A healthy small business will search for ways to achieve and maintain a competitive edge. Previously, we have discussed ways in which to improve the organization internally, such as quality management and reengineering the patient experience. Another way to generate an advantage is to consider the practice’s outward orientation and effective marketing analysis.
A marketing strategy should be accountable, and we will consider measures by which it should be held. Marketing is the business of promoting services to potential clients and thereby making an impact on net inward cash flow. This suggests that marketing performance can and should be evaluated financially, ideally with a single number.
In our office, questionnaires are used to track the referral patterns and direct-to-consumer avenues for business growth. How much is a single referral worth? Can we quantify a lead and convert a patient into a commodity? And, if so, is there a radioisotope for identifying the utility of one’s marketing strategy?
Let’s consider three possible candidates: return on investment (ROI), discounted cash flow (DCF), and customer lifetime value (CLV).
There are potentially misleading roles of anecdotal marketing metrics as tools for performance assessment. For example, a colleague was recently quoted as saying that ZocDoc merely pays for itself in his market. Applying the principle of DCF, there is direct cash in-cash out analysis, and, by the net present values, the marketing strategy may simply break even. Let it be said that this is not an advertisement for the Internet-based MD portal. At the same time, customer (patient) equity and lifetime value can extend beyond the individual encounter, and thus these online customers are more inline with word-of-mouth referrals when it comes to retention. Therefore, a more appropriate means for assessing performance is net profit plus any enhancement of the marketing asset. Taken together, the customer referral value plus the enhanced value of the marketing asset, a potential for future earnings is built. The average value of a referred customer is at least 16% higher than that of a non-referred customer with similar time acquisition,1 and once that customer steps into your office, there is a correction factor of 0.18, or an 18% lower churn rate. Finally, acquisition through referrals tends to result in information transfer and is more profitable.
Often, medical practices are founded on traditional industry principles and experience, which may not be translatable to a small business. The result is inadequate marketing, and a practice can stagnate. A private office, under physician control, tends to suffer from a lack of knowledge and understanding of marketing trends. What may work one year may not apply to the next. But a commitment to a few basic principles can serve as a means for calibration. So, remember that one of the four As of success is accessibility (the other three being ability, affability, and affordability). Elevating your community’s awareness of the practice can directly increase accessibility. Put yourself on everyone’s radar. The marketplace is predictably unpredictable, and if one is allowed a bird’s eye view, patterns have been found. Johan Bollen et al,2 of the Indiana University School of Informatics and Computing, discovered certain dimensions of public mood states that proved to increase the accuracy of predicting changes in the Dow Jones Industrial Average. In short, tapping into a communal pulse like Twitter or Groupon can allow a practice to ride the wave of large-scale collective decision-making to time a marketing push at a crest, and reserve funds and rely on low-cost means during the trough, creating veritable marketing quorum sensing. In essence, the desire as a practice is to create a standard response, a reflex if you will, and once a threshold is reached, ie, “ I need to get rid of my glasses,” then the reflex should be, “I must call Dr. Solomon.”
The need exists to increase a small practice’s awareness of the importance of a planned approach to marketing and how the strategy can be improved. To do this, consider the characteristics of your medical practice and formulate a detailed description of your marketing goal. One must be willing to regressively analyze the outcomes on a regular basis, much like optimizing a particular A-constant or nomogram.
In our practice, we have found appropriate marketing technology includes simple self-help information transfer via the web, appreciation-level marketing education (print ads), and in-depth marketing specific to our practice and our offerings with local TV spots. We track patients through referral programs and those acquired through other methods (direct mailing and advertising) and extend the marketing value of customers acquired through word of mouth. From this, our model has been to develop a marketing plan with intended capabilities and specific performance metrics. Mine the data, and recognize the limitations of your metrics. Patients are not fossils, for goodness sake.
1. Schmitt P, Skiera B, Van den Bulte C. Referral programs and customer value. J Marketing. 2011;75(1):46-59.
2. Bollen J, Mao H, Zeng XJ. Twitter mood predicts the stock market. J Comput Sci. 2011;2(1):1-8.