Knowing your numbers
Tracking the success of your marketing campaigns is a big deal….it allows you to decide which are working and which are not…..let me explain through these example:
A.You have been attending trade shows to get out and meet with prospective patients. You know you have invested $20,000, which includes the trade show booth for two days, print materials, prizes to give away, your time to attend the booth, set up, tear down and travel time for you and any staff you brought to help you. You have also been diligent about tracking everything, so you have your list of 20 people you spoke with at the event. You compare that list to your list of patients every month. After three months of follow-up, you find you only attracted one new client from that event. Since you know your numbers, you conclude…
Cost-Per-Lead = $1000 ($20,000 spend / 20 leads)
Client Acquisition Cost = $10,000 ($20,000 spend / 1 client)
Lifetime Value = $10,0000 (Est $10,000 x 1 new client)
ROA = -50% ([$10,000 LTV – $20,000 spend]/$20,000 spend)
Note: LTV is used to simplify this calculation and enhance your understanding. In reality, you may have acquired three leads that bought nothing at all, or three that did 30K treatment plans each.
B.You acquire a mailing list of 20,000 from a local marketing firm and schedule four quarterly mailings over the next year. The total cost of this lead strategy after you’ve hired a professional designer to design the mailer, paid for the print and postage and accounted for the time spent for your team to follow up on the inquiries and book the appointments is $21,000. Over the course of the year and for three months after you finish your campaign, you were able to get three new clients. As you review the numbers, you conclude:
Cost-Per-Lead = price paid for your list / 20,000 leads
Client Acquisition Cost = $7000 ($21,000 spend / 3 clients)
Lifetime Value = $30,000 (Est $10,000 per client x 3 new clients)
ROA (campaign) = +43% ([$30,000 LTV – $21,000 spend]/$21,000 spend)
C.You have decided to venture into promoting your practice online because you’ve heard some good things about search advertising. You hire a digital advertising agency to help you and test the waters. The agency charges you $10,000 for the entire campaign, which includes keyword research, ad spend (based on clickthrough), optimization, management and list building. At the end of the campaign, the agency provides you with a list of 10,000 people with whom to follow up. During your review of the numbers, you observe the following:
Cost-Per-Lead = $1.00 per lead ($10,000 spend / 10,000 leads)
Client Acquisition Cost = TBD – to break even, you would need one new client.
Lifetime Value = TBD
ROA (campaign) = TBD
Based on the information above, which method do you continue with and which do you stop? It appears Scenario A was a complete bust and you may never want to use that modality going forward. The Cost-Per-Lead is very high and the ROI is negative. The results from Scenario B look promising. The Cost-Per-Lead is likely to be reasonable and the ROI is positive. The results for Scenario C are not complete yet so it would be difficult to make a permanent decision on that yet, though the Cost-Per-Lead is very low and the break-even in clients appears attainable.
Simply based on knowing your numbers, you would be able to conclude that the first method is a complete waste of marketing investment while the other two methods appear to be more worthwhile. This is a great start to keeping things simple. However, I am here to tell you the real world of running a business in your field of practice is not quite this simple, but you are now more prepared to start asking pointed questions about why one strategy appears to work so much better or worse than the others.
Here are some questions I would ask about each of these scenarios:
- Was the trade show in Scenario A the wrong show for the patients we need to attract? Was it the wrong type of audience?
- Was the team ineffective in our follow-up from the trade show?
- Did we follow up long enough after the trade show?
- Did we max out our return from the direct mailing? Would we have increased the return if we’d increased the frequency of mail outs?
- Could we have acquired a similar direct mailing list for less money?
- Was the agency effective in their bidding process? Are there other agencies who can provide leads for less?
- What is their agency fee vs. media spend? Are there other agencies who can provide leads for less?
Sit back and take a deep breath. There are many software tools and companies who do this work and can give you all the help you need to succeed. You do not need to be the expert on all of these strategies. I don’t want you to be. Because if you are spending time becoming the point person on all of this, you’re back to working IN your business. That is the opposite of what I want for you.
With any modality, I target a MINIMUM return of three-to-four times my spend. The figures we used above are illustrative only. You may find your results to be much different, but you will never know unless you are tracking everything and then know when to stop investing in marketing that has No ROI.