Stop Money Sucking, Mind Numbing, Wasteful Marketing Strategies
The definition of the word investment according to dictionary.com is as follows:
Investment – The investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.
Imagine for a moment, that I were to approach you with an amazing investment opportunity. I’d tell you about how much money you’d make, and all you’d have to do is give me a couple thousand dollars.
But there’s one catch….
During the life of that investment, we would have no clue how it performs, no way to track it, and we would only know how much money was made after the investment was sold.
Would you invest in that?
Of course not.
Marketing Absolutely Must Be Viewed As An Investment!
If you were to invest $5,000 in a marketing campaign, and you get 2 new residents out of that campaign, then obviously those residents are going to be worth more than $2,500. On average, the value of those residents are worth anywhere from $60,000-$70,000. Talk about a great return on investment!
This is where the lifeblood of smart senior living marketing comes into play. At SeniorMarketing.com we focus exclusively on senior living and home care, and the fundamentals of everything we do is based on the lifeblood of smart marketing. We eat sleep and breathe it!
Marketing Should Be Tracked, And When It Is, It Becomes Scientific.
I’m going to be blunt with this statement. Senior living marketing is NOT meant to be artistic, but rather it is scientific. Sure everything needs to look professional, but the main goal is to attract new residents and customers, not win awards based on artistic ability.
This is why your marketing activities need to be tracked. Tracking gives you insight into your senior living or home care marketing activities.
Whether you’re using tracking phone number, promo codes, “asking for Shirley”, website analytics, or requesting the ad piece be brought in, you need to track your marketing efforts.
Once you have these numbers, you can make scientific assumptions about your marketing, make marketing budgets based on actual hard numbers, and you can begin to apply the principles of smart senior living marketing.
Explanation Of What The Lifeblood Of Smart Senior Living Marketing Is:
The lifeblood of smart marketing is knowing your:
- Lifetime Resident Value
- Cost Per Resident Acquisition
- Profit Per Resident Per Medium
- Return On Investment Per Medium
What I mean by medium, is an advertising medium such as yellow pages, internet marketing, referral company, direct mail, and so on. So you should know your profit per resident per yellow pages, profit per tenant for internet marketing, profit per tenant for direct mail.
And the same thing with the rest of these metrics, which I’ll explain how to do in a little bit. But first, we’re going to walk though each one of these important marketing metrics.
The Foundation Of All Your Senior Marketing Activities. The Average Lifetime Resident Value.
When I ask people what the lifetime value of their residents is, maybe 5% actually know these numbers. I don’t know about you, but that does not sit well with me at all.
Would you buy real estate without having it appraised, not knowing it’s worth?
Paying for a new resident without knowing their value to you is the same concept. It’s not quite as dramatic as real estate, but the concept is the same and you need to know how much your residents or customers are worth.
So, lifetime resident value is the value in dollars that a customer is worth to you on average. This can be calculated globally but should be done by service type.
NOTE: When I say service type, I mean knowing your average lifetime resident value for the various types of senior living you offer. So knowing your lifetime resident value for assisted living, independent living, memory care, short term-long term skilled nursing, rehabilitation, homecare, and break it down by any other service type you have.
For the sake of simplicity, here’s a global example. Let’s say you take your entire community and figure out the average resident stays 21 months and their average monthly rent is $3,300. If you multiply them together you get their average lifetime value of $69,300. That’s a global example.
Avg. Stay in Months 21 X Avg. Rent $3,300 = (LRV) $69,300
If this sounds overwhelming to you, don’t let it be. It’s not something you need to figure out over night. Definitely start with the global lifetime resident value first because that I think will shock you.
Most people have no idea how much their residents are worth to them and if they did they they’re going to start treating those phone calls and marketing much more seriously because they are worth a lot of money!
How Much Does It Cost Your To Acquire A New Resident?
The Important of Knowing Your Cost To Acquire a New Customer
The next important marketing metric within the lifeblood of smart senior living marketing is one that not many people understand but it's something that needs to be talked. This is your cost per resident acquisition, and is how much money it costs you to get a new paying resident, not a lead.
And this can be done globally, but it should be done by marketing medium. So what I mean by marketing medium, if you're not familiar with that it should be done by your various avenues that you market yourself through.
So, if you’re using various marketing mediums, you need to know your cost per resident by internet marketing, referral companies, direct mail, yellow pages, newspaper, magazines, and even referrals. (If referrals are coming from residents, they are going to be free. But if you have an employee referral program, there are some costs associated with that including their time and any other incentives you provide them.)
Because this might be a new concept to you, I have a global example. Lets say you have a $10,000 a month marketing budget and that generates you 3 new residents. You know the costs to acquire those residents is $3,333.
Monthly Budget $10,000 / 3 New Residents Generated = (CPA) $3,333
A Lead Or A Phone Call Does Not Pay You! You Need To Get A New Customer For That To Happen.
There’s this phenomenon going on in our industry right now where people are talking about how low their cost per lead is. (I just need to clarify for a minute, that I’m not talking about buying leads at a fixed cost from a referral site. If that’s your agreement with the company that’s fine, but there’s more you need to measure.)
Neither a lead or a phone call pays you money, so this isn’t a metric you should be making business decisions with.
