Where Should You Focus First: Metrics or Marketing?

A few years into my CEO career, I went to a conference hosted by a top consultant in the industry. Even though our practice was steadily growing, I always looked for new perspectives that might help me continue to grow. The consultant asked the group where we should start if we want to grow our practice. I confidently answered that we should focus on marketing. I felt good about our company’s operations and customer service. The next logical step seemed to be acquiring new patients through marketing. The consultant wisely corrected me and responded that we should first focus on our phones. Why spend the money on marketing if we are missing phone calls or doing a terrible job of getting the new patients to schedule appointments? 

This comment really resonated with me because a few months prior, we had just created the first call center in our market. I realized it was unrealistic for our employees to provide great customer service to our patients if they had to answer phones while interacting with the patients in the office. At the time we had three office locations and two doctors, which meant that one location was always closed. To deal with this, we would forward our landlines to the closed office to answer phones for the open locations. I had implemented a great customer service solution that was better for our patients and employees but I had no ability at this time to gather any metrics on our calls because landline services did not provide you any reporting. I still had no clue about the quality of our phone services. To collect data, I converted our traditional landlines to digital lines because digital phones provided us with call reports to measure our phone answer rates. Now I could see how many phone calls we were missing everyday and how many we were missing while we were closed during lunch. The data allowed us to increase our phone answer rate from 73% to 98%. Our improved phone answer rate led to us scheduling 40 more new patients per month that our current marketing was already generating.  

I didn’t stop with the phones. I sought to figure out how I could apply this lesson to as many departments as possible. My process for deciding what to focus on next usually begins with running the numbers to determine the potential return on my investment (ROI) by improving different metrics in our practice. I compared my ROI on improving efficiency versus simply spending more money on additional marketing campaigns. Since this was back in 2011 and our orthodontics practice management software barely provided any analytics, I had to build our own tracking systems to even figure out what our conversion rates were. As with our phones, I discovered that our actual metrics were much lower than I would have guessed. The positive of producing mediocre results is that it is that much easier to improve them. When you take the time to run the numbers, the results are incredible.

Let’s begin by evaluating the ROI on a marketing campaign investment instead of investing to improve efficiency. At the time, we were scheduling around 300 new patients per month and converting 100 per month for treatment for a true conversion rate of 33%. Our marketing campaigns were able to generate a new patient for $95. So a $10,000 marketing investment would generate around 105 new patients and 35 signed contracts for $140,000 in production. On its own, this is a solid return on your investment. But the issue with marketing ROI is that once your ad campaign ends, you have to spend another $10,000 to obtain another 35 new contracts. Plus you have to hope that the marketing campaign continues to generate the same results.

Now compare the impact of investing that $10,000 to improve your new patient conversion rates. After improving our new patient process, we quickly improved our true conversion rate from 33% to 45%. This meant that in our first month, our 300 new patients resulted in 135 signed contacts instead of our typical 100. The same $10,000 investment resulted in the same $140,000 increase in production. The only difference is that the next month, we also grew production by another $140,000 without needing an additional $10,000 investment. After implementing the changes to improve our new patient efficiency at the end of 2012, our investment led to an increase in production of $1.4M that year and our efficiency continued into each following year thereafter.

That is the power of compounding interest from investing in improving your systems instead of just increasing your marketing spend. Now if we invest $10,000 in marketing, the same campaign would still produce 105 new patients but now we would convert 47 of those patients instead of 35. Delaying the investment in marketing until after we improved our efficiencies would now produce an ROI of $188,000 instead of $140,000.  Marketing will always play a major role in the success of your practice, but it should be viewed as one of many solutions for success instead of the primary source.

Eventually we were able to increase our true conversion rate from 33% to 60%.