The Dental Marketing ‘Return on Investment’ (ROI) Formula All Doctors Should Know

The Dental Marketing ‘Return on Investment’ (ROI) Formula All Doctors Should Know

The Dental Marketing ‘Return on Investment’ (ROI) Formula All Doctors Should Know
BY ADAM ZILKO

Want to find out if your marketing agency is working for you instead of holding you back? It’s time to figure your dental marketing ROI. If you’ve just hired the company in question, it may take time for enough ROI data to generate. You’ll need this data to accurately calculate your ‘return on investment’ based on the figures required for the ROI formula. But if it’s been at least three months, you should have all the information you need. Here’s how to discover, once and for all, if your dental marketing company is worth the money you’re paying and what to do about it if not.

I’m going to take you through a typical ROI example. The ROI formula for calculating your dental marketing return on investment is (Profit-Cost)/Cost. To find these figures, you need to find out how much you’re paying for advertising, how much revenue that advertising is bringing in and how much your average customer spends in your office per year. Then we’ll plug those numbers into the ROI calculator to find out, once and for all, whether or not you made the right decision in hiring the marketing company you’re working with.

 

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How Much Are You Paying for Digital Advertising?

In order to calculate the effectiveness of your digital marketing campaign, you’ll need to calculate how much you’re paying for the services in question.

For instance, let’s assume that your marketing and advertising budget looks something like this each month.

$2000 for a Yellow Pages ad
$2500 for a Billboard overlooking Main Street
$500 for branded promotional items like pens, Frisbees and key chains
$100 for Groupon
And $1500 for Digital marketing
If you want to gauge the effectiveness of your digital marketing firm, you would take the $1500 you’re paying the company each month and multiply it by 12 to figure your yearly expenditure, which comes out to $18,000. Keep that number in mind. We’re going to come back to it in a moment to plug it into the ROI equation.

How Much is the Digital Marketing Company Earning You?
Now it’s important to figure out how much revenue your digital marketing company is bringing in to your office each year. To determine this number, take the average amount of new patients the digital marketing company attracts to your dental practice monthly. We’ll say five. So that’s five patients every month that were earned as a direct result of the digital marketing company working on your behalf.

Now multiply that number by 12 to figure how many new patients you’re likely to earn in the span of a year from the digital marketing company’s efforts. For the sake of our ROI calculation example, that number would be 60.

 

How Much Does the Average Patient Spend?
Let’s assume that your average patient comes in twice yearly for a checkup and cleaning. And now let’s assume that each patient also comes in for a specialty treatment, we’ll say a Root Canal.

If the cost of your average cleaning/checkup is $150 and a Root Canal costs $1000, then your average patient spends 2*$150+$1000 = $1300 per year at your dental practice.

Now take the amount of new patients your digital marketing company is earning you each year (60) and multiply it by the average amount each patient spends ($1300). That would mean that your digital marketing company is earning you a whopping $78,000 annually! Wow, what a great marketing company you hired.

Using that number, we can now figure your dental practice’s Profit for use in the ROI formula.

Figuring Your Dental Practice ‘Profit’
Your Profit is figured by taking the yearly take-in from all of your Internet-earned patients ($78,000), then subtracting the amount you’re paying your digital marketing company ($18,000).

That’s $70,000 in pure profit the digital marketing company is earning you in the span of a single year. And what an excellent year that would be.

Now we have all the information we need to figure your dental marketing ROI.

The ROI Formula for Figuring Your Dental Marketing Return on Investment
Here’ that simple formula for figuring your marketing ROI once again: (Profit – Cost)/Cost. We’ve already figured your Profit ($70,000), so now all we have to do is work the formula. The Cost in this instance refers to your digital marketing expenditure, which is the $18,000 we came up with earlier.

Plugging the numbers into the ROI calculator, we get ($70,000-$18,000)/ $18,000 = 2.89. To get the percentage, multiply by 100, which would bring your digital marketing Return on Investment to 289%. And a number like that is exactly what you’re looking for.

Now that you know how to figure your dental marketing ROI, let’s see why it matters.

When Does ROI Become Important?
The marketing company you hired should have provided you with a series of goals before they started, and especially before you signed a dental marketing contract. If the company doesn’t follow through on the promises they made, then you should definitely fire the company to search for a new one.

Knowing how to figure your dental marketing ROI is extremely important. Instead of measuring the effectiveness of your digital marketing company by rankings or various other metrics, find out if the company is actually making you money. If it’s not, it might be time to make a switch.

If you’re not happy with your current return on investment after using this simple ROI equation, hire a company that actually can come through on all its promises, just like this one right here.

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