Medical Office Marketing ROI Measurment
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The document discusses the importance of measuring marketing effectiveness and return on investment (ROI) for medical and dental practices, highlighting that a significant portion of marketing budgets is often wasted. It outlines the need for accountability in marketing expenditures, poses key questions about marketing effectiveness, and emphasizes the use of econometric models to optimize marketing spend for better growth. The document also presents case studies of various companies that successfully improved their sales through refined marketing strategies and ROI modeling.
Medical Office Marketing ROI Measurment
- 1. Measuring and Growing the ROI of Marketing for Medical & Dental Practices 1
- 2. Agenda for today 1. The critical questions to address 2. Why are we here and what is the problem? 3. Brief introduction to marketing effectiveness measurement. 4. How to optimize marketing spend and maximize growth 5. Questions and discussion 2
- 3. Current Situation • Marketing Waste: Estimates consistently show that 40-60% of marketing spend is wasted • Marketing Expense: Is often the largest line- item expense on the balance sheet • CMOs and CFOs: There has traditionally been tension on matters of marketing accoutability 3
- 4. Some questions prompting need for measuring marketing effectiveness and ROI ✓ What are the most effective marketing channels – TV, Radio, Outdoor, FSI’s, Print or Digital? ✓ What elements of my marketing investment are working and not working? Where is the waste? ✓ What could we expect if we increased our marketing budget by $2 million and how should we spend it? ✓ What has been the ROI of online/digital media versus traditional mass media? ✓ What is the impact on sales if we expand our offices across the country by 10%? ✓ What is the best way to allocate my marketing budget? ✓ What are the primary growth drivers for our sales? 4
- 5. Why are we here? • Marketing budgets tend to be one of the largest line-item expenses on the balance sheet. Understanding what you are getting for that is critical! • Traditionally, there has tended to be no accountability for this expense. What do we get from this investment? Is there payback? • According to a study by Proxima Consulting in 2015, “up to 60% of global marketing budgets are being wasted every single year!”. Finding this wasted spend is essential to the health of your enterprise! • According to a recent study by IBM with about 1700 global marketing leaders, 63% of them believe that marketing ROI will be the most important and critical measure of business and marketing success in the next 3-5 years. Are you invested in your future success? • The problem, however, is that only 16% of these marketers presently use marketing ROI as a guide to their marketing investment decisions. Where do you stand on this? 5
- 6. 6 1. Spend on a new marketing initiative 3. Sales increase by X dollars and Profit Increases by Y% Execute in Market 2. You take it to the market In the ideal world But things are not that simple
- 7. The problem: Too many channels, fragmentation and confusion Sales Competition Weather Service Quality 7
- 8. …simply eye-balling historic media and sales data does not provide answers 8
- 9. 30 32 34 36 38 40 42 44 46 1000 1100 1200 1300 1400 1500 1600 Price Sales Sales and Retail Price 9 Correlations and Data Relationships Correlation = -0.71 Econometrics is based on tested statistical relationships between marketing drivers and sales. Statistical correlation, as shown below, is the basic foundation.
