How To Engineer Predictable Growth Into Your Practice and Exponentially Increase Results With Conversion Optimization

Chris Down Uncategorized Leave a Comment

With a headline like that, you’re probably expecting me to start talking about some new digital marketing tactic, a new software, or some new “hack” you can do to get predictable growth and results.

Not here. As with a lot of content I create, what I have to talk about has to do with fundamentals and winning strategies, not tactics.

Tactics can change every year, if not every month. If you’ve been in practice for longer than even a year, I’m sure you’ve seen the digital landscape change dramatically in that time.

Tactics are plenty, but winning and predictable strategies are few.

The good news about growing a practice, or really any business for that matter, is that it all comes down to math.

Love it or hate it, it’s as simple as doing some basic math to figure out how to engineer predictable growth into your practice.

At the end of the day, there are really only two primary things that you need (on top of providing an awesome service and experience) to achieve growth in your practice.

1) A predictable and scalable marketing system.

2) A follow up and sales process to convert new patient leads into new patients routinely and consistently.

With both of these elements working together, there is almost no way that you can fail in bringing in new patients for your practice in a predictable, reliable, and sustainable way.

In order to get to that point though, you need to get a hold of and track all of your numbers. We’ll get into what those numbers are in just a second.

It’s all about doing the math, tracking the numbers, and doing the work where it’s needed to improve upon the results on a weekly and monthly basis.

I’m sure you’ve heard something along these lines before, but it’s especially applicable here – If you don’t measure it, you can’t manage it.

 

Preface – Understanding Your Metrics

There are three key metrics that you need to know within your practice whenever you are trying to achieve growth through marketing…

CPL – Cost Per Lead – How much an individual lead costs.

CPA – Cost Per Acquisition – How much it costs to acquire a new patient from those leads.

CLTV – Customer Lifetime Value (or in this case Patient Lifetime Value) – What is the lifetime value of a patient?

If you know these now, that’s awesome, but if not don’t worry. We’ll dive in deep in just a second so you’ll be able to get a sense of where to look for these numbers and how to calculate them for your practice.

 

Step 1 – Calculate Patient Lifetime Value

Make sure that you always split these numbers into specific categories based on what the procedure is. Don’t try lumping different procedures and types of patients together because that will skew your data and make it very difficult to track everything.

For the sake of simplicity in this example we’re using here today, let’s say that the patient is coming in for a $5,000 procedure.

Therefore, the lifetime value of a patient is $5,000 (unless you have other services to provide to them after the procedure, this number would be a $5,000 one time fee).

Before we move on, let’s look at a couple of different examples because calculating Customer Lifetime Value can be tricky depending upon the procedure being done.

Here are a couple of other examples of this…

  • A $1,000 procedure that the patient has to come in 7 times for? – Not $1,000, but $7,000 CLTV.
  • A teeth cleaning that costs $175? – Not $175, but most likely in the thousands of dollars depending upon how many years someone remains a patient. If the average patient stays for 5 years, then that number goes from $175 to $1,750 (assuming someone gets their teeth cleaned twice per year) and that doesn’t include any times that they may need other services or in some cases surgery or cosmetic work.

Defining these numbers is very important because they let you see what you can truly pay to acquire a new patient.

In the second example above, a $1,000 procedure that the patient has to come in 7 times for, our target CPA (Cost Per Acquisition) would be affected based upon the lifetime value number we’re looking at.

A lot of people may look at the front end $1,000 and try to be profitable right off the bat, but in reality you would be able to pay much more to acquire one of those patients because of the lifetime value they hold.

When you look at the $7,000 lifetime value of that particular patient, that allows you to step back and look at things from a long term perspective. You’ll realize that you don’t have to try to acquire a new patient for under $1,000 to be profitable, you can actually pay upwards of $2,000 if not more to acquire one of those patients and remain profitable in the process.

Obviously the lower the better when it comes to patient acquisition cost, but clearly defining those numbers gives you a huge advantage because you’ll have the security in knowing what you can safely invest to acquire a new patient.

Not only is this a great piece of info for yourself, but knowing what you can invest to acquire a new patient gives you a huge competitive advantage as well. That’s because in any marketplace, those who are willing to pay the most to acquire a new customer always win. In order to do that you must first know how much a new patient is worth to your practice.

