Medical Marketing ROI - A No Brainer

So it was a few days back that we had a conversation with one of our clients that went a little like this:

ETNA: "Your online directory listing with [popularplasticsurgerysite.com] is up for renewal. Working with your staff we audited all of the leads generated through the listing, and found that there were 4 confirmed surgical cases. Your confirmed revenue was just over $20,000. The listing cost $7,500 last year."

CLIENT: "That seems like a no-brainer, we should renew."

A no-brainer? [Insert sound of me swallowing my uvula here]

While paying a fee for a referral is illegal in almost every state, return on investment (ROI) analysis for medical marketing is a bit like calculating how much you paid to put a patient on the table. In this case, the math is easy, $7500 resulted in 4 patients, $7500/4 is $1875 per patient.

I know, you're thinking, hold on Ryan, there are the intangible benefits of name and brand exposure and all those leads you can't track, like the people who call the practice rather than using a lead capture form...I'm with you...and we'll get back to that.

Stay with me. My guess is that I would get a very different response than, "it's a no-brainer" from a client if I recommended a new directory service that guaranteed perfect candidates on the table, each willing to pay an average of $5000, for the low low cost of just $1875. For those of you that like the numbers, that's a 37.5% cost to acquire.

So if you're reading this, and you're a doctor, ask yourself now, what would I be willing to pay for a new patient? It's a scary idea, but it's just an exercise in good business. You MUST know that number in order to determine which investments are really no-brainers, and which investments are going to break the bank.

My feeling is that most plastic surgeons who average $5000 in total revenue per case, would be willing to part with about $800 per case (about 15% of that revenue). Does that feel right to you?

So back to our real world example...I promised to return to those unknowns and intangibles. When evaluating directories, we will often give them 100% benefit of the doubt. So if we were able to track 4 cases (and we work hard at tracking lead capture), then we assume there were probably 8 cases in total. That $20,000 in confirmed revenue, we'll take the leap and call it $40,000. But even in that case, we're still talking about $938 per referral...not bad, but when we know there are alternate programs out there that are driving procedures at less than $200 per case...certainly not our first choice.

And as for the "brand marketing" benefits...I can't quantify them (most of our clients don't have the resources for expensive campaign impact research) and therefore I cannot defend their value. For small practice marketing, when your budget is finite, I say go with what you can measure.

Said another way, go with what you can wrap your brain around. I feel strongly that every online marketing decision should be a brainer; carefully considered at first and carefully evaluated when due for renewal.