Gavin GriffithsHow much do you budget to get a patient?

This is usually my second question when I first meet a client.

The first, if you’re interested, is: “So, are you looking for more business?” It’s disingenuous of me, really. We’re in business – all people in business are looking for new clients, and sometimes we need to focus the mind and break down what it is that we really do.

In the Private Medical Health and Beauty market we help to cure problems and make people feel better about themselves, but sometimes we forget that we’re in business and that we can apply cold hard business logic to what we do. We’re here to make money. If we don’t make money then we won’t be in business for long. Then it will be impossible to make people feel better about themselves.

So, for a minute let’s strip out the medical and health element of what we do and concentrate on the business bit – I’m going to tell you about CPA:

COST PER ACQUISITION

CPA is what you pay for getting a new client. And if you are looking blankly and thinking, “erm, we don’t really do that?”, the answer is: you do. It’s easy to work out. You divide your annual marketing spend by the amount of new clients you got in that year. That’s your CPA.

So, add up all your marketing spend; from the little ads you’ve put in the local paper or magazine, website costs, web advertising, PR, networking dinners, costs for printing new brochures – anything that was in pursuit of you getting new clients. Add it all up and then look at your customer book and do the sum. It’s probably a lot higher than you thought.

If it’s higher than you thought, don’t worry – it needs to be a decent figure because your competitors are onto this. To give you a yardstick to measure yourself by, a major cosmetic surgery chain is currently budgeting a CPA of approx £1,000 per new client. To those in the cosmetic surgery business it explains nicely why you don’t get as much business as you think you should because it’s my bet that you don’t budget anything like this. Before you get all in a fluster, don’t fret; your CPA probably doesn’t need to be anywhere near £1,000 per new client, these guys are a big chain and have their ‘marketing game’ switched firmly on. However, you do need to be investing some significant budget into your CPA if you want to be generating enquiries like your competitors.

The interesting thing that starts to happen when you think about your marketing in this way is that you get an understanding of what happens when you turn up the dial. If you decide to spend an extra £250 a month on marketing and it gets you an extra 5 clients – bingo! Each client has cost you £50; if you treat them well and they keep coming back then in time they will become a profitable customer.

It also sharpens your mind when it comes to you and your staff dealing with enquiries. Is the person answering the phone converting as many sales opportunities as they could? To be honest, we’ve lost count of the number of secretaries and receptionists who don’t appreciate the value of an incoming call. Get your staff to understand that each new point of contact is actually a potential profit.

Thinking about the cost of acquiring each new customer changes your mindset. It makes you think of your potential customers as little, precious, bejewelled eggs that must be cherished; not just phone calls or incoming emails.

I’ll talk again about CPA in a bit more depth next month – it’s the bedrock of launching your PPC campaign if you ever decide to dip your toe in to search engine marketing.

Gavin Griffiths
BHM Media

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