4 Essential Steps of Measuring Advertising ROI for Dentists

Your dental practice puts a lot of time, effort, and money into digital advertising. Do you know what kind of return on investment (ROI) you’re getting?

Ultimately, the goal of digital advertising is to support your business objectives—filling appointments, financing equipment, even opening another office. When you’re throwing money after useless ad spends, you’ll never reach your goals.

Only when you know how to calculate the ROI of your digital advertising spend accurately can you create an informed budget. That’s because you’ll understand your numbers at every stage of the sales funnel—from awareness all the way to filling your appointment calendar.


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Why Measure Return on Investment?

It’s important to measure ROI, so you can figure out whether your marketing tactics are providing a profit.

But knowing whether your tactics are profitable is just the first step. If you plan to use multiple forms of advertising over the long run, you need to know which advertising makes you the most money.

Here’s a shortlist of the benefits of measuring the ROI of your advertising spend:

Know if you’re getting your money’s worth – You’re closing a sale or two—maybe even enough to cover your advertising costs. There’s a difference between closing a few sales and getting your money’s worth. Without knowing your ROI, you may be leaving advertising dollars on the table.

Understand what channels work best for you – Know a colleague who’s bringing in lots of new patients with Facebook advertising, but you can’t seem to get any traction? By measuring your ROI, you may discover that direct mail or PPC advertising converts better for you and make the smart move—for your needs and patients—of focusing your budget there.

Make more sales – It’s simple: By optimizing your marketing dollars and allocating more budget to the channels that work, you’ll make more sales. Measuring ROI means more successful campaigns and more profit.

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The 4 Essential Steps of Measuring Digital Advertising ROI


So you know ROI is a crucial measurement for your practice, but you’re not sure where to start. We’ve identified the four essential steps of measuring the return on investment you’re getting from advertising spend.

STEP 1: PLAN (Before You Spend Any Money)

You work too hard to waste your profits, so it’s important to understand a few baseline numbers before allocating any money.

Here’s how to calculate:

  • Maximum cost per sale
  • Cost per lead
  • Budget

Know Your Maximum Cost Per Sale

What is the maximum cost per sale? In the dental world, it’s how much you’re willing to spend per procedure you offer.

To simplify things, break all your procedures down into three tiers:

  1. Cosmetic items: Invisalign®, braces, bridges, etc.
  2. Emergency procedures: Extractions, root canals, etc.
  3. General Dentistry: Cleanings, cavities, and other hygiene

Calculating Maximum Cost Per Sale

For each procedure or tier, you need to determine the maximum amount of money you’re willing to spend to acquire a business. On average, this is 15% to 20% of the cost of the procedure. For example, for an $800 procedure, you should be willing to spend around $120 to make a sale.

It’s important to note that $120 is the amount you’re willing to make a sale, not acquire a lead.

Calculating Cost Per Lead

By working backward, you can determine how much each lead (potential new patient) costs to acquire. First, figure out how many people engage with your advertising campaigns book procedures. On average, for dentists, around 15% 30% of leads book procedures.

Now that you have your conversion rate, do this math:

For our example, this is the calculation:

$120 maximum cost per sale * 20% conversion rate = $24 cost per lead

Calculating Budget

Now that you know your maximum cost per sale and your cost per lead, you can determine your advertising budget. First, assess how busy you are as a practice and how much of your time is available for new clients.

If you know you need a certain amount of procedures booked to meet your business goals, you’ll be able to calculate your advertising budget accordingly. For example, if you know you need 20 dental implants to meet your goal, you can now determine for each procedure using the equation below:

Now that you’ve established these numbers, you can determine ROI based on whether they hold. You’ll be able to see the revenue that comes from the procedures you book and know exactly what you spend to achieve that.

Let’s Put It Altogether – An Example

Let’s assume our fictitious practice, LA Smiles wants more root canals, but they also want to be confident their investment is working. We’ll calculate the return on investment.

