“If you can measure it, you can improve it”.
I learned early on as an entrepreneur, to do well in marketing you need to know a little math, and there are specific indicators to track what’s working and what’s not.
If you have 100 people land on your website, do you know what percentage actually buys your product? , I want to share seven success measures to determine the health of your business using the example of my cash-based medical practice.
And as an added bonus, I also share four things I look at to determine the effectiveness of a new online ad campaign. Whether you have an online business, a local practice, or just getting started, these are the measures you’ll want to know to save you time and money.
LINK MENTIONED:
http://www.callrail.com – software to track your phone call leads
TRANSCRIPT
If you want to get more sales, you want to get more customers, you have to measure it. So I use certain metrics in my business to determine if I’m losing money or if I’m making money. The metrics that I want to share with you guys I think can be used to apply to almost any type of business out there. I use it for my medical practice, for my online businesses.
Hey, guys, this is Dr. Mike Woo-Ming. Welcome to another edition of BootstrapMD, the podcast for physician and healthcare entrepreneurs. If this is your first time, welcome, and if you’ve listened to me before, welcome back. Today, I’m going to be talking about metrics. Sounds like a pretty boring topic, but it’s something every entrepreneur needs to know. There is a quote that I like to use. The quote says, “If you can’t measure it, you can’t improve on it.” For me, as someone who is introverted and likes to see numbers, this works perfectly for me. I learned early on that to do well in marketing you just need to know a little bit about math.
Take your website. You’ve got a website. You’re selling some type of widget. When you have your website, you want to know analytics. For example, if 100 people come to my website, what percentage actually buys my product? Now, the average is about 1%, 0.5%. Are there things that I can do to improve that percentage? There may be different variables to test on my website. Maybe I’ll have a blue background versus a red background. Is there a difference between people who buy the blue website versus the red website? Maybe I introduce a video versus a still picture. Maybe I add testimonial A versus testimonial B. These are all things that you can measure. An example that we would use is from, let’s say, my online business. Maybe I’ll buy a Google ad. The ad allows you to show a blue background website versus a red background website. Then, you can measure it to see if we send 100 people this versus 100 people on the other site, is there going to be a difference in percentages?
Another adage that we use in marketing is, “If it’s not working, test, test, test,” with the idea that you’re split testing it, and you’re using just basic mathematics to determine which site is better. Once you’ve got a website that is doing well, you then have your control. Then, maybe you’ll add another variable. That way, you can incrementally increase the success of your website, increase more sales.
What I’m going to cover today are these success metrics that I use to determine where I am in my business, just as you would a patient. You would be checking the vital signs to determine if this is someone who’s going to be ill or is this someone who is going to be healthy. You’re going to be looking at the labs. Well, you do the same thing in a small business. I want to share these success metrics that I use. For an example, I’m going to be using my cash-based medical practice. Some of you who are new, I own or co-own a number of different practices that are cash based. They don’t take any insurances. In our practice, we do aesthetics. We do medical weight loss.
Again, we don’t have insurance companies to refer us patients, so I have to have a marketing budget each month. I need to know the dollars that I used, I set aside for marketing, and what isn’t marketing, getting it into the right place. It also determines what I need to improve on, just a general assessment, how we’re doing. So these success metrics indicators just give you a snapshot of your business so you can see where you stand. It’s something that, if I can’t get to it every month, at least every quarter. That way, I know where my marketing budget goes, if I need to promote something, or if I need to take something out of my practice. These are all things that an entrepreneur needs to be aware. Now, again, I’m using my medical practice as an example, but if you have an online business, you can use these same success indicators.
So without further ado, here are the seven success metrics that every physician entrepreneur should know. Number one, customer acquisition cost, or CAC. Plainly speaking, how much money is it going to cost you to acquire a customer? let’s say you spend $1000 on a Facebook ad campaign and you get one customer. Customer acquisition cost is $1000. So I and a business partner, we agreed to put this big banner, pay for this banner, in a shopping mall that was near our weight loss clinic. We got a good deal, but when it came time to re-up it, we didn’t really know if it was making money or not. This one cost thousands of dollars to apply, very similar to I’ve seen practices advertise on billboards. Sure, that Jaime may get thousands of cars every day, but is it targeted traffic, and how do you know that it’s actually worth it? You don’t. In that line of thinking, sure, you might want to get the most traffic as possible. Why don’t you buy a Super Bowl commercial? You have to have something that you can measure.
