You’ve read the statistics and heard the promises.
You know that Google has claimed 40% of all internet traffic. So, you invested in Google Ads to boost your online visibility and direct more users to your website. You’ve also taken the time to optimize your SEO approach.
Now, the waiting game begins. Will your hard work pay off?
Unless you have a dedicated strategy in place to analyze the performance of your digital marketing campaigns, it will be difficult to know where the new faces in your lobby came from.
Are they there because your online advertising convinced them to give your practice a try? Or, did they just make an appointment on a whim?
The good news is that it isn’t difficult to track the ROI of your efforts. Today, we’re sharing the steps to take when you want to make sure you aren’t spinning your wheels in the wrong direction.
Ready to learn more? Let’s get started.
Why Does ROI Matter?
Digital marketing ROI compares the amount of profit or loss that your campaigns have generated to the amount of money you’ve invested in them.
In other words, are you getting your money’s worth?
The reality is that the digital marketing industry is full of buzzwords like “viral” or “engagement.” However, it’s important to remember that a successful campaign means more than just getting eyes on your content. You then have to convince those viewers to take action and visit your dental practice. That’s the only move that makes a direct impact on your bottom line.
Think about it this way: Would you want a patient to look at a toothbrush all day and admire all of its features but never actually pick it up and clean their teeth with it? Visibility without action doesn’t help anyone.
At the end of the day, likes, follows, comments and shares are all nice to have. Yet, these vanity metrics don’t reveal how the work you’ve put into your campaign is paying off. To better understand how all the components of your campaign are working together to better your business, you need to track ROI.
Thankfully, if you’re already advertising with Google Ads, you also have access to Google Analytics. In one centralized dashboard, you can see the numbers behind every aspect of your campaign. Yet, before you can understand the true impact of those numbers, you have to take a closer look at your practice.
Understanding a Patient’s Average Lifetime Value
In your effort to attract new patients to your practice, are you taking into account their long-term impact on your business? This is known as their average lifetime value.
It can be challenging to track this metric because you never know with certainty how long a patient will be yours. Will they just come in for a root canal and never return? Or, will they become loyal to your office and book all of their treatments through you for years?
Moreover, the cost of each treatment also matters. Someone who comes in once every five years for a major, expensive oral surgery may have a higher lifetime value than someone who visits every year for a routine cleaning.
Calculating Average Lifetime Value
There are two ways you can calculate the average lifetime value for the dental patients at your office.
First, you can take your average transaction value per visit and multiply it by your average number of annual visits and average years of patient retention.
If that formula becomes too complicated, there’s a simpler approach.
To find the average lifetime value of an individual patient, first divide your practice’s annual revenue by your total number of active patients.
For instance, if you make 600,000 € annually and have 2,000 active patients, the average yearly value of one patient equals 300 €.
To find their lifetime value, just multiply this number by seven. Using the same numbers, you’ll find that your average lifetime value of each patient is 2,100 €.
Average Lifetime Value versus Cost Per Acquisition
What does this calculation have to do with your digital marketing ROI?
Once you know the average lifetime value of a prospective patient, you’ll need to compare this against the price it costs to acquire their business in the first place.
Following the previous calculation, you just discovered that the average lifetime value of your patients over a seven-year period is 2,100 €.
Next, factor in your cost per acquisition. For simplicity’s sake, let’s say your marketing campaign costs around 100 € per patient. Subtract that amount from your patient lifetime value (2,100 € – 100 €). You’re left with 2,000 €.
To find your ROI, divide that number by the acquisition cost again (2,000 € / 100 €). The result is a ROI of 20, or 2,000 € long-term value.
When you divide this number by seven years, your return becomes 285.71 €.
Now, compare this figure to your one-time acquisition cost of 100 €. This reveals that in the first year alone, you’re already turning a profit. And, this pattern will continue in years two through seven.
Thus, it’s easy to see now that true profit lies in a dental patient’s repetitive purchases rather than a one-time visit. Dentists who are able to make these calculations and understand these facts are able to get the most out of their marketing engines in terms of both revenue and profitability.
