This post discusses how hospital marketers can calculate campaign return on investment (ROI) and revenue attributions in 6 steps.
Today’s Marketing Challenge
When it comes to running healthcare digital marketing campaigns, hospital Chief Marketing Officers face a unique challenge:
How to identify and target consumers who are most likely to want and need your services when you have limited information on which tactics will have optimum impac, or what budget allocation will provide the best return on your marketing investment
What makes this challenge unique is that there is a myriad set of local, regional, and national options for consumers, there are service line variations in each hospital, as well as disparate demographics in healthcare marketing. Combine these challenges with the fact that hospitals only have an emerging understanding of:
- Digital and multichannel marketing effectiveness
- How to calculate ROI
- How to use technology and data to create great business outcomes
In order to continuously improve your campaigns and their results, you need a repeatable process to plan, execute, and measure the effectiveness of your hospital marketing activities. The Evariant enterprise platform and campaign reporting practices provide a valuable combination of data analysis and market knowledge that facilitates this analysis and accurate outputs.
As every accountant knows, the calculation for ROI is:
As straight-forward as this formula appears, the timing and factors associated with the inputs, specifically “net revenue,” require some forethought and assessment.
Step 1: The CRM System
Because of the complexity of calculating marketing return on investment, it is impossible to accurately do so manually (e.g., using a spreadsheet). For this reason, you will need the right CRM system to identify and manage the data you will collect in the steps that follow.
Evariant leverages its significant experience in marketing, CRM systems, and data resources to present a practical and reliable revenue attribution and campaign ROI methodology, with configurable factors based on service line characteristics and Provider/System business norms. Figure 1 clearly demonstrates the complexity of the lead and revenue acquisition process for healthcare providers — all of which you can track in the Evariant CRM platform.
Step 2: Forecasting Campaign Results
In order to determine the effectiveness of a campaign, you must identify the following in the upfront campaign planning process.
Note that these results require definitive outcomes, in contrast with “soft” measurements such as touches, clicks or even acquisition of contact information.
Step 3: Service Line Attribution
When calculation campaign ROI, you need to give consideration to the length of time it takes for the final outcomes and revenue to be recognized. Each service line will be different. Here are but a few examples of recommended post-campaign time frames for attributing revenue to specific marketing efforts for different service lines.
Step 4: Direct vs. Indirect Revenue
There are also other considerations that you must incorporate into your CRM’s campaign ROI formula — calculating direct versus indirect revenue and tracking attribution associated with new versus existing patients. For example, if a consumer responds to a campaign that encourages him/her to consider hip surgery, you will consider any subsequent procedure or surgery as direct revenue. However, if that same patient schedules an appointment for knee surgery, that is considered indirect revenue. Here are some key considerations when considering direct versus indirect revenue attribution using the Evariant CRM system:
- Campaigns are typically designed to attract new patients
- Campaigns for one service line may have a “halo” effect on other service lines
- Patients may have prior encounters that impact attribution to campaign(s)
- Consumers with prior encounters are included in the indirect revenue calculations and not attributed to current campaigns
- Consumers who are new to the hospital system, or had no interactions with the hospital for 48 months are attributed to the campaign as new patients and direct revenue.
The table below provides real case examples around the thinking on direct and indirect revenue:
Step 5: Include Baseline Measurements and Control Groups
It is also important to calculate the appropriate credit associated with a campaign independent of any other variables. For this reason, we often calculate attribution measurements in terms of “lift.”
For example, if prior to a campaign, the cardio team was receiving 10 campaign members and conversions to consultations per month that would be the baseline measurement. If during the campaign and for three months afterwards, the cardio team received 40 campaign members per month, the monthly life is 30 campaign members and the associated net revenue.
Control groups are another important marketing mechanism that marketers use to evaluate attribution. A control group, typically 5–10 percent of the target audience, is not included in the list of campaign recipients. For attribution and ROI calculations, the control group factor is subtracted from the net revenue to deliver the lift and ROI numbers. Control groups are not necessary when running digital campaigns that use keywords, display ads, web forms, and landing pages.
With an HCRM system, you have the option of selecting a baseline factor, a control group factor, or no factor based on your marketing guidelines.
Step 6: Project ROI Prior to Final ROI
When calculating a marketing ROI prior to the conclusion of a campaign, we recommend that you calculate a projected ROI at the completion of each campaign by associating the leads that you generate from the campaign with the DRGs and average dollar values associated with the service line. This helps you measure early. Once the timeframe for the specific service line encounters are complete, you can calculate a final ROI.
Within your HCRM, ensure each engagement has an average value that is derived from industry norms for DRGs associated with the campaign or from system specific data. This method lets you calculate an ROI from marketing efforts for each campaign and then use this data as a foundation to calculate the eventual business line ROI. It also provides a succinct and consistent framework to create roll up analysis of all campaigns, all service line marketing efforts, and digital tactics.
Marketing ROI models are only possible through the use of data— data from the marketplace, the marketing department, and the CRM system. This methodology provides hospital marketers with the tools they need to evaluate their campaigns, realize continuous improvement of their digital marketing efforts, and ultimately prove the intrinsic value of the marketing efforts and organization.