By Sarah Woods, Core Dental Solution
In my last blog post, I outlined the important key performance indicators (KPIs) to determine how well your practice’s marketing tactics are working. I discussed eight of the most important KPIs for every dental practice and the ones I often use as the directors of the overall marketing strategies I create for my clients. These KPIs are sales revenue, cost-per-lead, traffic-per-lead ratio, lead-to-customer ratio, number of calls (leads), patient retention percentage, number of patients reactivated and new patient source.
Before we start, what’s a lead? A lead is a prospective patient who has reached out to your practice in some way. This could be a phone call, a walk in or a website inquiry. A lead is different than traffic. Traffic is the people who go to the website, social media page or see your advertisement.
Now, let’s breakdown these KPIs and understand how each is calculated.
- Sales revenue: It is important to look at both the production and collection numbers every month. Production is the raw amount before collections, adjustments and overhead is subtracted. When determining whether marketing efforts are working, production is more reliable than collections because many factors can affect collections. For example, marketing is not related to whether the correct copays are collected, how much insurance is adjusted or the amount of overhead.
- Cost-per-lead: This measurement is important when determining how much a practice is spending for each lead. Simply divide the cost of marketing campaign by the total number of leads, like this:
cost of marketing campaign
total number of leads
- Traffic-to-lead ratio: This measurement is what I use to determine whether a marketing campaign is effective. It is calculated by converting the traffic to leads into a ratio, (traffic : leads). Remember, the traffic is everyone who sees a campaign, website, etc., and leads are the amount of people who reached out to the practice in some way. For example, to see how a website is doing, its analytics are used to determine the traffic. Leads can be measured manually (a staff person collecting information and documenting how many calls are coming into the practice) or with call-tracking.
- Lead-to-customer ratio: This KPI is similar to the conversion rate in that it determines the amount of leads that convert to customers. The ratio is leads : customers, and can also be reduced.
- Number of calls (leads): It is crucial to track every lead. The most effective and reliable way to do this is by using a call-tracking service. I don’t recommend staff members tracking leads because these numbers are significantly less reliable. This KPI is the foundation for the rest and it is crucial that it’s accurate.
- Patient retention percentage: This KPI is calculated to determine the percentage of patients retained in the practice. It is calculated by taking the difference of the number of deactivated patients from the total patients, and then dividing by the total patients and multiplying by 100, like this:
(Total patients- deactivated patients) x 100 = Patient retention %
- Patient reactivation percentage: This KPI determines how many overdue patients (hasn’t been seen in at least nine months) are being reactivated. The patient reactivation percentage is calculated by taking the difference of the number of reactivated patients from the total number of overdue patients, and then dividing by the total number of overdue patients and multiplying by 100, like this:
(Total overdue patients – reactivated patients) x 100 = Patient reactivation %
Total overdue patients
- New patient source: This KPI is crucial and just like the number of leads KPI, the foundation for all the KPIs. It is crucial that the source of every new patient is entered correctly. This sometimes takes training staff on the importance of marketing and asking the right questions when a prospect calls.
There is one last KPI that I forgot to add to my last blog. It’s the annual new patient growth. This number is calculated by taking the difference of the number of patients in a given year and the number of patients in a previous year, and dividing by the number of patients in a previous year, then multiplying by 100, like this:
(Number of patients in given year – number of patients in previous year) x 100
Number of patients in previous year
Accurately calculating these KPIs is extremely important when determining whether your marketing is effective — and if done correctly, can prevent wasteful marketing spending.
Sarah Woods is a marketing consultant and president of Core Dental Solutions, a full-service dental marketing agency that provides digital, traditional and inbound marketing to dental practice owners meeting them where they are in their life cycle. They approach dental practice marketing with a “holistic” mindset. Rather than incorporating “set-and-forget” marketing tactics to generate revenue and address shortfalls, they turn a dental practice into a well-oiled machine. Sarah can be reached at Sarah@CoreDentalSolutions.com.