Balancing Volume & CPA Priorities: The Dangers of Focusing on One Goal

Announcer: Welcome to the Ignite Podcast, the only healthcare marketing podcast that digs into the digital strategies and tactics that help you accelerate growth. Each week, Cardinal’s experts explore innovative ways to build your digital presence and attract more patients. Buckle up for another episode of Ignite.

Lauren Leone: Hey, everyone, welcome back to Ignite Healthcare Marketing podcast. My name’s Lauren Leone, I’m the SVP of healthcare marketing. I have with us again today, Rich Briddock, who is our VP of strategy and analytics. Today, we’re going to be talking about a topic that, Rich, I think dates back to, I don’t know, five or six years ago when we were working on clients together. This is the efficiency versus volume discussion, and the balance between the two, and can they co-exist? What’s really interesting is, we have conversations with clients all the time, and they tend to flip-flop between these two things or want them both, which is, I need to reduce my cost per acquisition, but I also need more patients.

How do I accomplish that? I want to really talk about maybe the dangers of going too far down one path or the other, and then we can talk about what a nice balance might look like. Let’s talk about only focusing on efficiency first. That tends to be probably the number one thing we get asked. When I get a phone call in sales, I want to get a better cost per patient acquisition. In that case, really, what we’re doing is we’re focused only on efficiency, and I want to talk about some of the dangers of doing that. The first one being that you could sacrifice volume, so talk to me about some scenarios that you’ve been in recently since we see this all the time, where maybe there was an overly weighted focus on efficiency and what was lost because of it.

Rich Briddock: The first thing, too, is, to set the stage on this, is, typically, what you’re tracking in the platform is not what you’re actually tracking as a patient that is acquired for that practice. Not only are you optimizing towards efficiency, but you’re optimizing towards lead efficiency most often, not patient efficiency. Just because you’re driving a cheap lead does not mean that those leads are turning into patients, so I’ll give you a great example of this, where we had a multi-location client that had 250 locations, and there was no direction given to us on how we should spend the budget, and there was– One of their locations was in a urban, highly dense population area that had a lot of demand, bright kind of buyer, and we were driving tons of leads, tons and tons of leads.

Lauren: Leads being phone calls?

Rich: Phone calls and form submissions.

Lauren: Form submissions, potentially, some online booking. To set the stage, sometimes, the challenge, or why we’re not focusing on the patient, is because the visibility into that pipeline, and then that kickback of information in real-time, is a known challenge in healthcare.

Rich: Yes, and does not exist to us to, essentially, optimize towards. We’re driving tons of leads, and everybody’s feeling good about themselves, giving themselves high fives, and then the clients like, “I don’t understand why you’re spending so much money at this location.” This doctor only works one day a week. Practices only open one day a week, and he is booked out for the next four months. Such [crosstalk] things happening is he’s driving a bunch of phone calls of people that he could not see or driving a bunch of form submissions of people that he could not see.

I think obviously that is an extreme example, but it’s something that can happen when you have a disconnect of telling your agency, “Just go chase lead efficiency,” and don’t actually really understand the nuances of the business down to the location level. Then, subsequently, obviously, there’s far too many conversations, and we completely restructured the way that we spent money for them. We broke down locations into different tiers, based on their production revenue, how many patients they needed [unintellpodcat igible 00:11:34] 0:04:03] contribute to.

It’s a game changer when you can share that business information with your agency and help them to understand the actual business objectives that you’re trying to meet, from a patient acquisition point of view, rather than just, “Hey, go find me the cheapest lead online,” which is often completely different, in terms of that objective.

Lauren: Yes. Sometimes, the cheapest lead, the highest, or the most efficient front-end CPA that you could have on your report and feel really good about yourself, translates into lower quality. It may be on the terms that they’re head terms, there’s a ton of volume, but the intent is really low. We also, oftentimes, get, and I think maybe this is something else you could walk us through. If efficiency is my number one, and there are no considerations around volume, that’s not discussed, you don’t share with your media manager, what you actually need in terms of production in order to keep your doors open and be healthy. You may end up whittling it down to just a small sub-spend of spend campaigns, keywords, whatever it may be, that can accomplish that, so it’s going to look really good, but you’re then going to be saying, “Why am I sitting with open capacity for my five days a week?”