- 10. …econometrics (marketing-mix modeling) can help A statistical technique used to identify and quantify the incremental contribution made by marketing investments on sales & revenue Sales Macro- Economic Factors Penetration Of Office Locations Price Owned & Earned Media Promos/ Direct Marketing Patient Satisfasction Metrics Paid Digital Media (PPC, Display) Mass Media: TV, Radio, Print, OOH 10 Involves collecting this data over time
- 11. 11 The long & winding road of marketing & the steps to Take
- 12. Key Deliverables from Econometrics Projects 12
- 13. -200 0 200 400 600 800 1000 1200 1400 1600 1800 Oct-2010 Nov-2010 Dec-2010 Jan-2011 Feb-2011 Mar-2011 Apr-2011 May-2011 Jun-2011 Jul-2011 Aug-2011 Sep-2011 Oct-2011 Nov-2011 Dec-2011 Jan-2012 Feb-2012 Mar-2012 Apr-2012 May-2012 Jun-2012 Jul-2012 Aug-2012 Sep-2012 Oct-2012 Nov-2012 Dec-2012 Jan-2013 Feb-2013 Mar-2013 Apr-2013 May-2013 Jun-2013 Jul-2013 Aug-2013 Sep-2013 UnitsSold Variance Modelled Sales Actual Sales Forecast R2 = 97.6% - This indicates a very high level of accuracy to the actual sales data. Holdout R2 = 89.9% - This indicates fit for the forecast (holdout) test. MAPE = 4.2% The average % variance between actual sales and fitted/predicted. Step 1: Develop a highly predictive sales model Develop a predictive model by mapping historic media activity (data) against sales. We deliberately holdout 10-15% of the dataset to test for predictive accuracy. The premise and validity of our models depends on validating predictive capabilities 13
- 14. 71.1 3.2 2.4 9.9 3.3 6.5 2.1 1.5 11.2 40.1 Total Incremental Sales Contributions for Company XYZ Baseline Sales Paid.Digital-Search Paid.Digital-Display Earned-Social.Brand-Experience Owned-Website/SEO Paid SpotTV Paid Radio Paid Magazines Long-Term.Marketing Effect 14 Step 2: Overall media contribution to sales
- 15. Step 3: Marketing Variance: Drivers of Growth -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Office Market Penetration Pricing Baseline Sales Owned-Website/SEO Paid.Digital-Search Paid.Digital-Display Paid Magazines Paid SpotTV Paid Radio Long-Term.Marketing Effect GDP Effect (Macro Economy) -2.0% -1.9% -1.0% -0.4% 0.6% 1.3% 1.7% 1.9% 2.1% 2.5% 2.9% Annual Variance Contribution Below shows how company’s total 7.7% year-over-year growth is allocated across the marketing-mix and how each element affected this growth and business performance 15
- 16. $1.16 $1.24 $1.34 $1.73 $3.17 $- $1.00 $2.00 $3.00 $4.00 Paid Radio Paid Magazines Paid SpotTV Paid.Digital-Display Paid.Digital-Search ROI per Dollar Spend for Paid Media ROI per Dollar Spend 16 Step 4: Returns by Paid Media Channel (ROI per $1 spent) The critical step in improving marketing productivity is a precise understanding of returns per invested dollar
- 17. Step 5: Total Marketing Response 168,000 168,500 169,000 169,500 170,000 170,500 171,000 171,500 172,000 172,500 173,000 £- £1,000,000 £2,000,000 £3,000,000 AnnualUnitSales Annual Marketing Spend Unit Sales Marginal Profit Current Spend The dilemma is that incremental spend sometimes will not generate much growth because of saturation and diminishing returns. Marketing response tends to vary depending on the spending levels and competitive activities. 17
- 18. (500) - 500 1,000 1,500 2,000 2,500 Oct-2010 Nov-2010 Dec-2010 Jan-2011 Feb-2011 Mar-2011 Apr-2011 May-2011 Jun-2011 Jul-2011 Aug-2011 Sep-2011 Oct-2011 Nov-2011 Dec-2011 Jan-2012 Feb-2012 Mar-2012 Apr-2012 May-2012 Jun-2012 Jul-2012 Aug-2012 Sep-2012 Oct-2012 Nov-2012 Dec-2012 Jan-2013 Feb-2013 Mar-2013 Apr-2013 May-2013 Jun-2013 Jul-2013 Aug-2013 Sep-2013 Baseline Pricing GDP Paid.Digital-Search Paid Magazines Paid.Digital-Display Paid Radio Owned-Website/SEO Office Penetration Paid SpotTV Long-Term.Marketing Effect Earned-Social.Brand-Experience 18 Step 6: Marketing Contributions by Month