A customer pays you money. If you have any advertising sales person or any marketing company selling you on cost per lead, I strongly encourage you to reconsider whether or not they’re they right company for you.
Let me explain why….
Anybody Can Generate A TON Of Leads For You! Whether Or Not They’re Quality Leads, That Will Actually Turn Into A Paying Customer Is A Different Story.
I’m sure you know what pay per click advertising is.
Pay per click (PPC) is the ads on the right hand side of the Google search results that say sponsored links. The way this works is, you bid on keywords and phrases. And when someone searches for that keyword, up pops your ad. Any time someone clicks on that ad, you get charged.
Now, there are some marketing companies that get paid a percentage of your pay per click spend. What these marketing companies do, is they’ll take 15% of the amount of money you spend on pay per click and they’ll put it in their pocket as profit. Then they sell you concept called cost per lead.
Well I can generate thousands of leads on a monthly basis, based on keywords that don’t have anything to do with senior living and are way outside your target market. Ya, I’m getting a lead at a low cost, but that lead has a very low likely hood of turning into a resident.
How Someone Can Generate A TON of Poor Quality Leads For You Through Direct Mail
With direct mail, let’s say I send out a campaign to your target market, and I promote an offer that if they came to your community for a visit they would get a $50 visa gift card, free lunch for them and their family just for coming down. Then they can come down and you can consider them a lead.
What I’m selling is the $50 gift card and the free lunch. So I can generate a whole bunch of traffic to your community, but the quality of traffic is terrible. Your cost per lead will be low, but your cost to acquire a new resident is going to be very high.
This Is Why It’s Critical To Know Your Cost Per Resident Acquisition.
Knowing how much it costs you to acquire a new resident gives you much better numbers to work with in your business.
Understanding these first two metrics in the lifeblood of smart senior living marketing, (which again are Lifetime Resident Value and Cost to Acquire a New Resident) you can more accurately gauge what your marketing budgets can and should be.
I think I've explained enough about these two, but they really are that important.
How Much Profit Are You Making Per Resident?
Understanding Your Marketing Profit Per Resident (PPR)
The next lifeblood of smart marketing is marketing profit per resident. Now this is simply what each resident or customer is worth to you after you factor in the cost to acquire a customer.
So let’s say, your average lifetime customer value is $69,300, and you acquire a customer for $3,333. Your profit per resident is $65,967.
(LRV) $69,300- (CPA) $3,333 = (PPR) $65,967
I know those of you who are CPA’s or finance people saying, “Ya but what about all the other overhead that goes into that.”
This is simply marketing profit per resident and you can take all that out afterwards. What we’re trying to figure out here is strictly marketing. The complete financial picture is different, but you should factor in overhead and employee time and everything else later.
The Important Metric Every Investor Wants To See. Your Senior Living Marketing Return On Investment (ROI)
I hope by now, you’re starting to believe me that marketing is an investment and should not be viewed as an expense.
So, every smart investor wants to know what their return is. How much did we make?… Right?
This is where the next metric in the lifeblood of smart senior living marketing comes in. That’s knowing your marketing return on investment.
To figure this out you take your profit per resident and divide that by the cost per resident acquisition. Below is an example working off the numbers we’ve been using this entire guide.
(PPR) $65,697 / (CPA) $3,333 = 1,971% ROI
As an investor, this is what you want to see. Knowing you’re getting almost a 2000% return on your investment should make you one happy camper!
Technology That Puts The Lifeblood Of Smart Senior Living Marketing Together In One Easy To Use Interface.
In the above video, I explain our marketing ROI console. We’ve developed this to help you calculate all important metrics we’ve been reviewing.
You’ve got your average lifetime customer value, which is something that can be changed. Once you figure out your lifetime resident value, you can enter it into the area on the top. In the example we use $69,300, but that number is going to be different for you. You will enter in what your number is and all the other numbers will reflect that change.
Let’s say your community is in a more rural area and the lifetime customer value is $56,000. Everything will change when you update your lifetime customer value. Regardless, the keystone to tracking smart marketing is first understanding what your average lifetime customer is.
There are different strategy rows for each marketing medium you’re using. You can change the strategy rows and add as many as you want. It’s important to look at the monthly investment for each of these. For example, you have a PPC internet marketing program that is costing $2,000 per month. You can look across the row and see all the numbers for that one medium.
The way we tell people to use this is for a marketing directors or sales persons to have this open all day in a web browser. If your tracking your marketing smartly, then know they got a lead from a specific source and they can punch it into the console as it comes in. Now if that person becomes a resident, they change the number of residents generated. It’s that simple.
Allocating Resources To The Best Performers. The Real Power Of Tracking The Lifeblood Of Smart Senior Living Marketing.
The real power of this is not only having the power to see which marketing is working and which marketing is not working, but let’s say that PPC marketing is giving you a 2,761% return on investment. We then ask, “Is there any way we can dump more money into that”?
Marketing works just like any other investment. If you’ve got a stock that’s doing really well you might take some of your money out of a less performing stock and put it into a better performing stock.
So, we might want to put more money into PPC and dump other poorly performing marketing mediums.
Thank you for hanging in there for this long guide. If you understand the lifeblood of smart marketing, you should be able to very easily to track your marketing efforts scientifically, make smarter marketing decisions, and work with budgets based on real numbers, not assumptions that get us into trouble.