Once we know the value of a patient, that brings us to the next step in the process of engineering predictable growth… determining what a breakeven and a profitable campaign actually looks like.

 

Step 2 – Determine what a breakeven campaign actually looks like

Doing this step will help you lay the foundation and groundwork for a successful campaign, and give you clarity on the numbers you should be shooting for when generating new patients.

The whole goal here is to take a step back and start looking at this system as a process or machine that can be optimized and improved upon over the long term. Not just something to get a quick return on investment. Real practice growth and predictability take time and persistence. There’s no marketing “hack” that will substitute that.

Once you do this, you will have a top down view on everything going on within the marketing and patient generation process and know exactly what needs to happen to get the results you want.

Most importantly you will be able to see what a breakeven campaign looks like, what a losing campaign looks like, and what a profitable campaign looks like for your practice. From there you’ll know exactly what your return on investment is on the campaign every time.

As mentioned earlier in the article the procedure we’re marketing in this example is $5,000, and let’s say that the practice is offering free consultations for that procedure.

The metrics we’ll be tracking for this campaign, in addition to the metrics above, are as follows…

  • Total Advertising Spend
  • Cost Per Lead
  • # Of Leads Generated
  • # Of Appointments Booked – Book In Rate in %
  • # Of Show Ups – Show Up Rate in %
  • # Of New Patients – Close Rate in %
  • Cost To Acquire A Patient
  • Total New Revenue Generated

There are two ways to figure out all of this information…

1) Look at past data from marketing efforts for your practice.

2) Run a campaign for a month to gather data and then continue to improve from there.

Some of our clients have fallen into that first category and already know their numbers for all of those data points, but many of them fall into the second category where we need to gather data to determine what the numbers need to look like.

There are usually many reasons for the lack of data. The previous marketing company could have not accurately tracked the metrics on their end, or just didn’t perform. Or, on the side of the practice, there could have been inaccurate tracking to know what was working or what wasn’t working.

Whether you have the data or not, either way is fine. If you don’t have the data, start getting on top of your numbers as soon as possible to start building up that information for yourself. Chances are you’ll have to run a campaign for a month or two to start to gather data on the marketing side of things to fully understand the whole picture of your practice growth.

Now let’s say for this example, the practice we’re working with falls into the second category and we need to get a campaign up and running for a month to start gathering data.

All of these numbers are here for the purpose of simple math, but for every practice these numbers could be completely different. Really depends upon the market you’re in as well as the existing processes you have in place at this time to turn a new patient lead into a new patient.

That said, these are the hypothetical numbers we could get back after that first month.

Total Advertising Spend – $2,000
CPL (Cost Per Lead) – $35
# Of Leads Generated – 57
# Of Appointments Booked – 12 – 21% Book In Rate
# Of Show Ups – 5 – 41% Show Up Rate
# Of New Patients – 1 – 20% Close Rate
CPA (Cost Per Acquisition) – $2,000
Patient Value – $5,000

Let’s say after the first month, we gather all of this data and we’re able to determine that this is a breakeven campaign. This would be after factoring in our fees, advertising spend, and profit margins.

Mind you, breaking even the first month is a great sign, so by no means is this a failure.

Some months when you start a campaign you can end up losing money, some end up breaking even, some end up being profitable. The only thing you should be focusing on during the first month, if not the first two months, is gathering data so you can establish these baselines and determine what your next steps are.

This brings us to the next step in the process…

 

Step 3 – Use Conversion Optimization to improve and optimize each step in the process

Now that we know our baseline numbers, we can start to improve upon them.

Usually when we work with our clients, we’re in touch on a weekly basis looking at the numbers. This lets us decide where we need to improve on our end, and what can be implemented on the side of the practice to improve the numbers.

Like I mentioned earlier, there are only two reasons why something won’t work when trying to bring in new patients. Either the marketing needs to be improved, or a process within the practice needs to be improved or optimized to produce better results.

This is where we start to make those improvements.

Let’s say at the end of month 1, we make adjustments on our end and improve the cost per lead going in to month 2.