- 19. Step 7: Marketing Spend Optimization Marketing spend optimization generates an estimated +10.2% sales lift at constant budget levels (average of past 2 years). This result restores some traditional mass media, but with a relative increase for digital. The plan finances an increase of all other media via a reduction in spend on sampling. CONTRIBUTION CURRENT SPEND OPTIMAL SPEND WebSEO 442490400 134,555 639,447 Paid.Digital-Display 321811200 1,003,211 703,392 Paid.Digital-Search 429081600 677,888 959,171 PaidMagazines 201132000 134,211 383,668 PaidRadio 281584800 833,455 767,337 PaidSpotTV 871572000 3,611,152 2,941,457 0% 20% 40% 60% 80% 100% WebSEO Paid.Digital-Display Paid.Digital-Search PaidMagazines PaidRadio PaidSpotTV 19 Total $6,394,472 $6,394,472
- 20. HOW WOULD YOU FEEL ABOUT GETTING 2 TO 8 PERCENT MORE REVENUE WITHOUT REQUIRING SPENDING ONE ADDITIONAL DIME ON MARKETING? 20
- 21. Play out marketing What-if scenarios An interactive dashboard allows you to simulate different marketing mix/spend scenarios and assess the resultant impact on sales and profitability. 1. Set marketing budgets. 2. Set your spend levels across media channels 3. Assess the resultant impact on sales & profit 21
- 22. Providing Answers to Business Questions 22
- 23. BOTTOM-LINE ANALYTICS: OUR EXPERIENCE 23
- 24. It’s all About Results Company Results Coca-Cola Brought marketing ROI modeling to company for first time in 1996. In first year developed models for Coca-Cola, Coke Light, Fanta and Sprite in 12 Countries. Year two sales gains over prior year exceeded $300 million. Starbucks Developed measure of customer-brand experience using social media. Discovered that Starbucks main strength lies in its in-store experience. Successfully developed brand positioning for Frappucino and Via Coffee. Sales growth improved from +7 to +11 percent McDonald's Identified significant upside growth opportunity to drive higher restaurant sales by investing significantly more in "dollar-value meals" one year after launch in 2005. Per recommendation, major & higher marketing investment in dollar value meals made McD's the growth leader in its competitive segment for 2 years thereafter. L'0real Developed models which measured the ROI across 12 different "Celebrity Spokespersons" in L'Oreal Commercials. Recommended reducing number from 12 to 5 Celebrities, leading to growth improvement from +3 to +5%. Hyatt Hotels Developed SEI to quantify measure of "customer satisfaction" derived from measures of Trip Advisor hotel reviews across 300 different properties. This lead to a 5% improvement in customer satisfaction in subsequent year and a +6% growth in total bookings AT&T Identified and quantified impact from the launch of iPhone. By identifying which ad copy messages were most effective, AT&T managed to increase it's wireless telecom market share from 28 to 30%. Johnson and Johnson Developed analytic system for measuring and evaluating ad copy for Splenda brand. Enabled brand to reduce ad production from 8 to 4 commercial executions, saving $6 million 24
- 25. 25 BLA leadership bios Michael Wolfeis CEO of Bottom-Line Analytics LLC in the USA. Michael has 30 years of direct experience in marketing science and analytics both on the client and consulting side. On the former, Michael has worked for Coca-Cola, Kraft Foods, Kellogg’s and Fisher-Price. He has also consulted with such blue-chip firms as AT&T, McDonald’s, Coca-Cola, Hyatt Corp., L’Oreal, FedEx and Starbucks. Michael has broad experience in marketing analytics covering marketing ROI modelling, social media analytics, pricing research and brand strategy. Masood Akhtar is the Bottom-Line Analytics partner in the UK and heads the company efforts across EMEA. Masood is former Director of Analytics for McCann-Erickson and also has worked for Mintel International Group, JWT, Costa Coffee, Coca Cola, Hyatt Corp. He is an accomplished econometrician with extensive experience in marketing ROI analytics, marketing research, market segmentation, social media analytics and marketing KPI dashboards. David Weinbergeris CMO of Bottom-Line Analytics. David’s career has taken him to such blue-chip firms as Coca-Cola, Kraft Foods, Georgia Pacific and the Home Depot. David’s consulting experience has focused on such verticals as retailing, financial services, apparel, consumer products and insurance. David’s has considerable expertise in the areas of customer analytics, life-time value, shopper marketing, social media, brand strategy, segmentation and marketing ROI analytics. 25
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