The How and Why of ROI
For home care agencies, understanding and analyzing Return on Investment (ROI) is vital for sustainable growth. Let’s dive into the how and why of ROI.
Why ROI Matters:
ROI measures the effectiveness of investments in things like marketing and hiring. It helps you make informed decisions about where to allocate resources for maximum results.
Knowing your ROI enables efficient budget management, helps in identifying successful strategies, and provides insights for future planning.
How to Measure ROI:
Let’s use an example of ROI for client acquisition strategies using A Place for Mom as an example.
Direct Costs vs. Returns: Compare the direct costs of purchasing leads from A Place for Mom against the value of the return (i.e. average client value).
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Average Client Value: Calculate the average total revenue per client over time. For example, if your total revenue in 2023 was $1,000,000 and you provided care to 68 clients throughout the year, your average client value is $14,705.
ROI Measurement:
Let’s assume you spend $550 a month on A Place for Mom leads (just under $7,000 per year) and you bring on 12 new clients over the course of the year. If your average client value is $14,705, this means that your annual spend of $7,000 resulted in 12 new clients producing $176,460 in revenue. Earning $176,460 from a $7,000 spend is a pretty substantial Return on Investment.
A key aspect of ROI from online leads is to focus on the revenue generated by the leads that hire care versus focusing on how many leads don’t convert. By thoroughly understanding and analyzing ROI, home care agencies can make informed decisions that drive growth, improve services, and ensure a sustainable business model.
Check out our podcast on Maximizing Online Leads to learn ways to increase your ROI from digital leads like A Place for Mom.
If you are a provider in the A Place for Mom network, additional resources and best practices can be found in the Resource Library of the Provider Portal.
If you are not currently receiving home care leads from A Place for Mom, we’d love to have you in our provider network. Contact our sales team at A Place for Mom or call (239) 594-3230, option 2.