The True Definition of ROI: Metrics for Profitable Hospital Marketing

By Stewart Gandolf, Chief Executive Officer

David Marlowe

[SHSMD13 Podcast Series] David Marlowe is the founder of Strategic Marketing Concepts and a past president and board member of SHSMD, the Society for Healthcare Strategy and Market Development of the American Hospital Association. And in our podcast conversation with Lonnie Hirsch, David provides expert insight about tracking and metrics for effective and profitable hospital marketing.

It’s good advice for everyone attending the sessions at SHSMD Connections 2013, or any other educational conference, for that matter. Return-on-Investment is often a primary method of measurement in applying conference ideas, strategies and tactics in marketing.

It’s important to understand what metrics are most important, and that the true definition of Return-on-Investment is a financial return.

“The problem with a lot of the ROI terminology that’s thrown around is that it doesn’t quite get to the point of measuring financial return,” David told us. “So, if you measure how many people attended…that’s great, but that’s not ROI. If you count how many phone calls came in…that’s great, but that’s not ROI. Unless you can show a logical connection in that “x” effort generated “y” revenue, it’s not ROI.

“A better term for ROI, might be Return-on-Marketing-Investment…it is ‘what did you get for a specific marketing activity?’ But by any label, the hallmark of ROI is that there is a measurable revenue and net margin return.”

In today’s interview, David Marlow listed three categories of metrics for Lonnie Hirsch. “The lines blur a little bit between them,” he explained. But in ascending order of importance and complexity, the three categories are:

Production Outcomes: This is measuring the physical production of a marketing and communications function. It might be how many events did you hold, how many brochures did you produce…literally, how much work was done? This is a basic category.

Marketing Outcomes Metrics: Then you move up to [determining] what was the direct result of a particular marketing activity. So if you did ten events during the year (a production outcome), how many people attended? That would be a marketing outcome. This would be the next step up in the metrics process.

And then you get to the third category…

Strategic Outcomes Metrics: These are the metrics that are tied to the strategic direction of the organization, and by the name, you can tell these are the most important. These are things that would range from awareness, preference, image ratings, market share, volume, and Return-on-Investment is probably the “holy grail” of strategic outcomes metrics. Others are enrollment, re-enrollment, number of referrals, number of active referral sources…it’s a long list.

“A healthy marketing function has all three metrics. But it’s important to understand that the leadership of the organization probably cares a lot more about the strategic than the production. So if you've only got metrics in the first two categories, then you’re going to have a problem. They are going to want to see the third.

“And to make this work, you need to plan ahead to know what you want to measure and to have the tracking systems in place to capture the data. If you wait until after the fact, you’re going to have to try to recreate the process and that’s very hard to do.”

Lonnie’s talk with David Marlowe also touched on other related topics, including:

How the process of tracking, metrics and ROI analysis has evolved in the past few years;
Examples of metrics that are easier to track and measure than others;
Common mistakes in measuring results that hospitals and health systems have in common?

LISTEN TO PODCAST NOW: HSS Podcast David Marlowe, Strategic Marketing Concepts

Tracking and Metrics for Effective and Profitable Hospital Marketing

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David L. Marlow, principal of Strategic Marketing Associates, Ellicott City, MD, has 30 years of healthcare marketing and planning experience as a consultant and a provider-based executive. He is a lecturer and author, a member of the editorial review board of Strategic Healthcare Marketing, a past president and a member of the SHSMD Board of Directors.

You are invited to meet up with Lonnie Hirsch at Healthcare Success’ presentation booth #202 on the exhibit floor at SHSMD Connections 2013 (Chicago, Sep 29 – Oct 2). Healthcare Success is a full-service healthcare marketing company serving a national clientele of hospitals and outpatient clinics.