Earlier this week I discussed the importance of finding your high value patients and crafting your practice around them.
Today, I’d like to talk about some simple ways you can sort and analyze your marketing and other business data to see what’s working for you – and where you might need to improve.
It might seem a little boring – but it shouldn’t. These data points can have $100,000 impacts on your business. No exaggeration. I’ll prove it in the numbers.
Working backwards from these numbers, you can begin to see which marketing efforts really are effective – and which ones might be bringing up the rear.
For simplicity’s sake, let’s break down measurable practice data into 3 basic categories:
Conversion: the success rate you have in taking leads from ALL of your sources and converting them to patients. That includes everything in this list and any other sources of leads you may have: Google AdWords, Email campaigns, social media, snail mail, newspaper, magazine, radio, tv, telephone.
Retention: the percentage of patients that stay with your practice from year to year.
Billing: the average amount of profit your practice receives per patient billing.
These three categories together can give you a very simplified version of what Marketing Directors and Chief Revenue Officers would call a “Return on Investment” (ROI) report.
Why is ROI important?
According to the marketing firm, Hubspot, “[companies] who measure ROI are more than 12 times more likely to be generating a greater as opposed to lower year-over-year return.“
So, measuring and understanding ROI is one of the surest ways to become more profitable.
To prove it, let’s drill down into just ONE category of ROI – which could account for huge swings in your practice’s profitability over the long haul:
You might have a decent idea of your retention rate – but again, you might not realize how powerful of a data point it can be.
If you know what your average retention rate (r) is, you can estimate how long the average patient will stay with you.
The formula is: 1/(1-r) = average number of years a patient stays with your practice.
So if you have a 90% retention rate: 1/(1-0.9) = 10 years.
But if you have a retention rate of 95%, the average span extends to 20 years…
While at 80%, the span drops to 5 years.
Over the lifetime of the average patient that could mean hundreds of thousands of dollars – not even counting the cost of replenishing patients…
Retention rates differing by just a few percentage points above and below 90% can mean huge swings in your practice’s long term profitability.
So if you’re not sure what your retention rate is – or if you’re not sure how to get it, you might consider taking a closer look at your data.
The thing is, all 3 categories can make these kinds of profitability differences. If you don’t know where you stand, then you’re going to have a hard time fixing any big problems.
The Good News:
If you’re not sure where to start , or just want a frame of reference, we have ROI consultants who can help.
Just call (888)932-3644 to set up a consultation appointment.