Will you start seeing this kind of growth overnight? No.
Will you recognize it a few years down the road? Absolutely.
The Role of Conversion Tracking
Once you understand your per-patient marketing cost, it’s time to see if your digital marketing efforts and your dental website design are creating the conversions you need. This is where Google Analytics comes in.
This free tool allows you to implement both conversion tracking (to monitor your marketing efforts) and web analytics (to monitor your site performance).
A few of the metrics you can track include:
- The amount of traffic that your site is generating, and trending directions
- The demographics of your web visitors, including their gender, age, geographic origin and language
- Your top-performing channels generating the most web traffic (e.g. Google Ads, organic clicks, social media advertising)
- Your top-performing channels generating the most patient leads (e.g. completed forms, e-mail signups, office contacts)
- Your top-performing web pages generating the most user engagement
- Your web pages with the highest bounce rates
Once you know the average lifetime value of each new patient lead, you can also use Google Analytics to see how much monetary value each channel is delivering to your practice. Ideally, each one should add to your profitability.
These insights can also show you a typical web visitor’s path to conversion. Does it only take one visit to your website or does it usually require multiple points of engagement?
Digital Marketing Benchmarks
With so much data at your fingertips, how can you prioritize the benchmarks that mean the most to your practice? The answer lies in understanding the averages across your industry.
Sure, you want to create a unicorn ad that generates a superstar CTR and a jaw-dropping conversion rate. Yet, the most relevant metrics will vary from industry to industry.
Dentists, for example, should be most interested in how their performance measures up against others in the healthcare sector. Wordstream produces a very helpful guide every year that outlines performance standards for various segments.
Key metrics to track include:
Google Search Ads:
- Average click-through-rate for search ads (CTR): 3.17% across all industries & 6.05% in the health care segment
- Average cost-per-click for search ads (CPC): $2.69 across all indusries & 2.78$ in the health care segment
- Average conversion rate (CVR): 3.75% across all industries & 9.64% in the health care segment
Google Display Ads:
- Average click-through-rate for display ads (CTR): 0.46% across all industries & 0.72% in the health care segment
- Average cost-per-click for display ads (CPC): $0.63 across all industries & 1.49$ in the health care segment
- Average conversion rate for display ads (CPC): 0.77% across all industries & 3.34% in the health care segment
A digital marketing team that specializes in the dental niche will have access to these industry figures. With this information, you can see how yours measure up and if your campaign is on track.
Measuring the ROI of Your SEO Strategy
Wondering if your Search Engine Optimization (SEO) efforts are working as they should?
The key lies in understanding your average patient lifetime value as well as the closing ratio of your sales staff. In other words, how many leads can they convert into new patients? Comparing these figures can reveal your average lead value.
Patient Lifetime Value and Sales Staff Closing Ratio
Let’s use a real-world example.
Say your SEO campaign produces 30 leads a month. Now, say your front-office staff is high-performing and can close at least 70% of those leads. That equals 21 new patients a month.
If you’ve already calculated that your average patient has a value of 2,100 € over a seven-year period, those 21 new patients combine to create a long-term revenue of 44,100 € to your dental practice.
The Value of Organic Traffic
Understanding your patient lifetime value compared to your sales staff’s closing ratio is only the first step in measuring the ROI of your SEO strategy.
Next, you’ll need to determine how much of your website’s traffic is derived from organic clicks. By multiplying the organic leads you receive by your average lead value, you can analyze if your SEO efforts are heading in the right direction.
You can also measure how much free traffic you’re receiving from Google as a result of your SEO strategy.
How? Begin with your traffic volume.
For example, you might receive 1,000 visitors through organic clicks as a result of your SEO campaign.
Next, multiply that number by the average CPC in your industry and segment. For this example, we’ll say the average CPC in your location is 3 €. Thus, the calculation becomes 1,000 x 3€. This equals 3,000 € worth of free traffic per month. Over the course of a year, this multiplies to 36,000 € worth of free traffic!
