Determining Your Return-on-Investment from New Patient Marketing

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New patient marketing can be a frustrating topic for many dentists because…well…it’s expensive!

You can easily spend thousands a month on Google or Facebook ads. Mailing postcards is expensive. Proper search engine optimization costs a fair amount, too. And if you’re doing multiple types of marketing and advertising simultaneously (which most successful offices do), it can really start to add up.

So yes, marketing can cost a good bit of money.

And if you’re going to spend that money, you need to know how much income you’re making in return.

You also need to know which marketing campaigns are working and which aren’t. Spending thousands on a campaign that turns out to be a dud is not only frustrating, it’s also done at the expense of what could have been a more effective campaign.

I’ve been surprised many times when I actually look at the hard numbers. Without them, I could have made the wrong move – many times. For instance, I’ve thought “We don’t seem to be getting many calls from this Google ad campaign, maybe we should reduce the budget.” Then, with the numbers to hand, I find that the income return was phenomenal. It turns out what I really needed to do was reduce another campaign so I could put more funds toward Google ads! Remember, when it comes to marketing – what you “think” or “feel,” can at times lead you in the wrong direction! ALWAYS, ALWAYS, ALWAYS, look at the cold hard facts.

TRACKING YOUR RESULTS

I’d suggest that at least once a month you should look at each marketing campaign and see:

How many phone calls (or inquiries) did we get from it?
How many new patients did we get from it?
How much money did we make from it?

(By the way, if you want to immediately improve your ROI and specifically attract high-quality patients that are a good fit for your office, attend our virtual New Patient Workshop, where we give you a lot more tools for acquiring and retaining new patients.)

How to Track Your Results

So how do you go about collecting these numbers? You can’t analyze the numbers if you don’t have any.

Here are a few ways you can do it.

Keep a “call log” at the front desk

The first and simplest thing you can do is put a piece of paper next to each phone at the front desk, and instruct the front desk that any time a potential new patient calls, they need to write down:

Patient’s name
Patient phone number
How they heard about you (Google, postcard, Facebook, Yelp, friend, etc. The more specific, the better. If they answer “Google,” you can even ask what they typed in when they searched, because that will help you optimize your SEO or Google ads.)
Whether or not they scheduled
If they didn’t schedule, why not?

Seeing ALL the phone calls you received is important because you may find that the marketing is doing its job (i.e. get the phone to ring), but your front desk isn’t doing a good job of scheduling them for appointments and need to be retrained.

Use call tracking numbers

There are many call tracking services out there. This allows you to get extra phone lines that track the number of calls they receive. This way you can put a unique phone number on a postcard or ad, and then see how many calls it got you.

Record your phone calls

The call tracking is much more effective when you record the phone calls, so you can actually see how these phone calls are being handled and whether they are legitimate calls or spam/solicitors. (Check the laws of your state, as you may need to disclose that the call may be recorded when answering the phone.)

Use your practice management software’s reporting features

Ideally, your software should allow you to:

Note the source for each patient (whether they came to you from Google, postcards, Facebook, referral, online directory, etc.)
Pull a report of patients from each source, including the total income made from each patient.

If your software can’t do this, you can dig through your old pen-and-paper call logs and backfill them with more information. After the patients on that log have come in for their appointments, mark down the amount each of them paid for services. This is much more tedious than generating a report from your software, but it gets the same result.

Additional reporting tools from Google, Facebook, or various marketing software products

When you advertise on Google or Facebook, they give you quite a lot of information about how much you spent and the results. And there are various other software products for tracking and calculating these things. If you’re very clever, you can even tie these in with your phone lines or practice management software to automatically calculate your return-on-investment and cost-per-patient.

But…setting these things up can be a little complex, and most dentists will want to coordinate with the marketing company they use to set it up for them. So I’m not going to get into the nitty-gritty details here.

Is this Marketing Campaign “Working?” Calculating Your Return-on-Investment (ROI).

So, now that you’re tracking your results as covered above, you can start to calculate your ROI. There are two ways of doing this, and I like to do both.

