How to Calculate Your Marketing ROI

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 %
Total patients

  • 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.

 

 

 

How to Maximize Your Marketing ROI

By Sarah Woods, Core Dental Solutions

Recently, I was on a dental forum and a dentist posted that he was looking for some help with his marketing. In the thread, a disgruntled dentist stated, “Marketing consultants are the worst, they will promise the moon, but leave you with crap.” I was taken aback by his comment, and was even a little insulted. However, I wasn’t surprised by his point of view — measuring marketing return on investment (ROI) properly hasn’t been clearly defined to many dentists. I’ve been in practices where their only marketing ROI measurements were monthly production or the number of new patients that come into a practice every month. These are the absolute worst ways to measure whether a dentist’s marketing efforts are working. Many factors outside of marketing affect this data. For instance: Was the prospect’s call answered? Did the team member use proper sales techniques to solidify that the patient would be seen in the office? Was the prospect scheduled within 24 to 48 hours?

Understanding the key performance indicators (KPIs) and the life cycle of marketing are both vital to accurately determine how effectively your practice is achieving its marketing goals.

Data from KPIs should be collected monthly and include:

  • Sales revenue: again, many factors outside of marketing can affect this data
  • Cost-per-lead: cost of marketing campaign and the production from each lead of the campaign
  • Traffic-to-lead ratio: how much traffic is going to your website, social media and other marketing tactics, and how many calls from each
  • Lead-to-customer ratio: how many calls turned into patients
  • Number of calls (leads): the number of calls generated from marketing efforts
  • Patient retention percentage: patients deactivated of total active patients
  • Patient reactivation: how many patients were reactivated
  • New patient source: this is VERY important and must be tracked accurately!

Understanding how to accurately measure whether your marketing is working will help when creating and adhering to your overall marketing strategy. These numbers will determine which marketing tactics are working and which are just a waste of money!

 

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.

 

Not as Busy as You Would Like? Try Looking Around the Dental “Neighborhood”

By Dr. Rick Huot

According to the ADA Health Policy Institute’s recent research brief, statistics show that dental offices have been lagging behind other business entities to recover from the Great Recession that started in 2008. Except in rural and urban areas that have a numerical shortage of dentists, most dental practices are reporting flat earnings and are just keeping up with the increasing costs of running an efficient practice.

The measure of growth in a practice due to internally referred patients and patients obtained by external marketing is called organic growth, since it is “home grown” from the efforts that the present office has done all along.

Another “fast track” of achieving growth is to purchase an existing practice in your practice neighborhood, by either merging into the larger office, or purchasing the existing patient base and obtaining the services of the present dentist, and many, if not all, of the doctor’s staff members.

This is the first year that millennial dentists will outnumber baby boomer dentists, and many of the boomers are approaching their 70s, which is past the traditional retirement age of 65 for the majority of America’s workforce for the last generation. However, people (and dentists!) are living longer, and quite possibly need to work longer, as they are financially short of their retirement goals.

For a young dentist (Dr. Millennial), buying an existing practice from a nearby colleague (Dr. Boomer) is a win-win situation, and some of the immediate benefits include:

  1. Purchasing an existing patient base is a more efficient way of securing new patients. The patients that belong to Dr. Boomer are existing “vetted” patients with a track record of seeking care, and a desire to keep their doctor-patient relationship with a young dentist, knowing it won’t be long before they have to choose a new dentist. Retaining upwards of 90 percent of the patient base is not unusual in this type of practice purchase, especially if Dr. Boomer occasionally practices in the new office.
  2. Every dental practice has a core of outstanding staff members, and the ability to retain those staff members will give Dr. Boomer’s patients a “familiar face” to see when they come in for dental treatment.
  3. The small equipment and additional supplies purchased with Dr. Boomer’s practice will increase efficiency in terms of instrument turnaround, such as extra handpieces and instrument setups, and reduce the future need of high-cost items, such as extra digital sensors and computer workstations.
  4. Dr. Millennial has a ready-made “temp service” in Dr. Boomer, which keeps the practice open for longer periods of time during vacation times and in the case of a female dentist, maternity leave. Having the practice open for more days and longer times increases the profitability of a business, as fixed costs are already accounted for and variable costs are less.

For Dr. Boomer, this also is a win-win situation, as some of the benefits include:

  1. The ability to take time off without the worry of provider coverage, and paying the costs of running a practice at a time in life when we physically slow down.
  2. If Dr. Boomer becomes a solo independent contractor to Dr. Millennial, the pension laws for someone reaching 50 years of age dramatically allows the older doctor to get a direct tax deduction for a considerable amount of retirement funds ($215,000 for a defined benefit plan, and $54,000 employee contribution to a defined contribution plan not including the matching provision), while taking a reduced amount to live on, since the practice sale would have provided funds for living expenses.
  3. Since Dr. Boomer is now a self-employed solo dentist, a Subchapter S corporation would allow practice profits to “flow through” their normal tax return (1040), and could provide tax bracket benefits.

As with any financial and business transaction, all of these practice purchase sales should be done with competent financial and legal advice, and might include a transition specialist who could facilitate the merger.

So, Dr. Millennial, it is time to look “around the neighborhood” and find someone compatible to your practice and business philosophy. The decision you make may prove to be the most financially astute one you will make in your entire practice career!

 

Dr. Huot is a general dentist in Vero Beach and the founder of Beachside Dental Consultants Inc., a dental practice management consulting business. He is on the FDA Board of Trustees and can be reached at rhuot@bot.floridadental.org. 

The Dental Practice Sales Funnel

By Sarah Woods, Dental Marketing Consultant

The sales funnel is alive and well within every dental practice. The success of marketing efforts is directly related to the sales effectiveness of the dental team within the dental practice. Each team member has a role to play in the success of the patient experience and how well it translates into increased treatment acceptance. The problem with this reality is that many dental practices fail to accept and understand the uniquely important role each person plays in the patient experience. The specific sales role of each team member is necessary and cannot be eliminated from the process due to cutting corners by under-staffing.

Based on the size of the practice, there should be at least one person in the following positions:

Marketing Coordinator/New Patient Concierge: handles internal and external marketing, takes photos for social media and digital platforms, acts as brand ambassador within the community, coordinates special events/seminars, implements and manages promotions and specials within the office.

Front Desk/Concierge: answers incoming calls with an upbeat attitude, schedules appointments, greets patients with a cheerful disposition and a warm smile.

Insurance Coordinator: handles all insurance companies, generates all insurance claims, coordinates payments, updates patient accounts.

Dental Assistant: assists dentist in providing treatment to patients, develops trusting relationship with each patient and follows up with the patient after treatment performed.

Hygienist: provides excellent dental cleanings, performs periodontal treatments, develops and nurtures relationships with the patient, and schedules future hygiene appointments for patients.

Treatment Coordinator: presents treatment plans to patients in an educated and confident way, and schedules necessary appointments.

Check Out: checks out patients and schedules all future appointments.

The key responsibility of each of these roles is to interact with the patient in a positive, thoughtful way while maintaining confidence. If just one of these roles isn’t filled, treatment acceptance and patient retention will suffer, affecting the bottom line of the practice.

 

Sarah is a dental marketing consultant with extensive experience working with dental practices to maximize their patient potential. With in-depth experience in various levels of a dental practice, she has a unique perspective that allows her to be effective at implementing strategies throughout the office that can be executed easily.

Please connect with Sarah on LinkedIn at linkedin.com/in/sarahcwoods or email her at Scwoods79@gmail.com