However, don’t get too excited yet. That’s not all pure profit.
Your next step is to determine the cost of your overall SEO campaign.
Not sure whether you are working with the right SEO agency? Read this guide on how to choose a dental seo company?
Calculating SEO Campaign Costs
While it will vary depending on your industry, location and other metrics, most six-to-12-month SEO campaigns cost roughly 1,500 € per month.
This equals around 9,000 € to 18,000 € for the full campaign.
Therefore, to determine the true ROI of your SEO campaign, you’ll need to incorporate these costs into the value of each lead, as well as the free traffic you earned from Google.
Begin by adding your free traffic value to your average lead value over seven years.
For this example, let’s say the SEO campaign of your dental practice produces on average 30 leads per month, or 360 leads per year. If your sales staff is able to close 70% of those leads, your SEO campaign would generate 21 patients per month or 252 patients per year.
1 Year value of SEO campaign:
252 patients x 300 € value / year = 75,600 €
1 Year value of SEO campaign with patient lifetime:
252 patients x 2,100 € value / 7 years = 529,200 €.
Using the numbers above, this calculation is:
36,000€ + 529,200 € = 565,200 €.
Next, subtract your SEO campaign costs (18,000€) from that sum:
565,200 € – 18,000 € = 547,200 €.
Finally, divide that total by your campaign costs again: 547,200 € / 18,000 € = 30.4 SEO ROI.
These numbers speak to the importance of keeping a long-term perspective.
In one year, the average lead value might only be 75,600 €. Plugging that figure into the same equation will result in much lower numbers. However, when you multiply it by seven years, it becomes substantially larger, as does your ROI.
Thus, it’s wise to focus on establishing long-term relationships with customers, rather than pouring all of your efforts into getting them through the door for a one-time visit. Though it can be frustrating to set your sights so far down the road, it’s worth it.
Real success isn’t the result of a get-rich-quick scheme. You can’t buy your way there or take a shortcut.
In fact, even your SEO campaign can take up to a year and a half to begin generating real, measurable results. This is because it can take between six and 18 months to achieve your rankings. If you partner with a digital marketing team that can put your SEO strategy on the right path in the first six to 12 months of your campaign, you’ll see the kind of consistent new patient acquisitions that lead to long-term success.
From there, you’ll continue to see results from year two through seven and beyond.
Measuring the ROI of Your Google Ads
Want to see some short-term metrics to encourage you to stay the course?
This is where Google Ads come in.
Unlike SEO, these campaigns have a shorter timeline for results. That’s one of the best parts about advertising on Google! You’re guaranteed visibility at the top of the search engine results pages (SERPs) almost instantly. You’re not stuck twiddling your thumbs while your website slowly climbs in the rankings.
As soon as you set up your campaign, you can start tracking it.
When you integrate Google Ads into Google Analytics, you can measure the ROI of several key metrics, including:
- The number of clicks your ads receive
- Your cost per click
- The number of leads your ads generate
Then, you can compare those insights with real data from your office. How many actual new patients enrolled during or after the campaign? How do these numbers compare to your pre-determined average patient value?
The lead value for your Google Ads campaign is calculated similarly to the example in the SEO example. Regardless of how quickly you begin to see results, it’s still true that your most impressive gains will take place over the course of several years.
Again, you’ll derive your average lead value by analyzing the closing ratio of your sales staff and your average patient lifetime value. Using the SEO example above, those numbers are:
- Leads per month: 30
- Closing ratio: 70%
- New patients per month: 21
- Average patient value 2,100€ over a seven-year period
- Long-term revenue: 44,100€
Thus, the return from your Google Ads campaign would be the leads you receive multiplied by your average lead value.
That’s the first part of the returns you’ll see from your campaign. Next, you’ll need to calculate how much money your practice saved by taking the right approach.
Calculating Saved Advertising Credit
When you take a DIY approach to Google advertising or trust an incompetent partner to do the work for you, you could target the wrong keywords and perform irrelevant queries. This wastes time, hurts your reputation and drains your marketing budget.
