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There are a few metrics to consider when using marketing techniques to attract new patients to your practice.
I am fully aware that most of the readers of this blog do not have a marketing background and may not have both an MD and an MBA. However, there are just a few metrics that you might want to consider when using marketing techniques to attract new patients to your practice. I know that diving into the business side of your practice can feel intimidating, especially if you are like most physicians, including myself, who have never received any formal marketing training. And while you don't need to take on the job of a large-scale marketing department to understand the basics of medical marketing, measuring just a few marketing metrics can go a long way in ensuring your practice's success. This blog will discuss the cost of acquiring a new patient using a marketing campaign, the patient acquisition cost, and the return on the investment from your marketing dollars. When you understand this concept, you can fine-tune your marketing efforts.
Let's begin with calculating your cost per lead (CPL). Your cost\lead is the cost to attract a new patient to your practice. The CPL describes the cost for someone to become a patient in your practice. For example, this would be the cost for a web surfer who reads a blog post on your website and enters their email to receive additional information. The cost may represent the potential patient who clicks a Google AdWord for your practice and comes in for a free consultation you are conducting on a weight loss program.
When you know your CPL, you can make important decisions about where to put your money to maximize the value of your marketing dollar, or you can see what isn't working and discontinue that marketing campaign.
In the past, healthcare marketing took a lot of best-guess efforts to understand the value of your marketing efforts. You knew how much you spent, but when measuring the patients who came to your practice directly from your marketing, it was murky, and you were marketing by the seat of your pants.
These days, with all the latest technology at your fingertips, you can track your cost per lead. Accurate trackers can be enabled so you know if a patient is reaching out from an online ad, an email, a postcard, or even a billboard. You can even track that person from the beginning to the end of their patient journey through your practice. In other words, you can know the exact patient value your marketing campaign brought in—no guesswork needed.
In the healthcare industry, the cost per lead ranges from $36 to $286\patient, with an average of $162 per lead. The average CPL for health and medical companies using Google AdWords is approximately $125\patient. These are broad averages over the whole industry, but they give an idea of what you may expect as you begin calculating the cost per lead for each new patient that enters your practice.
The Calculation of the CPL
The CPL is a simple math equation.
The calculation consists of the campaign cost, or the marketing expenses divided by the number of patients who called the office for an appointment = patient cost per lead. For example, if the practice spent $2000 on Google Ads over three months and received 500 calls from those ads, the cost per lead is $2000 divided by 500 or $4.00 for each patient lead.
The cost per acquisition (CPA)
However, not all initial callers will convert to paying patients. The 50 patients who made appointments can be plugged into the same equation, i.e., campaign costs divided by patients who became paying patients or $2000 divided by 50 equals $40, representing the patient acquisition cost (PAC). Now, if each patient who entered the practice spends $800 over the patient's lifetime, that's an increase in income of $40,000, not shabby for $2,000 in marketing expenses.
The return on the investment (ROI)
The return on the investment (ROI) is the income derived divided by the marketing expense X 100. It is $40,000 divided by $2000 x 100 or 200% as a return on the initial investment.
ROI = income\marketing costs X 100
You have at your disposal to measure the effectiveness of your marketing efforts. The available data gives us the power to make informed decisions that will increase our practice if we have the knowledge and expertise to tap into it. If you are not looking at your patient cost per lead as you make your marketing decisions, you're missing valuable information.
Understanding your patient’s CPL, PAC, and ROI positions you to bring in new patients and grow your practice with the confidence of data-backed decisions. These leads from your marketing efforts are the lifeblood of growing your practice. Your marketing goal is to create a steady stream of new patients since some of those people will become loyal patients and add significant revenue to your bottom line. Just knowing these three metrics provides you objective data to make good marketing decisions.
Neil Baum, MD, a Professor of Clinical Urology at Tulane University in New Orleans, LA. Dr. Baum is the author of several books, including the best-selling book, Marketing Your Medical Practice-Ethically, Effectively, and Economically, which has sold over 225,000 copies and has been translated into Spanish.