Practice management software is an important tool for your daily operations, but your complete reliance on it probably costs you hundreds of thousands of dollars.
It’s not that your software isn’t doing its job. It is. The thing is, the jobs that software does aren’t enough for your practice to truly thrive.
What would you do if you calculated that your practice was losing $624,000 every year?
What Practice Management Software Does For You
Don’t get rid of your practice management software just yet. For daily tasks like making appointments, dealing with insurance companies, organizing your staff, and managing patient health records, the software you use makes a big difference.
All of those things are important. They keep your practice running, and the more efficiently your practice operates, the healthier your bottom line.
They’re just not the only important things you need to do.
Managing the daily operations of your practice is vital, but just like you need to breathe and you need to eat, your practice needs good management and an effective marketing strategy.
As efficacious as your practice management software might be at operations, its capabilities don’t extend beyond those basic tasks.
The biggest failure of your management system is that it gives you the illusion that all of your business needs are covered by a single tool.
What Practice Management Software Can’t-Do
Your system can tell you for what time someone made an appointment, but it can’t tell you how they found you, how long it took them to decide to schedule a consultation, or how much it cost you in marketing dollars to get that appointment booked.
You’re already spending money on marketing, and you know that something is working because you’re booking more appointments.
However, do you know which marketing channel is producing the best leads?
Do you know which one of your marketing strategies results in the most completed procedures at the lowest cost per lead?
Managing your practice is one thing. Managing your sales process, your marketing strategy, and your employee efficiency is something else entirely. Without proper tracking and insights, you’re navigating in the dark, and you’re probably wasting thousands of dollars in ineffective marketing every month.
Seeing The Big Picture
You don’t actually know how well your practice is performing until you start tracking your key metrics.
Here are some of the figures you should know:
- Where your leads are coming from
- How well each source of leads is performing
- How much it costs to turn a lead into a completed surgery
- For each campaign and source of leads, how much you make for every dollar spent
Some practices mistakenly believe that these measurements are nice to know, but not necessary. Here’s an example of how much that kind of thinking can cost you:
Your practice spends $5,000 per month on marketing across all channels; $3,000 is spent on radio ads, $1,500 on social media marketing, and $500 on print advertising in local newspapers.
Each month, you book an average of 45 surgeries, and 20 of them are actually completed. You make $2,000 in profit per completed surgery, and when you account for your $5,000 in marketing spending, you’re bringing in $35,000 per month in profits. You’re pretty happy with that number.
Now, let’s look at what happens when you start tracking marketing performance.
Where are your leads coming from?
- Your $3,000 on radio ads produce the most leads. Last month, 80 people called to ask about a procedure after hearing your radio ad.
- Social media, on which you spent $1,500, brought you 60 leads.
- That $500 print ad generated 20 leads.
- Referrals accounted for another 5 leads, and you didn’t spend anything to get those.
Based on these numbers, it looks like radio is your best marketing channel, right?
Let’s look a little closer. You’re in the business of performing surgeries, not in the lead generation business, so what really matters is how many surgeries you perform.
Out of your 80 radio leads, 50 of those people booked consultations, and 10 actually showed up for their appointments. You were able to schedule 4 surgeries, 3 canceled, and you completed 1 of those 4.
Your 60 social media leads resulted in 40 scheduled consultations. 30 showed up to their first appointment, and 20 scheduled surgery. You actually completed 15 of those surgeries.
The 20 print ad leads led to 10 consultations, for which 6 people showed up. Only 1 person booked a surgery, and it was completed.
Of the 5 people who were referred to your office by friends, all 5 booked consultations. From those 5, 4 people scheduled surgery, and 3 surgeries were performed.
So here’s the bottom line:
- The $3,000 in radio ads resulted in 1 surgery. Since you make $2,000 per surgery, you lost $1,000.
- The $1,500 social media spend resulted in 15 surgeries, and you made $28,500.
- The $500 print ad resulted in 1 surgery, so your profit there is $1,500.
- Your 3 referral surgeries brought in another $6,000 on top of your other leads.
Now, you know exactly where that $35,000 is coming from. You also know that your biggest advertising expense, radio ads, isn’t giving you a return on your investment at all – you’re losing $1,000 per month.
It’s not just a $1,000 loss, though.
The $3,000 that you’re spending on radio ads could be spent elsewhere. If you instead increase your budget for social media and print advertising, your numbers might look something like this:
$3,500 for social media results in 40 surgeries, which makes you $76,500. Notice that a higher budget here results in a lower cost per lead acquisition – instead of costing you $100 per conversion ($1,500 in advertising for 15 conversions) your increased ad spend lowers that to $87.50 per conversion.
$1,500 in print ads results in 3 procedures and a profit of $4,500. You still do 3 surgeries from referrals during your first month, bringing in another $6,000.
Now, because you took an honest look at the big picture, you went from making $35,000 per month to $87,000 per month without increasing your marketing budget at all. That means that relying only on your practice management software to keep track of your business was costing you $52,000 every month.
In a year, that adds up to $624,000 for a mid-sized practice with a moderate marketing budget.
You could purchase a house in a lakefront community, a Porsche, and a boat for that kind of money.
It gets even better:
When you were completing 20 procedures per month, that generated an average of 5 referrals.
With your new and informed marketing strategy, you more than doubled the number of surgeries you performed each month.
On top of that, you’re attracting better quality clients, so a higher percentage of those people refer more qualified candidates to your practice.
It takes a few months for your referrals to scale up with your growth, but after 3 months, you’re getting 20 referrals, booking 17 appointments, and completing 12 procedures for a grand total of $24,000 in extra monthly profits.
Adding that to your other increases, your average annual income just went up $912,000 without increasing your ad spending at all.
What If Your Marketing Is Already Working Well?
The example above shows how much of a difference can be made by optimizing even a modest $5,000 monthly ad spend. The shift was relatively minor – you analyzed results and reallocated $3,000 – and the difference was dramatic.
Every practice is a little different, and you might not actually be losing any money on any of your marketing channels.
If that’s the case, congratulations!
That still doesn’t mean your marketing is optimized to produce the best results, though. You might find that you’re spending too little on your best channels and too much on your most costly, or you may even discover that certain members of your team have productivity issues while others tend to convert a higher percentage of leads.
Most likely, you also won’t see dramatic changes after one shift.
It takes time and continuous monitoring to get your marketing and management balance correct. Increasing your budget for your best performing channel might not produce better results, so make changes gradually and watch carefully.
The information you need to intelligently monitor and optimize your marketing strategy doesn’t come from your practice management software, though your tracking software can integrate with your practice management.
When you have the right tools to get new patients through the door and to keep your practice running smoothly, you’re in a position to win.
Just remember that you need both.
Originally posted 2017-10-26 16:18:40.