1) ROI based on income you have already received

If you want to see how much money you’ve actually received and put in the bank from a marketing campaign, you can take a period of time, perhaps the last 3 or 6 months, and gather these two numbers:

How much you spent on a marketing campaign over the time
The total income generated from patients from that campaign

Subtract the amount you spent from the total income generated. Then divide that by the amount spent.

So as an example, it would look like this:

$10,000 (total income generated)
-$2,000 (amount spent)
= $8,000

Then…

$8,000 / $2,000
= 4

So your ROI would be 4:1 or 400%.

This may seem like disappointing ROI, and certainly, it could be better but dentistry is not a “one-time purchase.” If you calculate ROI soon after starting the campaign and the patients have only come in for one visit, this number will seem artificially low. Which is why I also use the next method of calculating…

2) ROI based on projected value

Hopefully, your new patients will be sticking around longer than one or two visits. They should be with your practice for years. So using a projection for your ROI calculation can give you a better idea of the actual value of the marketing.

You could use Average Lifetime Value of each patient, but that’s a little too ambitious in my opinion because you don’t want to be losing money now on the hopes that it’ll pay off after 7+ years.

What you can do is take the average patient value for 1 or 2 years. You need to do some digging around in your software to come up with this number. I’m not going to give you an average to use in your calculations, because it varies wildly from practice to practice depending on the services you offer, your fee structure, your case presentation skills, the quality of your recall program, etc.

(If you’d like help with this, schedule a free consultation with us here and we’ll give you some guidance.)

So here’s how this equation would look as an example:

10 (number of new patients)
x $1,500 (average annual value per new patient)
= $15,000 (projected income)

Then…

$15,000 (projected income)
– $2,000 (amount spent)
= $13,000

Then…

$13,000 / $2,000
= 6.5

So your projected ROI is 6.5:1 or 650%

That’s not bad. I’d rather be around 8:1 or 10:1, but I’m making money and it’s viable. Anything better than 5:1 is generally okay.

Why do I like to use both methods of calculating?

Using just one of these methods doesn’t give you the full picture for a few reasons.

First, I don’t want to rely solely on projections, because there’s always a chance that a marketing campaign brought me lots of new patients but for some reason, that particular campaign only attracted patients that aren’t a good fit for my office. Maybe they all refused treatment and never came back, couldn’t qualify for financing, were not prospects for the services I offer, etc.

So I always want to verify that I’m actually making money in accordance with what I’d expect—and I’m not massively hemorrhaging because I think it’ll pay off later on.

But on the flip side, if I only calculate using income from the patient’s first visit, that number is always going to look disappointing and won’t be a true representation of the new patient’s value.

So I look at both.

What to do if the ROI is bad?

Let’s say you look at your ROI and it’s a measly 2:1, meaning that after you take your overhead expenses into account, you’re barely making any money in the short term. Or worse, it’s worse than 1:1 and you’re actively losing money.

What do you do?

Sometimes the answer will be obvious: stop that particular campaign that is performing poorly and put the money towards another campaign with better ROI. I add this last part as I’ve seen a number of doctors who will stop the campaign and not replace it with anything! Not a good idea. You have to market – but you want to make sure your marketing is effective.

And remember, I also wanted you to track the number of phone calls. You may find a campaign isn’t bringing in new patients—but it IS producing phone calls. This means you need to listen to some of the call recordings and determine if you need to retrain your receptionist. (Speaking of which, we are offering a free mystery call, where we call your practice as a new patient and grade the receptionist’s phone skills. Book your free mystery call here.)

You also may find that your average value per new patient is too low, in which case you need to improve your case acceptance—and then suddenly your ROI will be much better for the same marketing campaigns. Increasing case acceptance is our forte here at MGE, and I highly recommend attending the MGE Communication & Sales Seminars for that.

What if ALL your marketing campaigns are performing poorly? Well then, you’re doing something very wrong, and you need to attend the MGE New Patient Workshop, where we cover everything you need to know to build a sustainable new patient acquisition system. Many of the tools we cover are very inexpensive or even free to implement, so you can increase your new patient even if you don’t want to spend more money.

I hope all of this helps! And don’t forget, if you have any questions or would like help with any of this, go ahead and request a free consultation here.

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Determining Your Return-on-Investment from New Patient Marketing