 clients details but due to poor marketing and lack of follow up - the list is largely worthless to a potential buyer.
Do you have any interesting research database for selling? Do you need help to estimate a good VALUE and CLIENTS for it?
The final value of the database is its market value. It means it's the market to have the last word. To get an idea of that, you might need to go around and ask.
There are tools to assess the value of almost anything, e.g. https://tinyurl.com/yavmw3qv, yet they do not allow you to escape from the most fundamental question: What is the utility of the thing/data to the customer. So how better of would the owner/new user of data be in comparison with the ones without the data.
Stancho V Pavlov I agree with your analysis that to calculate the value RFM (Recency, Frequency and Monetry) Model aspect of the leads can be checked . Beside that Dr.Kumars CLV formula can also be used.
The content and timing of the message also matters.
In terms of Contextual Marketing. I have experience of Telecom sector campaigns. I would like to add one aspect here. The value of database can also be decided based on the depth/details of the information. For example in 2015, I was working with one telecom company, One company which produced one product for women in one city (Islamabad) request us to message the product to the women. So we agreed with the following price.
The message will be sent to only females: 1$
The message will be sent to active most frequent high ARPU active customers (females)=2$
The message will be sent to females in Islamabad =3$
The message will be sent to the females of exact location: 4$
I think, the more information, one has , the value of database increases. It also depends on the type of person who buying, as you mentioned in health industry if the clink sells the information with personal details+ Income level+ Patient history + His connections other possible information then price of the data should be higher than just one sample name and mobile number.
Dear colleagues, Michal Svoboda and Muhammad Farooq , thank you very much for your kind and valious contribution. I fully agree. Thank you for your comments!
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