Now, I do understand that there are some businesses, it’s all about branding. Coca Cola, they have the budgets to have this big media advertising, but not if you’re, in my case, a small local medical clinic. I’ve got a very limited marketing budget. I’m not all about branding, but I want to be sure that your marketing dollar goes farther. Now, one simple way of determining what’s the best strategy for your customer acquisition costs, and most people do this, most businesses do this, is the simple “How did you hear from us?”
Let’s say you decided to do a health talk at a local community group, and maybe it costs you $50 a year to be a member. You find out that you got 10 new patients from that talk that you did. Maybe you should do more of that versus paying $3,000 for a billboard that maybe gets you two patients. That’s just one way of having some type of understanding of what it is. I’m so surprised that more people don’t realize, when they say to me, “Hey, I think it’s working, it sounds like it is,” but they have no real grasp of it.
One thing that I do, if you’re going to do something like a print ad or a billboard, is to have certain tracking phone numbers that forwards to your main clinic number. When I’m doing some online marketing for my medical practice, I’ll have a different tracking number on my Facebook ad versus, let’s say, my Google ads and another number for a print ad that we’re doing, or a direct mail ad. That way I know which one is bringing in more phone calls. That’s a way that I can track. In that way, I know I can put more money in this one because it’s working, and this one is not. I use a system called CallRail. Callrail.com is what I use. I know if you use Google system, they do have their own Google tracking that’s free, that comes if you use the Google ads platform. But at very least, it’s one way that I can track more effectively what’s working and what’s not.
Next is customer lifetime value or CLV. Simply put, it’s a metrics that indicates what is the total amount of revenue that a business can reasonably expect from just one single customer. If you’re doing this, you are ahead of 95 to 99% of all business owners, yours truly. I have a general idea about my CLV, but it’s not something that I compute regularly. Simple example, I went to Starbucks this morning, got my vente for $6.50, but my customer lifetime value isn’t $6.50 cents to Starbucks because I go there a few times a week and I’ve been doing this since it’s opened. My customer lifetime value, over all the coffees that I’ve drunk, is a lot higher.
Simply put, in your business, are they just buying like one $27 ebook and you’re done, or are you offering additional services? Are you offering services that are more expensive, more lucrative for you as the business owner? Are you offering a webinar experience that may be a few hundred dollars more or coaching? That way, the average customer lifetime value increases. In my example, we have, let’s say, a special on Botox, but they don’t just come in for Botox. They come in every three months. We’ll add complimentary services to a skincare line, supplements, dermal fillers that all increase the customer lifetime value, just a measure of retaining as well as a measure of satisfaction. Are they just here one and done, or are they here for life? I’ve had patients here ever since I’ve been opening.
That’s something that you need to track, and again, most business owners don’t do that. The one measure, just as an aside, there’s a ratio called the CLV to CAC ratio, so customer lifetime value over their customer acquisition cost. Some businesses use that with the sense that you want to be able to increase your CLV and then decrease your CAC. You want to increase the customer lifetime value and then decrease your customer acquisition costs, so the higher the number is, obviously, the better. So that’s one way that you can combine those two measures.
Number three is return on investment. We cover that in the first part. I gave you an example of the different types of online ads. Am I getting a return on investment on my Facebook ad versus my print ad? What’s actually working? I might turn off my print ad when I find that, my return on investment, it’s just not where I need to be. Then, I could put my marketing dollar in a better place that actually is converting.
But again, it always surprised me, in using the understanding of return on investment, how many businesses, at least in my space, in the medical spa space, where they’ll just throw money at it. If they’re business is hemorrhaging, they’ll say, “Well, I’ll just buy this laser because it’s a high priced item. I can get $6,000,” but not measuring what is the customer lifetime value, not measuring what the customer acquisition costs. Then, that laser becomes a coat rack after a few years, until the laser rep remind you of the new best upgrade that’s going to be coming out that you need to have. When you’re looking at return on an investment, don’t just trust what the salespeople are going to say. You want to trust and actually, if you’re going to introduce some type of new procedure or treatment, ask around, “What is return on investment on it?” You want to hear from the business owners. They’ll tell you, not the salespeople because they have an ulterior motive.