Rich: Yes. I think you can end up really choking down the spend on a lot of campaigns by trying to be overly efficient or setting a unattainable efficiency goal that you’re trying to hit across all campaigns rather than just having a blended cost per acquisition goal. I think you also need to think and probably a lot of healthcare professionals do, but you need to have your agencies think this way; is chasing patients in certain markets is going to be more expensive. You need to dedicate more marketing budget in those more competitive markets to get those patients, to meet those production goals, and to meet your daily capacity numbers, and you can’t expect to have the same efficiencies across all locations because the efficiencies are wildly different. I think that’s all going to be taken into the equation, if it can be.

Certain locations, I know we work with clients that have set budgets because it might be some multi-brand franchise situation where almost franchise situation whereby the doctor is contributing to the budge, and we can only spend what the doctor or the hospital is willing to contribute, but I think for most of the situations where you have an MSO or a DSO, having the flexibility to have different efficiency goals by market, based on not just how expensive it is to acquire that patient but also the optimal flipside, like some patients are worth more.

Maybe a patient in Miami is worth twice what a patient in Atlanta is worth, for whatever reason, whatever dynamic you have in that business, so that should also be taken into the cost-per-acquisition equation because, yes, you’re going to pay more, but they’re worth twice as much, so it’s fine. The numbers still make sense.

Lauren: Yes. That drive to efficiency. When I joked that we’ve been dealing with this for the past six years, one of the first instances we came across this dynamic of efficiency versus volume was in a business where the efficiency was paramount, at least in the early stages of the relationship, so you may have a very simple entry point service, like a teeth cleaning, and then you also have a number of service lines like orthodontics, surgeries, where that patient is worth significantly more, but that front end CPA being all that matters means you end up turning off all those other campaigns where it’s going to cost you three times to acquire the patient, but your value is 10X.

It’s really important (and I think too) when you talk about focusing on efficiency, if that is the way you’re going to go, that there are still nuances into how what that efficiency means for different areas of your business reiche

Rich: Yes. I think the other thing, too, is look at efficiency in totality. Have a holistic view of efficiency. There are some channels out there that are not efficient, but they drive upper-funnel engagement, which then translates to downstream conversions. Things like paid social might not be as efficient as paid search and, obviously, SEO is likely to be by far your most efficient channel, but you can offset the cost of social to drive more awareness at the top of the funnel. More engagement in the middle of the funnel, that will eventually lead to increasing patient volume by how efficient SEO is, how efficient paid search is.

Once you start looking at channel-level efficiencies, that’s where I think you can start getting to that situation that you were talking about which is like, “I’m looking at this in isolation. It’s not very efficient, so I’m just going to pull back. I’m not going to spend, I’m not going to invest in it anymore. Whereas, generally, the better approach is to say, “What is my holistic CPA? Is that looking good?” “Yes.” Okay. I can afford to have a pretty high cost per acquisition on social because I’m so efficient at other places, and I know it’s the first touch point for a lot of the patient journey.

Lauren: Yes. Let’s think about the flip side of this dynamic now, and we get asked this a lot too. I need 100 patients a day. There really are no parameters around efficiency, and I think that direction in isolation can also be quite dangerous when you start to think about a company making the money that it needs to keep its stores open, pay its employees and its providers, maintain its facilities. Give us some examples where maybe that’s the heavier-weighted element of the equation and maybe things have gone wrong.

Rich: The biggest danger when you push the volume, if you’re starting from a position where maybe you are quite efficient, and then the directive change or. the directive changes for a subset of locations, not across the whole system, the biggest danger is you push so hard for volume that you can get into a situation whereby you may be spending three times as much, but you’re driving the same number of leads. [crosstalk]

Rich: Yes.

Lauren: Way past diminishing return.

Rich: Yes. You’re way past diminishing return and actually the net incremental volume that you’re capturing is so minimal for the investment that you’re making.

Lauren: Yes.

Rich: That you should have really just not done it at all so I think the biggest thing to be mindful of, again, is understanding what a patient is worth understanding if they’re willing to be at a negative ROI, but for how long? Is this a temporary thing? Again, understanding all the business parameters that you’re working within, having that shared understanding with the client, and making sure that you’re forecasting appropriately so we have tools like performance planner where we can input a three X increase in budget to try and drive more patients and what that’s going to look like from a CPA point of view. Give that forecast to the client to sign off on beforehand.

