Simple Steps to Understanding Your Marketing ROI
Learn to crunch the critical numbers.
By Steve Stalzer, PT, MSPT, MBA
The year 2020 was defined by unprecedented uncertainty. It required business owners to make fast decisions and react to the ever-changing environment and new regulations.
As a result, many owners slashed marketing budgets and discontinued marketing activity that was routine just months before. Others increased marketing spending to mitigate the impacts of the pandemic. Regardless of which approach you took, now is a great time to assess the lessons learned over the past 18 months, re-evaluate the effectiveness of your marketing plan, and move toward a more effective marketing plan for the future. The following are key steps to improve your marketing return on investment (ROI).
GET THE RIGHT NUMBERS
Often, the greatest challenge in understanding your marketing ROI is gathering good data. Typically, the patient care coordinator (PCC) is tasked with gathering a significant amount of intake information as well as scheduling the patient for their plan of care. Asking the reason that a patient chose your clinic is just not a priority for the limited time they have with that patient. In addition, most EMRs are designed to capture a physician name for billing purposes rather than assessing the true referral source. Asking therapists to track this information can also be challenging and inconsistent.
Rather than require this of your PCC or physical therapist team, consider taking a different approach. Over the course of one week, take time to survey each patient currently coming into your clinic. Depending on the structure of your organization, you may choose to do this yourself or have someone from the marketing team complete this task. Because the average physical therapy patient receives care over a period of 6-8 weeks, that means you are capturing information from 12-15% of your total patient volume by simply doing a one-week survey of both new and returning patients. Completing this task each quarter will provide you with an opportunity to check in on 45-60% of all patients. If you do this right, it is also a great opportunity to thank those patients and promote direct access and referrals of friends and/or family members when appropriate.
Keep it simple by tracking only key referral sources such as: physicians, past patients, internet search, advertising, and community events.
UNDERSTAND THE NUMBERS
Assessing the results of this initial survey is step two. Look at the number of referrals as a percentage to determine where your referrals are coming from. If this is your first time assessing this data, you won’t have enough information to determine which are growing and which are stagnant, but over time, that information will become clearer.
MAKE A SMALL CHANGE
Once you have a baseline, make a single small change in your marketing plan. Start by identifying which referral channel you wish to grow and then determine a strategy to improve referrals from that source. As an example, you may determine that you are going to focus on past patient referrals. Research various options for improving past patient referrals and implement those that are likely to bring success. You may also allocate additional funds for the next 90-180 days toward that specific strategy.
ASSESS THE RESULTS
At this point, you likely already know that the next step will be to re-survey patients and gather a similar sample size in a similar fashion outlined in Step 1. With the established baseline from your first survey, you will now be able to see the impact from your efforts.
CALCULATE THE ROI
Let’s say you spend an extra $1,000 on a system to improve email communication with past patients and over the last 90 days, your past patient referrals increased by 10. Dividing your investment ($1,000) by the number of new patients (10) gives you a customer acquisition cost of $100.
Even if you do not like math, the next part is pretty simple. If each new patient at your clinic, on average, results in 12 visits and generates $85 in revenue per visit, that means that every new patient generates $1,020 in revenue. You can, of course, get more specific on visits and revenue by program or patient type if desired. For now, let’s stick with our simple example.
At this point, you need to assess the profit generated from those 10 new patients. This part can get a bit more complicated. Start by reading the scenarios below, then determining an appropriate estimate for profitability.
a) Assume you hired an additional therapist at $50/visit to see the additional visits, your billing cost is 7% or $6 per visit, overhead is 10% or $8.50. Using those numbers, we apply each for an estimate of 12 visits and get the following total expenses for each New Patient as outlined in scenario A. (Table 1)
b) Now let’s assume you have an existing therapist that was able to absorb that volume at a cost of roughly $25/visit thanks to a good incentive plan that creates a win for the therapist and the company. All other expenses are the same as outlined in scenario A.
ADJUST YOUR PLAN
As you can see in Table 1, both scenarios have a great ROI and point toward this being a successful marketing activity that should be integrated long term and potentially expanded upon in the future. If the costs are greater than the profit generated, dig deeper to understand why the initiative was unsuccessful, then adjust and execute on the next strategy.
Steve Stalzer, PT, MSPT, MBA, is an M&A Advisor at 8150 Advisors. He can be reached at email@example.com.