ROI: How do Healthcare Marketers Measure Up?

Healthcare marketers are sometimes criticized for lagging behind other industries when it comes to measuring the financial return on investment of their marketing efforts. But it turns out they might not be so far behind, after all.

Yes, marketing is hard to measure. But many companies don't even seem to be trying, according to a recent McKinsey & Company survey.

Marketing ROI across industries
The global survey asked chief marketing officers and other senior executives from around the world to describe how their companies assess their marketing campaigns, make their budgets, and plan new campaigns, as well as how their plans have changed as a result of the economic crisis, according to McKinsey, a global management consulting firm.

Interestingly, companies that market directly to consumers are doing better at measuring ROI than those that market to businesses. In healthcare, that would translate to better measurement of marketing to physicians and increasing referrals as opposed to marketing directly to patients.

That would make sense in the healthcare industry, since it's a lot easier to measure an increase in referrals—broken down by referring physicians—than it is to try to figure out how many patients checked into the hospital as a result of an ad they saw. (Especially since patients are notoriously bad at reporting what drove them to the hospital.)

Some other interesting findings from the Measuring Marketing: McKinsey Global Survey Results report (premium subscription required):

• Consumer-focused companies are much likelier to use best practices such as clearly allocating or defining marketing spending across the whole company and regularly reviewing the results
• Despite the economy, consumer-focused companies are more likely to be increasing their marketing spending
• Performance improves when companies use detailed spending metrics to compare spending both historically and with that of competitors

That's the good news (for B2C marketers, anyway). The not-so-good news is that 32% of all companies surveyed say they do not compare their marketing spending with any benchmarks, and only 18% use any detailed benchmarks beyond marketing spending as a percent of revenue.

That surprised me—and suggests that the experts, consultants, and pundits are being a little too hard on healthcare marketers.

Marketing ROI in healthcare
The healthcare industry is a hybrid of B2B and B2C with significant barriers to measuring marketing efforts, such as the fact that people don't go to the hospital right after seeing an ad or hearing positive word-of-mouth, but months or years later, when they actually need the service.

Regardless of stereotypes about healthcare marketers and their acumen (or lack thereof) in measuring ROI, marketing leaders at hospitals and health systems do seem to be making an effort—or plan to in the near future.

In the 2009 HealthLeaders Media Industry Survey, we asked marketing leaders at hospitals and health systems what emphasis their organization will place on measuring the ROI of marketing efforts the next three years.

The largest number of respondents (85%) said they'll use a mix or anecdotal and financial evidence to measure return, although only 6.74% say they'll employ hard, financial ROI measurement exclusively.

Further, two figures that indicate organizational strength in the areas of fiscal management and strategic marketing, according to the HealthLeaders survey:

• About 48% of marketers rate the fiscal management of their organization as "very strong," while 31% say it is "slightly strong."
• Almost 42% of marketers say they have "high involvement" in developing the overall strategic plans and decisions for the organization; the same number say they have "moderate involvement"

Of course, those figures are from the marketer's point of view. The cross-survey results, which include responses from all leaders, including CEOs, were slightly less rosy. They described marketing at their organizations as "slightly strong" (30%), "neutral" (29%) or "slightly weak (20%).

As with any survey, you have to take some of the data with a grain of salt.

The next marketing ROI step
What can healthcare organizations learn from business across all sectors, especially B2C companies?

The McKinsey survey suggests those organizations that look at what consumer-oriented companies are doing, implement the best practices of companies that take a vigorous approach to measurement, and better understand spending across the organization are more likely to allocate budgets more effectively.

"As companies weather the economic downturn, those that better understand their spending across the company are likelier than others to make targeted spending cuts—which are more effective than across-the-board cuts—and to plan to increase spending on both high-priority campaigns and experimental ones," the survey report concludes.