So if you’re new to marketing, the first two or three might be a little bit difficult to explain conceptually, but I think the next couple are pretty easy to understand. Number four is how many customers do I have each month, or with Mike it’s, how many patients do I have each month? I also look at breakdown. Are they new? Are they recurring? I’ll also look at appointments. What are the type of procedures that are occurring? How does it compare to 12 months ago? How does it compare it to from two years, from that data point? What do I need to do? What’s changed? I also look at things like seasonal components. That’s why, for example, around December, in weight loss, it’s really slow because people are going to holidays. They want to eat a lot with family and friends, so I might be promoting something different. I might be promoting some skin lines during the winter season to make up for the decreased amount of visits.
Number five is just looking at monthly revenue. What’s the revenue that’s coming in? Again, taking to all the things that I just talked about. One interesting component, too, is do you have recurring revenue? See the thing with a cash-based clinic, it’s based upon how many people are actually going to show up? That determines what the amount of dollars you can be bringing in that day. With recurring revenue, you don’t have to worry about those ups and downs. That’s why the gyms love memberships. They know that, when they joined on the first or 15th or whatever the date is and it automatically re-bills, they’re going to be getting that set amount of income whether the customers show up or not. We don’t have a membership in our clinic, but it’s something that we’re strongly looking at because it does save you, that you know that you’re going to get this recurring revenue that’s coming in, that can help pay the bills when things might be dire.
Number six, website traffic. Obviously not something I look at every single day, but owning a marketing company that did local search engine optimization, it’s important. You want to make sure that you are being ranked for the keywords that will bring in more customers and will bring in more patients. Where do you stand versus your competitors? You want to make sure that you have your Google analytics, you’re bringing in more traffic to your website, the targeted traffic that’s coming in, and if it’s not, what you need to do to improve that.
Number seven, reviews. This is especially important for local businesses. We’re on Yelp, so we want to make sure that we’ve got an excellent reputation on Yelp. We’ll look at the number of reviews. We’ll look at the average amount of stars that we get. These all play a role to it, like it or not. Study by Bright Local, just giving some stats, 82% of consumers will first read up on what other people have to say about a local business. I know I do that myself. Other thing, too, is, as a local business, you always want to be bringing in more reviews. Another stat I’ll throw at you is that 84% believe that reviews that are older than three months are no longer relevant, so you always want to give an opportunity for your customers to say nice things about you for reviews.
Now, as someone who owns an online business, Yelp may not be very important to you, but the same principles apply. What’s coming up on your name or your product on the search engine? Is it positive or negative? Just like you want to respond to any bad reviews that you would get in a business, you want to respond to some bad reviews on an online testimonial that you may or may not see. Again, reviews is very important in this transparent society that we live in today.
So those are my seven success measure indicators. As a bonus, I want to give you some indicators that I use when I am doing some online marketing. These are things that I look at when I am doing online advertising. Now, you may not be someone who wants to do your own online marketing. You may want to outsource it to a company. These are some things that you need to be asking these medical marketing companies or any kind of marketing companies. If they’re putting out these online ads, these are the indicators that they should be telling you because these are the indicators that can determine the effectiveness of the online ads.
We’re going to again use the example of my clinic. We have online advertising vendors going, where we’re trying to attract cold craft, people who have never heard of us before. The way that we do it, in this scenario, is we use a coupon. We have an ad that goes out where they get a coupon for a Botox at a discounted price. They get a special. Now, we were putting out an around, and let’s say we’re using Google or Facebook. The ad goes in, and if they click on the ad, they’re going to be taken to a coupon where they’re going to get this discount, this discount on Botox.
On the ads, we want to know what is the click through rate. So of people who see my ad, how many actually click through to actually see the coupon? That’s your click through rate. So of those, taking 100 clicks on the initial ad, how many will actually go and click on the advertisement and see that coupon? We want to know what that is. The second thing is we want to look at their opt-in rate. Now, this may not be used for every single ad. You might have, let’s say, a click through that just goes to your website. There’s nothing to opt in. We like to have an indicator.