First, they have to come up with the inputs:

  • Fees to Dentist Root canal prices vary across the U.S., but let’s use a standard price of $900.
  • Max Marketing Expense – For this expense, let’s say LA Smiles is willing to spend up to $300 to acquire a patient. That’s a 33% max marketing expense.
  • Conversion Rate – If they have a good patient-management system, they should calculate their conversion rate by taking the number of total patients for root canals and dividing that by the total number of leads to get a conversion rate. LA Smiles’s conversions rate is 25%—they book 1 in 4 calls.
  • Desired Procedures Per Month – How many procedures does LA Smiles ultimately want to add to their calendar every month? Let’s say 15.

With these numbers, they can now calculate the ROI.

Max Cost Per Lead – Using (Max Marketing Expense * Conversion Rate), they need to generate leads at no more than $75 per piece.

Profit Net of Advertising Per Lead – (Fees to Dentist – Max Advertising Cost) The return for LA Smiles would be $600 per patient.

Total Net Profit – (Desired Procedures per Month * Profit Net of Advertising) Since LA Smiles wants to add 15 procedures each month, they net $600 per; they have a total net profit of $9,000.

Estimated Advertising Budget – Max Marketing Expense * # of leads – 300 * 15 = $4,500 per month

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The Wildcard – Lifetime Value of a Customer

None of the above calculations assume the prospect will ever come back again. If you’re doing any retention marketing, such as email marketing or direct mail, you should have a healthy repeat patient revenue stream with minimal incremental marketing investment.

If you want to be even more precise, you’ll need to factor this into the equation, and to do so; you’ll need to calculate the average lifetime value of a customer.

Let’s get back to LA Smiles, for example:

Average Revenue Per Visit Total number of visits / total revenue. LA Smiles has yearly revenue of $1.3 million. If they estimate 2,890 patient visits over the year, that’s an average revenue per visit of approximately $450.

Average Visits Per Year Using the numbers above, LA Smiles would divide the total number of visits (2,890) by the total number of billed patients. If they billed roughly 1,600 patients, then their average number of visits per year is 1.8.

Average Customer Lifespan This can be a little difficult to calculate if a practice hasn’t been around for more than a decade, but the industry average is ten years.

Average Referrals Over Lifetime We all know that existing patients are a great resource for new patients! Let’s assume LA Smiles gets two average referrals over the lifetime of each customer.

In this example, the total lifetime value of a patient is calculated by (($450 per visit * 1.8 visits per year) * 10 years) * 2 referrals.

That equals the $ 24,300-lifetime value of a customer.


Even if you were a financial whiz and calculated the net present value (NPV) of a new customer, it’s still conservatively over $14,000.

What’s the bottom line? Be aggressive when it comes to your acquisition costs of new customers. The potential for your bottom line is huge.

If you want to make sure your practice realizes the value we laid out above, you have to track your activity and report on it regularly. Don’t worry…we’re going to cover that too!

STEP 2: Set Up Tracking, So You Know Where Leads Come From

Now that we have a rock-solid budget, we need to track our actual efforts and confirm we are meeting the previously laid out goals. If you want to understand which channels work for you and which ones don’t, you have to know where leads are coming from. There are two things you must do to track ROI historically:

Assign Marketing Attribution to Incoming Leads

If you’re advertising on multiple channels—Facebook, direct mail, digital ads, etc.—you’ll need to attribute to the sources they come from. It would help if you always assigned attribution after the first interaction with a lead.

Track Leads Through the Sales Process

Determine which leads closed from each channel and which procedures the patients bought due to your advertising efforts.

Tracking Leads – The Execution Plan

Leads primarily come in three ways: phone calls, web form submission, and chat.

Phone Calls – You can track phone calls by using a tracking system like CallRail. This kind of software allows you to map special tracking numbers to your existing phone lines, so you can track where calls come from. You can also match calls to prospects in your patient management system by cross-referencing the tracking reports with your current leads. You can even listen to recordings of the calls to make sure they are quality prospects!

