If you have been investing in marketing for your vet practice, it’s important to keep track of its results. How have your efforts in a given marketing program impacted your revenue or sales? Have you attracted new customers or created brand awareness? In other words, did it deliver a return on your investment (ROI)?
Determining what the results of your marketing campaigns are can be tricky. Maybe the result will be slow, and won’t really show up for another couple of months, or maybe it’s just hard to measure how many people you’ve reached with a certain program.
But just because measuring your ROI is hard, doesn’t mean it’s impossible. There are some tactics marketers have developed so you can keep up with the results of your marketing, making it easier to evaluate if you’re on the right track and where to make some changes.
First of all, we have to decide what the target of your marketing efforts are. Are you looking to bring in new customers? Then let’s say we use your sales growth to calculate your ROI.
Simple ROI calculation
The most basic way to calculate the ROI of your marketing campaign is to integrate it into the business line calculation.
The formula is easy, you take your sales growth and subtract the marketing costs. Then you divide this number by the marketing cost.
(sales growth – marketing costs) / marketing cost = ROI
Let’s say you brought in 4 new customers, meaning your sales grew by $1000. You invested $200 dollars in a Facebook campaign. This means your ROI is %400.
Campaign Attributable ROI
Even though this is a simple calculation, it means that you start from the assumption that all new visitors to your practice were directly related to the Facebook ads you were running that month.
For a more accurate formula, use one that takes the organic growth into account. Let’s say you have an average growth of 2 new customers every month, so that would be an average sales growth of $500 already.
To calculate the ROI we take the sales growth, subtract the average organic growth and the marketing costs, and then divide it by the marketing cost.
(sales growth – average organic sales growth – marketing cost) / marketing cost = ROI
This would leave us with an ROI of 150%.
But even here, it’s not 100% accurate. Keep in mind that one of those new customers might be the effect of a marketing campaign that you ran last month, or simply means a growth in your average sales growth.
How to use Google Analytics for your ROI
Now we’ve figured out a basic formula, let’s make this a bit more practical. Because most of your marketing is happening online, it’s actually a lot easier to keep track of your ROI. Even when you’re dealing with multiple platforms or longer periods of time.
Let’s say the goal of your marketing efforts is conversions, which in your case would mean online bookings via the website. You have a designated landing page where pet-owners can schedule an appointment, and the goal is to bring as much traffic to this page – hopefully leading to conversions.
A tool that will be extremely useful for keeping track of your conversions and your ROI is Google Analytics. Google Analytics gives you the chance to set up goals or conversions, so every time a goal is achieved and an appointment is scheduled, Google will keep track of it. This data gives you a good insight into how many of your conversions came from your Facebook ads or your email marketing campaign.
Not only can you exactly define where your traffic came from, Google Analytics also takes a longer timeframe into consideration. You can define the exact period you want the data for, and even look at multichannel funnels – which includes people who might have been exposed to your marketing campaigns on different platforms over a longer period of time, resulting in a conversion.
How to use the Call Tracking Technology
But what about people that call the practice to make an appointment? Just because they prefer doing it the old-fashioned way doesn’t mean we can’t include them into our ROI measurement. Call Tracking Technology makes it possible to get the same data Google Analytics would offer you, but then prior to the phone call.
When you run Google Ads with a call extension (this is an ad where the number and direct link to call shows up in the mobile search results) you might already get some of that data through your Google Analytics. But what about print ads, flyers and brochures? The Call Tracking Software makes it possible to extend that knowledge with data about all your receiving calls.
Calculating the CPA
Now you know where to find all the data and conversion numbers for both your online and offline marketing campaigns, it’s time to calculate the Cost-Per-Acquisition (CPA).
Let’s say you printed brochures with the number of your vet practice that you left at local businesses in your area. This cost you $3000. Your Call Tracking Software data shows you that it resulted in 30 calls to your practice, of which 10 ended up booking an appointment and became new customers.
Now you can figure out the value of your new clients. Let’s say this is $200, minus your margins of 20%, is $160. 10 clients times $160, is $1600 in total net profit.
Now calculating your CPA, we take the costs of your advertisement campaign, which is $3000. This resulted in 10 new clients, which means your CPA is $300. The net profit made per client was $160, which means the CPA is almost double as much as the profit you got from one client. This might be a sign that you should reconsider investing in a significant amount of printed ads again.
One last thing to point out here is that this formula doesn’t take customer retention into account. What if your ad resulted in a lifelong customer? The lifetime value of a customer can be calculated with the following formula:
(average value of a sale) x (number of repeated transactions) x (average retention time in years for a customer)
We already said that the average value of a sale is $160. Let’s say the client comes twice a year with her dog, for approximately 10 years. This means 160 x 2 x 10 = $3200. This means the lifetime value of your customer is definitely worth the CPA. This again states the importance of customer retention and excellent customer service – because happy clients will come again!