For example, say you’ve allotted 2,000€ per month for your Google Ads budget. If you’re wasting 50% of that on missed targets, you’re losing 1,000€ per month. Over the course of one year, that equals 12,000€. Imagine the many ways your practice could reinvest that money if it weren’t flying out the window.
On the other hand, an experienced dental Google Ads consultant can help you target the exact keywords that can put you as high as possible on SERPs. Using the figures above, that’s a savings of 12,000€ annually!
The main difference in calculating the real ROI of this campaign? You’ll measure your campaign costs differently.
Not sure whether you are working with the right Google Ads agency? Read this guide on how to choose a Google Ads agency for dentists?
Measuring the Cost of Your Google Ad Campaign
When you invest in a Google Ads campaign, you have to account for advertising credit you pay to Google.
While organic clicks equal free traffic, this strategy takes an alternative approach. Here, you’ll post your ads on the search engine and pay Google a small fee every time a web visitor clicks on it to visit your website. These fees can range from a couple of cents to 20€, though most aren’t that high.
In addition to those costs, you’ll also need to factor in the management fees that you pay to your digital marketing consultant or agency. While some providers might charge you a success-based fee that you’ll only pay if you see results, others will charge you a fixed monthly fee regardless of campaign performance.
For example, say you pay your agency 450 € per month to manage your digital marketing campaign.
To figure your ROI, begin with your yearly saved advertising credit of 12,000 €. Then, add your lead value over seven years (529,200 € in this case)
12,000 € + 75,600 € = 87,600 € (1 year)
12,000 € + 529,200 € = 541,200 € (7 year lifetime value)
Then, add your yearly advertising credit and yearly management fee together. For this example, say you pay Google 1,500 € per month.
(1,500 € x 12) + (450 € x 12) = 23,400 €
Next, subtract that amount from your yearly saved advertising credit and seven-year lead value combined above (541,200 €)
87,600 € – 23,400 € = 64,200 € (1 year)
541,200 € – 23,400 € = 517,800 € (7 year lifetime value)
Divide this total by your annual advertising credit and yearly management fee combined (23,400€)
64,200 € / 23,400€ = 2.74 ROI (1 year)
517,800€ / 23,400€ = 21.95 ROI (7 year lifetime value)
Because there is no ramp-up or waiting phase for a Google Ads campaign, you can start seeing these results almost at the beginning.
The key to doing so? You have to team with a skilled and experienced dental marketing consultant. The pendulum could easily swing in the opposite direction if you aren’t careful with your partner selection. If your Google Ads campaign is correctly optimized, you could start seeing new patients from month one. Conversely, an SEO campaign could take two years to generate comparable business results.
Understanding Overall ROI
In this article, we’ve shown you how to calculate the ROI on your digital marketing campaign, focusing on SEO and Google Ads.
However, keep in mind that while it’s important to measure campaign ROI, these numbers only reveal your relative gain compared to your investment. In reality, a comprehensive marketing activity could generate far more revenue or profit than we’ve covered here.
In that case, you’ll need to consider the entire campaign as a whole. For example, you could make 5000 € in revenue on a 3,500 € investment for a 1,500 € profit and ROI of 43%. Or, you could invest 100 € and make 300 € for a 200 € profit and 100% ROI.
At the end of the day, it’s profits that matter.
Thus, resist the urge to look at your ROI in a vacuum. Instead, compare it against the size, scale, and performance of the campaign as a whole. While these metrics can tell you whether or not a marketing activity is benefitting or hurting your business, you should always follow up by analyzing the overall value in absolute terms.
Create Digital Marketing Campaigns That Soar
Are you ready to invest in the future of your dental practice? Your prospective patients are online, and it’s time to reach them.
Whether you’re interested in Google Ads, an SEO strategy or both, we’re here to help you create robust digital marketing campaigns that deliver.
We’re dental marketing professionals dedicated to helping you bring more business through your doors. Acquiring new leads and building your bottom line doesn’t have to feel like pulling teeth. Contact us to get started today and let’s grow together.