When asking about a healthcare marketer’s goals in regards to CRM, one of the first priorities we hear is the need to prove Return on Investment (ROI). For those who are new to CRM, we are often asked, “Tell me how you calculate ROI.” Marketing campaigns can be complex, and a great amount of attention, and often dollars, go into making them effective and successful. At the end of a campaign, the client wants to know if the development efforts and thousands of dollars spent were worth it.
Measuring success when it comes to marketing campaigns can include many variables, but one of the most helpful tools to use is the control group. While control groups may seem commonplace for our veteran healthcare marketers, we hear questions about control group development often, and would like to take this opportunity to get back to the basics.
Did the marketing attract those individuals or would they have come in anyway?
In science, the control group is the segment of the experiment that is not manipulated. It exists to determine how something behaves untouched by experimentation. For example, if a farmer is growing kale and wants to try a new fertilizer, he may block off a section that receives the new fertilizer to compare his crop growth with the fertilizer he has previously used to see which is more successful.
It’s the same concept for healthcare marketing. How does the client know if the marketing campaign brought people into the system to utilize services, or if they were going to “come in anyway” according to the CFO? The way to combat this line of thinking is to track the households that received the marketing material versus the households that were not subjected to the specific marketing effort.
Control groups allow marketers to determine ROI for campaigns. ROI for healthcare is often calculated differently for marketing than it is for other activities. The reason for this is that healthcare marketing often takes time to impact change. For instance, to determine the ROI for a food truck, one would take the cost of the food truck – gas, maintenance, food – and subtract that from the sales.
|Sales ($2,000) – Cost ($1,000)|
This calculates to 100% ROI, meaning for every dollar spent two dollars were returned. ROI works with this scenario because there are direct costs attributed to direct sales revenues. Using the same calculation with a marketing campaign could lead to similar results, but it leads back to the previous question: Did the marketing attract those individuals or would they have come in anyway?
For example, a primary care group plans to run a campaign to attract new patients. The first step is to select a group to receive marketing and then randomly select a statistically significant portion of that same group to be set aside from the marketing campaign to become the control group. The reason for this is demographically similar groups share similar behaviors. Since both groups match in behavior, the success of the campaign will be defined by the marketing itself. Households in the marketing group and the control group will be tracked for the next year. Once all the numbers are available, it is time to check the math to determine the campaign’s success.
Step 1: Calculate the downstream revenue from the campaign group.
Step 2: Calculate the downstream revenue from the control group.
Step 3: Subtract the control group revenue from the campaign group revenue to determine “lift in revenue” associated with the campaign. By calculating this lift, we are able to attribute only those additional dollars above and beyond those that would have been realized had the marketing campaign not been executed.
Step 4: Calculate the Return on Investment based on the following formula:
(Lift in Revenue – Campaign Cost)/Campaign Cost = ROI
In general, a positive ROI indicates a successful campaign, and a lift in downstream revenue shows that the marketing piece was effective in generating additional patients to utilize a particular service at a greater rate than those who did not receive the marketing message. If the control group outperformed the campaign group, it could mean those individuals were going to come in anyway, or they could have been exposed to additional marketing outside of the marketing piece being measured. It could also mean the marketing piece needs to be reviewed for compelling creative elements, tone, look and feel, and a strong call-to-action based on the target audience.
Take control of your marketing measurements and be sure to include a control group in your future campaigns. This is only the tip of the iceberg. If you want to discuss what goes on under the surface, give LionShare a call at 1-800-928-0712.