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The basic formula for figuring return on investment is simple.
The basic formula for figuring return on investment (ROI) is simple:
(Gain from investment-cost of investment)/cost of investment x 100=ROI
For example, say an investment of $25,000 produces a gain of $100,000.
And it's even more difficult to determine ROI on marketing for medical practices. In fact, it's downright "fuzzy," in the words of one practice consultant. That's because marketing medical services is far different than marketing, say, cereal.
Patients' reasons for choosing a particular physician or practice are typically far more complex than their motivation for choosing corn flakes over granola. The relationship between patient and doctor is richer and longer lasting than between consumer and purchased goods. Unlike boxes of cereal that cost the same to produce and sell, each patient requires requires different resources and can bring in varying revenue. And the results of medical marketing can't be measured as easily as boxes sold.
But that doesn't mean physicians shouldn't measure marketing ROI. In fact, if they're going to market their practices, it's essential that they do.
WHY MARKETING ROI MATTERS
Combine that with many physicians' discomfort with marketing and you get practices that are unwilling to spend time tracking ROI and so are more likely to waste their marketing dollars, says Stewart Gandolf, MBA, a founding partner of Healthcare Success Strategies, a medical marketing firm in Irvine, California.
But tracking marketing ROI should be no different than checking any other investment: Is it accomplishing what it is supposed to? Is it making the practice money or losing it?
Effective marketing can greatly help practices; ineffective marketing is a waste of resources. Tracking ROI is the best way to know if it's effective. "To keep spending money and hoping it works out is clueless," says Gandolf.