The numbers at the end of month 2 could then look like…

Total Advertising Spend – $2,000
CPL (Cost Per Lead) – $25
# Of Leads Generated – 80
# Of Appointments Booked – 17 – 21% Book In Rate
# Of Show Ups – 7 – 41% Show Up Rate
# Of New Patients – 1 to 2 new patients – 20% Close Rate
CPA (Cost Per Acquisition) – $1,000 to $2,000
Patient Value – $5,000
New Revenue – $5,000 to $10,000

After that month we could look at those numbers, and the one number that sticks out the most is the book in rate.

Usually when a book in rate is low this has to do with either the lead quality or the follow up process.

Let’s say in this case, we identify that the follow up process needs to be improved. An effective follow up process should see book in rates upwards of 40% to 50% and sometimes can be higher depending upon the procedure.

If we make optimizations and improvements to the follow up process, things could look like this in month three…

Total Advertising Spend – $2,000
CPL (Cost Per Lead) – $25
# Of Leads Generated – 80
# Of Appointments Booked – 32 – 40% Book In Rate
# Of Show Ups – 13 – 41% Show Up Rate
# Of New Patients – 2 to 3 new patients – 20% Close Rate
CPA (Cost Per Acquisition) – $500 to $1,000
Patient Value – $5,000
New Revenue – $10,000 to $15,000

I’m sure you can see what I’m getting at with all of this… small tweaks and improvements over time can lead to exponentially better results.

This is also the power of knowing ALL of your numbers. At this stage right here, you know exactly how much you need to invest and what numbers you need to hit to get the predictable results that you’re after.

Just for fun, let’s go one step further just to see where we could take things…

If you have the capacity to do so, you could offer seminars for certain procedures and drive people to a seminar before a consultation.

Doing this will usually save your time as well as your staff’s time, and usually improve the close rate on the consultations you do because the patient will be more educated. Seminars only apply to some procedures, but for higher ticket procedures they can work pretty well.

Those numbers for month four could look like…

Total Advertising Spend – $2,000
CPL (Cost Per Lead) – $20
# Of Seminar Registrations – 100
# Of Seminar Attendees – 35 – 35% Show Up Rate
# Of Consultations Booked – 14 – 40% Book In Rate
# Of New Patients – 5 new patients – 40% Close Rate
CPA (Cost Per Acquisition) – $400
Patient Value – $5,000
New Revenue – $25,000

From there, it’s just a matter of rinsing and repeating on a monthly basis.

When you know your numbers at that level, all you have to do to know your next steps is take a top down look at the “machine” that you’ve built and then ask. – Which one of those numbers in the process can be improved and optimized on a monthly basis? How can we make the campaign work better as a whole? What are the next steps and things we need to implement to make those improvements?

At that point the conversation changes from…

How are we going to get our next new patients, and where are they going to come from?

To…

How many new patients do we want to generate this month?

It becomes as simple as identifying your goals, looking at your projections, investing the amount of money needed, and doing the actions needed to generate that number of patients.

Effectively letting you turn your practice into an investment vehicle, where you can invest $5,000 and get $25,000 back in return. How many times would you make that investment?

Once you have all of those processes dialed in, then you can start rolling in campaigns for other services. Or you can figure out a way to increase the value of the patients you are bringing in currently by offering other services to them.

At that point, you can add on as much as you can handle given your team’s capacity and where you want to take your practice. Adding another $10K, $25K, or even $50K per month to a practice becomes simple once you look at it through this lens.

If you know your numbers, execute consistently, and stay persistent, then there is no reason why you can’t see those kind of numbers for your practice.

 

If you would like to book a 100% Risk Free Strategy Session, where we’ll dive deep on your practice growth efforts and help you identify what your next steps are to achieve the growth you want, email us at team@growthsparkdigital.com and we can set up a time to chat. Or, you can visit this link and book a time with me personally to chat about your practice growth goals.

 

If you would like to connect with me directly, feel free to shoot me a connection request on LinkedIn here – https://www.linkedin.com/in/chrisdownnj/

 

For more information and content on practice growth and marketing strategies, visit our blog at http://www.growthsparkdigital.com/blog/

 

Thanks for reading!

Chris Down

Chris Down is the Managing Member of Growth Spark Digital and an expert in the world of medical marketing.

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