This is obviously, I’m giving you a very agency-centric view of the world, but even if you were working on this internally and you had to go to your C-suite, having those numbers is important and then you have a shared expectation of what’s going to happen when you spend that money and then you use that forecast. If that’s accepted by everybody as being valid and a good go-ahead plan. Use that forecast to actually then see what is happening in actuality to make sure that you are meeting or close to meeting that forecast and that the things that you think were going to happen are happening so I think that’s how you guard against basically just being given a bunch of money and trying to throw it at the problem and then finding out, whoops, I actually didn’t yield anything else. I think the other thing too is you have to understand the limitations of the channels that you’re working with.

Lauren: Yes. [unintelligible 00:12:26]

Rich: If you’re doing SEO and PPC and you’re already, you’re not losing any impression. She had to budget and someone says, here’s an extra $200,000 go get me an extra hundred patients. It might not be possible.

Lauren: Yes.

Rich: You need to typically be able to stay on this channel mix, that’s not going to happen. All we’re going to do is spend more on driver’s buses, CPCs, and SEO might get a little bit more traffic, but not a whole lot more. It’s going to take ages and so we need to be on performance max, or we need to be on display, we need to be on paid social we need to do this connect TV thing and if you’re having to go further up the funnel, they should be aware that there might be a lag so if I have to go into des disruptive marketing efforts, then maybe it takes three months before you actually start to see the yield from that. Again, I think expectation setting when you’re really just chasing volume, especially if it’s incremental volume, you just got to be really clear about the strategy and how long it’s going to take.

Lauren: Yes. In that explanation, I think you gave some really good nuggets of what the mix looks like, but is the best-case scenario one in which there’s a mutual understanding of maybe the high end of what a company could tolerate on a blended cost for acquisition, and then the ability to push for volume within that ceiling. Is that like the best-case scenario? Or what could a marketer at a healthcare organization say to their in-house team, their marketing team that would really fire them up to do the best of both worlds?

Rich: I think the best-case scenario is to understand the patient acquisition objectives by each major segment of the business. If that’s a service line, if that’s a location, if it’s a market, whatever that segmentation might be. If it’s a tier where you have like five production locations in Tier 1, Tier 2, low, and Tier 3, whatever that segmentation is, understanding the goals of a segment and then setting the appropriate acquisition costs and volume for each segment. The budget required to achieve those things, that is the best case that we have seen. I know in South Florida, I need to get 1,000 patients. I know that a patient is going to cost pretty reasonably $20, so, therefore, I know I need a $20,000 budget every month to go chase that. I’m not spending $18,000 of that $20,000 in another market somewhere because it’s got a $10 CPA and it’s more efficient. I know that I have to reserve this budget for achieving this objective in that market of South Florida so that’s what I’m going to do, but you have to have that communication between the people pulling the letters in the platform and the people looking at the patient numbers coming in for those different sections of the business.

Lauren: Yes. it’s really hard to start down a path without that information and then have to adjust later. We’re in the business now, in the digital space of training and algorithm. To start to work with an algorithm and a team towards one direction and then having to pivot. it’s not an overnight thing. To go from, “I’m super focused on efficiency” to “All of a suddent, I need volume and vice versa. Really is going to then require that relearning phase, both of the team and how they’re thinking about it, but the algorithm itself naturally has to pick up on those additional signals. Pivot to what we’re now telling it to care about and start marching down that path so I think that’s, it’s really important if you’re entering a conversation or thinking about a new campaign, thinking about making a major change to put these things in place now before you get started.

Rich: Yes. The chances are that your campaign structure won’t be right either. If you don’t know what the different segmentation should be for the business, the chances are the way that you set up your account is completely wrong, and then once you understand that down the road, you then have to completely restructure your account. Everything’s going back into the learning phase, you’re going to have a massive dip in performance, so you were totally right. Get the information upfront as you start to embark on this patient acquisition program. Try not to do it further down the road because you’re just reinventing the wheel.

Lauren: Yes. I think it’s nice to think about getting to market quickly, but, sometimes, that is really just delaying the inevitable and you’ll be further behind when you actually get the right pieces. Awesome. Thanks, Rich for joining us. This has been another awesome episode of Ignite Healthcare Marketing Podcast. Like, share, subscribe, wherever you’re listening, and we hope to see you all next time.

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