As a healthcare marketer immersed in day-to-day operations, you can easily get bogged down by the number of metrics you look at — click-through-rates, email open rates, impressions, and shares, just to name a few. It can be difficult to take a step back and look at the bigger picture:
What am I doing to generate return on investment (ROI) for my organization?
Calculating the ROI of marketing efforts is vital to the success of your overall marketing strategy; you want to do more of what’s generating revenue and ROI. You need to do this strategically —Narrow your efforts to specific metrics that impact business to gain a clear picture of your successes versus failures.
Let’s walk through seven key metrics:
1. Leads Generated
The number of leads in the marketing pipeline is an important metric to look at when determining ROI. Show the number of leads per active campaign and note where they are in terms of completion (acquisition, engagement, conversion), otherwise known as a lead’s “Funnel Stage.” It’s also important to understand lead generation from a channel perspective – what channel is the first touch? And what channel leads to conversion? With a deeper understanding of how leads are interacting with your organization, you can make adjustments to improve effectiveness and how quickly the leads move from top of funnel to conversion.
2. Conversion Rate
Campaign conversion rate, within marketing, refers to the percentage of patients that complete a desired top of funnel goal out of the total number of campaign targets. Your goal is a high conversion rate, indicating successful campaign design and targeting. To evaluate the conversion rate for each campaign, first determine what your goal is so that you know what to measure as a conversion—is it registering for a webinar? Filling out a form? Scheduling a clinical appointment? Then, select a time period during which to calculate conversion rate, typically monthly or quarterly.
Clinically speaking, you should also strive for a clinical conversion rate or lead-to-patient conversion goal, meaning a percentage of top-of-funnel leads that clinically convert. However, it is important to note in healthcare that this goal cannot be solely managed or owned by marketing and should be a joint effort between marketing and clinical operations.
On average, our clients see a digital conversion rate of 8 percent; if your campaigns have significantly lower conversion rates than 8 percent, consider reevaluating tactics to boost conversion rates.
3. Acquisition Costs
Acquiring new patients is one of the most important jobs healthcare marketers have, so proving the effectiveness of acquisition-focused marketing efforts is critical. Since new patients can be acquired via various channels — digital, direct mail, paid ads, referrals, call center, and others — and specific campaigns, cost-per-acquisition (CPA) should be broken out by channel and campaign. In other words: how much does your marketing department need to spend within a specific channel or on a particular campaign to acquire a new patient?
Breaking out CPA by channel and campaign gives visibility into which marketing activities are the most effective at pulling new patients into your health system. Use intelligent attribution tools, such as a healthcare CRM, which collects, organizes, and analyzes marketing data to measure the efficacy and ROI of your campaigns by channel, to carefully track the channels and campaigns that are successfully acquiring patients.
Since many patient journeys are multi-channel, meaning they begin through one channel, such as email, and eventually expand to other communication channels, like the call center, you need to decide how to represent this in CPA data. Whatever you choose, ensure you keep metrics consistent on reports over time. This way, you’re accurately comparing like data and can develop long-term CPA trend insights.
Please note: It’s normal for different service lines and different markets to vary in terms of CPA. For example, a cardiac valve campaign in one region might have a CPA of $240 while a bariatrics campaign in another region is $100. Understanding these variances will help you make more intelligent decisions about how to allocate marketing dollars to align with service line and health system goals
4. Retention Rate
Across industries, it costs five times as much to attract a new customer than to retain an existing one, so focusing on increasing retention rates is an effective way to boost ROI. Additionally, the likelihood of re-selling to an existing customer is 60 to 70 percent, compared to 5 to 20 percent for a new customer.
Healthcare organizations that have high retention rates focus their marketing strategies on providing patients with positive experiences and excellent customer service.
5. Patient Engagement
Engaged patients are dialed into their own care, which results in better health outcomes, higher retention rates and lifetime values, and lower costs. Healthcare marketers can boost patient engagement by forming trusting relationships with patients, accomplished by personalizing interactions, adhering to the patient journey, and coordinating across departments.
Patient engagement helps marketers understand how consumers and patients respond to outreach efforts and how likely they are to convert. Calculating patient engagement metrics also helps direct and refine healthcare marketing strategies. Measure patient engagement by gauging interactions— clicks, impressions, shares, comments, calls into the hospital call center— and reviewing patient satisfaction rates.
6. Payer Mix
Payer mix refers to the ratio of patients your organization treats that have private insurance versus Medicare and Medicaid. Understanding your payer mix is important for determining ROI because reimbursement rates from commercial payers are significantly higher (by 50 to 75 percent) than Medicare or Medicaid reimbursement rates. The takeaway is simple: treating patients with commercial insurance typically results in greater ROI and keeping a healthy balance is key.
Given the large gap between private and public payers, even a small change in payer mix can have a significant effect on revenue. Therefore, reporting on payer mix can help you project future revenue and gain insights into how to optimize your payer mix to boost ROI.
7. Contribution Margin
Your contribution margin shows how much revenue you have available after you subtract variable costs. Variable costs are expenses that fluctuate with the quantity of revenue produced, such as ad-buying around healthcare key phrases, printing fees for informational campaign pamphlets, and expenses involved with hosting patient seminars.
- Contribution Margin = Revenue – Variable Costs
Analyzing contribution margin helps you determine which marketing efforts — broken out by campaign or service line — to continue and which to shelf. If the contribution margin for a specific marketing initiative, like a conversion campaign for orthopedics, is negative, what this campaign is returning is not enough to justify what you’re spending.
Thus, you should reevaluate this campaign, perhaps by altering the outreach method to a less expensive one or by switching to a service line target with a lower CPA. If the contribution margin is positive, you are proving ROI and contributing to profit. It’s important to keep in mind that your contribution margin can be positive even if your conventionally-calculated profit is negative.
Let’s look at an example of how health systems can utilize contribution margin metrics:
Say you have three service lines that you want to increase in volume: bariatrics, orthopedics, and cardiology. Compare each service line’s contribution margin from previous campaigns:
In this example, prioritize growing the orthopedic service line, since it has the highest contribution margin and contribution margin ratio. This way, you will maximize revenue while minimizing costs.
Aligning marketing efforts with ROI is entirely dependent on data — gathering it, analyzing it, and using it to make strategic decisions. Therefore, ensure your health system has a plan in place for managing your data. It can also be beneficial to utilize reporting dashboards that consolidate ROI metrics in one place, making presentation to the C-suite much simpler.
Proving ROI in healthcare is essential to get C-suite buy-in, which affects available budgets and resources for the future. By focusing on the financial impact of marketing efforts, you appeal to C-level executives’ interests and show them why your healthcare marketing department is driving results and deserves their support.