Clients frequently ask me: what should I be spending on marketing? But that’s the wrong question. The better question is: are you getting an appropriate return on your marketing spend?
Acquisition cost per new patient tells you if you are getting an appropriate return from your marketing. Usually abbreviated “CPA” (Cost Per Acquisition), your cost per new patient allows you to compare the efficacy of different marketing channels and – assuming you know the lifetime value of a patient – will tell you if your marketing expense to attract a new patient is reasonable.
Calculating Cost Per New Patient
The calculation couldn’t be simpler. Take the total amount spent and divide it by the total number of patients that came from that campaign. Let’s say you spent $7,000 on Google ad words and got 82 patients. Your CPA for that campaign was $85.36. That’s how much it cost you to get each new patient into your clinic.
The math to figure CPA is simple. The hard part is tracking each patient back to the marketing campaign. Some marketing channels, like paid search ads, are pretty straightforward to match new patients gained to your marketing spend. Other channels, such as public relations, are notoriously harder.
And once you do the hard work of tracking new patients back to the original marketing source, you’re still left with a difficult question: is this an acceptable cost per patient for this channel? If you don’t have some type of metric, it’s hard to know whether you are getting a decent return for that channel, even knowing your CPA.
What to Compare Against?
Lack of transparency with mental health industry comparison data presents a real challenge. In the spirit of fostering transparency and giving back to the community, I am sharing an infographic with actual cost per new patient data for four mental health marketing channels: public relations, field-based rep, Google PPC ads, and SEO.
The infographic shows the cost per new patient acquired by each marketing channel over an 18-month period for a multi-location, multi-state, mental health provider specializing in ketamine and TMS. These are not industry averages or the results of a survey.
Some quick notes on each marketing channel:
Public Relations
While PR does not cost money directly for placement (like advertising does), executing a comprehensive PR campaign is time-consuming and complex, requiring expertise and resources most TMS and ketamine clinics do not have. The cost per patient from this channel includes the cost of hiring an outside PR firm.
Field-based Rep
Pharma companies have long used field-based reps to promote their products. Using field reps is becoming more common for specialty providers, such as mental health, to build relationships with referring providers in the community in order to generate patient referrals to the practice. The cost per patient includes the full cost associated with maintaining one field-based rep for one local area. These costs include salary, benefits, incentive bonus, car mileage reimbursement, and meal cost for hosting provider lunch and learns.
Paid Search
When it comes to PPC ads, cost per lead and cost per patient are two very different things. While it can be tempting to focus on the cost per lead (usually quite reasonable for PPC ads), don’t lose sight of the goal: bringing new patients into the practice. In my experience, conversion rate on PPC leads can be quite low, especially if you don’t have a system in place to maximize conversion. The infographic displays cost per patient, not cost per lead.
SEO and Content Marketing
SEO and content marketing delivered the best return by far. I recommend SEO and content marketing for all my clients because it delivers a triple benefit: it boosts your ranking on search engines (thereby increasing organic traffic), it provides potential patients with relevant information about your services (which makes them want to come to your practice), and it generates high-quality content which can be repurposed multiple ways (email marketing, in-office pamphlets, video, etc). The cost basis for SEO and content marketing includes full salary and benefits for an in-house marketing team, plus the cost for required software tools and systems to do the work.
My intent in sharing this information is to spark a discussion. Are you seeing a better return? Tell me about it! Are you seeing a worse return? Let’s discuss!
Don’t know how to track your leads to attribute them to the campaign properly? We can help with that too.
And if you’re looking to drive more TMS and ketamine patients to your practice while maintaining a reasonable cost per new patient, I invite you to book a no-pressure, 15-minute introductory call to review your practice marketing efforts and how we can help make them deliver a higher return.