So for people who decide to take the coupon, we want them to jump hoops a little bit and opt to answer. They have to give us their email address or their phone number to actually get the coupon. That allows us to track and also determines that they’re more serious versus someone who just could be a competitor or just clicking on the advertising. But if you’re just sending them straight to your website, you won’t need to have it. So the number two indicator is the opt-in rate. So of those 100 people, let’s say 20 people, or 20%, actually clicked on and got exposed to the coupon. Now, if they actually get the coupon, of those 20 people, how many actually gave us their email address or their phone number? It could be five out of 20, so that’s our opt-in rate.
Now, taking that further, number three is of those people who’ve got the coupon, how many actually made a phone call? We want to know, from the people who initially clicked on the ad, how many people actually took us up on our offer, got the coupon and then called us to make an appointment. How do we figure that out? You probably guessed it. I have a special tracking phone number, so I can determine who are the people who saw the ad, got the coupon, and I know how many calls that I’m getting. That way, I know whether a campaign is working, or if it’s not.
Again, these are indicators that you need to know, you need to be able to ask your marketing company, whoever you’re going to be using. Now, I told you, there were four. Three are related to the actual online marketing of the ad. The fourth one is related to how well you are at hiring your staff. The fourth one is the conversion rate. How many of those people who take the phone calls, what percentage actually make an appointment? If you find out that one person is getting 95% and you find out maybe another person is getting 25 or 50%, you may need to talk to that person because they’re not doing a good job in actually converting that phone call and inquiry into an appointment.
What I like about it, with these indicators, you can actually break down to see if there is an issue with your online ad campaign. You can actually see where the breakdown is. Let’s say you have a low click through rate. You’ve got your ad, but not a lot of people are clicking on that ad. That means that your ad needs to be improved. There’s something that is not resonating. Let’s say you got a pretty good click through rate. People are clicking through, but they’re not giving you their email address or their phone number. Well, there’s something on that website that is stopping them. Maybe it looks too spammy. Maybe they’re not comfortable giving you their email address, or you’re asking them for their cell phone number. So what’s on the website? Are you having testimonials that enlist trust, that, “Okay, this looks legitimate?” You need to be looking at that.
Then, let’s say people are getting the coupon, but they are not converting those into appointments. We had that issue, and we needed some reminders that they had this coupon. That’s what we found out. That’s where we found our breakdown. Once we improved that, then we started getting incredible amount of appointments. Then, if they’re calling in and it’s not converting into appointments, you’re getting the phone calls, it’s not converting to appointments, what is your front desk person saying? Maybe they’re saying something that’s turning people off. Maybe you’re so busy. You can’t get appointments, and you have to be seen for a few weeks or months. These are all areas that you can look at and investigate and analyze.
So those are the measures that we’re using when we’re doing our online ad campaigns. You notice I didn’t say anything about how many Facebook comments I’m getting or Facebook likes or views. Those all may be important, but in determining your campaign actually being effective, the four ones I gave you are much more important. I have a marketing friend who says, “I can’t deposit likes into a bank.” So if you just stick with the four that I gave you, it’s going to be well worth your time and money.
As an aside, I have a marketing team that we work with that will help you with those four indicators. At least at the time of this recording, they are open to take a couple more clients. So if that’s something that you may be interested, they’re specifically working with med spas and cash-based medical clinics. The guy who owns it I’ve known for over 10, 15 years. If that’s something that you’re interested in, I’m not going to put out their information publicly, but if you are interested in that marketing company, just go to bootstrapmd.com. At the top right is a contact us. Just put in [inaudible 00:24:56] marketing team and maybe a little bit about your business. Again, they’re just working primarily with med spas, cash-based medical practices, and be happy to share with you that information.
I hope you found that helpful. These success measures can really make or break a business and not a lot of entrepreneurs are actively doing it. It’s all about teaching you guys to be more proactive with your business. Find out what’s actually going on with your business before it’s too late. With these indicators, these are the things that are going to help your business, keep moving you forward.
You’ve just listened to the BootstrapMD podcast. For more valuable resources, as well as past recordings of our show, check out our website at bootstrapmd.com. Now let’s get to work.
