[vc_row css=”.vc_custom_1490859354007{margin-top: -120px !important;}” el_class=”our-results-intro”][vc_column width=”1/1″ el_class=”container”][vc_empty_space height=”130px”][vc_row_inner][vc_column_inner width=”1/1″][vc_column_text el_class=”press-release-text-content”]

RETURN ON INVESTMENT EXPECTATIONS FOR ELECTIVE HEALTHCARE MARKETING

It’s a Practice-Specific Expectation

I have been working with elective healthcare practices on their return on investment (ROI) from patient acquisition activities (marketing, lead conversion, acquisition, retention) for 10 years this month. It’s hard to believe that we still get asked at the early stages of every engagement:

“What should my ROI be?”

There are actually two answers to this: (1) Let’s make sure you CAN and ARE measuring it correctly. This means accurately tracking lead generation through to acquisition and retention (see Blog 1 for more detail); (2) ROI is a practice-specific expectation and driven by the owner’s desires and personal situation. It’s similar to retirement planning or expectations for returns from your financial planner, it all depends on how you want to live in retirement. These factors are wrapped in the fact that high ROI does not mean high profits unless there is a “volume” patients that drive the net profit to the highest level possible. There are two areas that must be considered first in setting your ROI expectations and like many other things in life, these expectations need to be fluid and adapt over time to age of the practice, changes in the market, and your own personal desires.

1. PRACTICE SPECIFIC FACTORS DRIVING ROI

A. Time – How much time are you willing to invest into your practice? The more time you personally as the business owner are willing to invest in planning and execution of your marketing strategy the higher your ROI will be. That is a simple fact in ANY business. If you are willing to learn how to run a business as effectively as possible (not just surgery), invest time into proper planning and measurement of your key performance indicators, and self-educate and test new marketing, technology, etc. ultimately you are going to drive a higher ROI from where you spend your time. If you choose (and it’s your choice!) to take a day off, arrive late and leave early consistently you can still make a wonderful living, but you will leave money on the table and decrease your overall ROI. Time is the business owner’s choice! B. Financial Budget – What type of budget are you willing to spend on generating a higher ROI from your marketing and patient acquisition systems? In the initial stages of your practice your available funds for marketing may be less and you will have to be very creative and efficient in how you use them; can you say “grass roots marketing”. As cash flow increases in a maturing practice you can begin to invest in the testing of new marketing channels, improved technology for business systems (patient marketing automation), more experienced personnel, etc. This should be constantly monitored to allow you to revamp your expectations and strategy, as the practice matures, more money should be available.

2. MARKET SPECIFIC FACTORS DRIVING ROI

A. Number of Competitors – The larger the number of direct competitors (plastic surgery marketing vs plastic surgery marketing) and indirect competitors (plastic surgeon marketing vs med spa marketing) your specific market has the more challenging it will be to get a higher return on investment for new patient acquisition. This is simple supply and demand economics; the more demand (competition) for the supply (advertising) the higher the cost of the associated advertising. The higher the cost the higher the necessary revenue, yet increased competition will drive prices down ultimately decreasing available ROI. Generally volume in a more competitive market will offset this challenge. Less competition will lower associated costs for marketing, personnel, etc. while allowing for lower potential prices to consumers and high ROI. However lack of volume may not allow for net figures at the level you desire. Ultimately strategies specific to your market need to be thought through to drive your ROI and adapt to change in the maturation of the practice and market. B. Number of Marketing Channels Available – How many valuable marketing channels are there for you in your market? Your patient data base always comes first, followed by your website, then from there it is a market by market analysis. Paid placement is easily tested from there because of the controlled atmosphere, however generally challenging due to higher than profitable prices due to uneducated buyers in the market driving the price to high. From paid placement it is a “crap shoot” of online and offline channels that will need testing to gauge value based on their ROI. The issues discussed on the Number of Competitors also impact the value of the marketing channels.

KEY FACTORS THAT DRIVE ROI IN MATURE PRACTICES

The above factors “set the table ” to understand actual ROI expectations and most importantly developing the strategy to achieve that ROI. As a general rule of thumb the older the practice the higher the ROI expectations should be for your marketing and patient acquisition process. The key factors that help drive ROI higher as a practice matures are: 1. Age of Practice – With age comes knowledge, you simply run your business better as it matures. Your team works better, your pricing and margins establish themselves, etc. 2. Size of Lead and Patient Data Base – As you mature the number of “leads” and “existing patients” increases, thus your long term ROI on historical advertising increases due to repeat visits from existing customers, $0 cost to acquire referrals, and long term conversion of historical leads from prior marketing activities (only if you keep your retention marketing up!) 3. Your Website Ages – It is an absolute fact the older your website address the better the opportunity you have to increase your rankings and positions in the search engines. Age is simply a value in the equation of getting to the top of the page!

PRACTICE AGE AND ROI

• 0-5 Years – The initial years of your practice are difficult to achieve a high ROI due to lack of patient volume opportunities, available cash flow for investment, and inmature business operations (not monitoring your key performance indicators). During this period you still want to be breakeven to extent you can control it, however many times it can be difficult to achieve a short term ROI of 100%-200%. Be sure to focus on patient retention to increase the long term ROI on these initial investments, the time and focus is worth the reward and will drive your profitability expectations faster than any other channel. • 5-10 Years – After 5 years you should definitely be past the 200% mark for your expectations if not to 300%. You should have proven patient acquisitions systems through your entire practice, reasonable cash flow to invest, and enjoying the fruits of your initial 5 years activities with strong repeat patient and referral levels. As a bench mark 1 out of 2 patients should be returning for a second treatment and/or referring patients. How fast they come back and what for is as much dependent on them as you, SAY IT WITH ME, targeted patient retention marketing. • 10+ Years – Approaching or passing the 10 year mark should allow for a high ROI on your overall marketing strategy. Your business is mature and efficient, patients are returning and referring, cash flow allows you to test and optimize quickly. Your website should be exceptionally ranked due to it’s maturity and build up of links and social media indicators (online reviews, etc.). The main factor for ROI will still come down to how much time do you want to put into your business whether through your own efforts or management of ancillary income (med spa for plastic surgeons). You should expect a 300% ROI from your overall strategy and only be willing to go lower if the net new patient acquisition justifies a long term view of ROI based on your proven patient return and referral rates. If you want to be out of the office one week a month you should readjust your expectations due to decreased conversion rates in your marketing funnel, its your prerogative. If you still want to be grinding it out to make the most money possible (my choice for what its worth!) your ROI should easily be 300% across the board. If not there is a break down in your process and you need to evaluate your key performance indicators immediately!

CONCLUSION

Remember, the game of business (running a practice) has many things you cannot control, the “market”; however you can control your time, strategy, and execution. Ultimately that is what will drive your ROI to the highest levels possible based on YOUR goals!  

Written by Jason Tuschman, CEO & Co-Founder of RSI, The #1 Patient Acquisition Platform in the Elective Healthcare Industry.

[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row][vc_column width=”1/1″][vc_column_text] [/vc_column_text][/vc_column][/vc_row]