WebForms – You can determine what source your leads came in from by using Google Analytics and adding a plugin like Gravity Forms if you use WordPress or other website platforms. To track what marketing created those leads, you have a couple of choices:

Dedicated Landing Pages – Many marketers use dedicated sales pages on their websites to track different marketing channels. You can have a page just for Facebook Ads and another version just for Google AdWords. If any leads come from these pages, you’ll know exactly where they came from. Popular landing page tools include Unbounce and Instapage.

Conversion Tracking Scripts – Advertising platforms like Google AdWords and Facebook use conversion codes you can put on the thank-you pages of your website. When a lead fills out a form and is directed to the thank-you page, it registers as a conversion and populates data into a report you can import into Google Analytics and AdWords. Then you can calculate the cost of a form-fill to see if it’s worth what you’re paying.

Chat –
You can use several tools, like Olark or LivePerson, to talk one-on-one with people on your website. Most chat providers have documentation on how to set up goals in Google Analytics.

Real-World Example of Tracking Leads

One of our customers had been trained by a previous marketing firm to focus on CPC or cost-per-click. He had several campaigns that were achieving a CPC of $2 or less. There was just one catch.

He wasn’t driving any clients.

In PPC, the buying of traffic is basically an auction. If keywords don’t have many bidders, then the price per click can be meager, BUT there is usually a reason why there aren’t any bidders. It’s because the keywords don’t drive customers.

We implemented call tracking and form-conversion tracking on his existing campaigns. Within weeks, we realized the money was being wasted.

Within four weeks, we had a positive return on investment. Within ten weeks, we were generating a return on ad spend of 10 times the investment. None of this would have been possible without tracking leads.


Why Report?

Reporting is an important part of managing your ROI because it gives you a repeatable system to ensure your actual results track to your goals. A great pipeline report lets you keep track of where people are in the sales process if they bought or not, and if they didn’t, why not.

Let’s say you need your stakeholders to sign off before you spend marketing dollars: You can use your pipeline report to keep them in the loop, show the value of your efforts, and make suggestions for future campaigns.

Tools for the Job

The report you create to track your ROI needs to be specific to the campaigns you’re running. You might be able to copy the framework of someone else’s report, but there’s no one-size-fits-all solution. Sometimes this means you need to create your report manually in an Excel spreadsheet. If that’s not something you want to build and maintain, you can automate the process using a CRM (customer relationship management) system.

CRM systems compile all the lead data from all your campaigns and allow you to build reports and manage your leads through the entire sales process. Many of these tools are Software as a Service (SaaS), so they don’t require any servers or IT help.

Popular CRM solutions include ReferralMD, referral management, and the Econsult platform for healthcare professionals, specifically built for healthcare’s workflow.

While CRM tools are not cheap solutions, they can improve your ROI by giving you greater visibility into who your audience is and whether they are buying or not.

Remember our client mentioned above? When we first took over their accounts, we had a monthly budget of around $2,000. Once we could measure the actual advertising cost per procedure as well as forecast their availability, two things happened:

  1. They were able to hire additional staff and keep them busy.
  2. They were able to make a significant investment in additional equipment, thus expanding their revenue potential.

Their highest spend month ever? $40,000 with a great profit margin. That increase in investment would never have been possible without effective pipeline reporting.


Once you’ve taken these steps, you’re empowered to make informed decisions about adjusting your campaigns for even better results. Remember: Your numbers will always be shifting and changing, so doing this ROI exercise often is important.

Once you collect performance data, you can test things like adjusting spend in different campaigns, attempting new marketing tactics, trying different offers and copy to lower costs, and improving the number of your leads.

There’s No Time to Waste: Get Started!

Calculating the ROI of your digital advertising efforts is a necessary step—and one that many of your peers are probably overlooking. If you want to be sure your money and your ads are working for you—and not the other way around—it’s time to start understanding and acting on your numbers.

To make it even easier, we created a spreadsheet to help you calculate the ROI of your digital advertising spend. Get your copy now, and you’ll be an ROI whiz in no time!

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Daryl Johnson is the founder of Frontier Marketing, a Premier Google Partner and BingAds Partner advertising agency located in North Texas. Daryl focuses on providing strategic direction for clients, and has deep industry experience in healthcare and technology.

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