Here's how to interpret the metrics in your ROI tracking sheet so you can make informed decisions about your marketing spend.

Front-End VS Back-End Analysis

The ROI Tracking Sheet contains sections to track both the front-end and back-end return on your marketing.

This is because in business, it's crucial to consider both the immediate and long-term return on your marketing spend.

Most clinics ignore the long-term return on their marketing, usually because they don't consider the lifetime gross profit (LTGP) of new clients.

As a result, they may terminate a marketing initiative that wasn't immediately profitable but was profitable in the long term.

Time to make informed marketing decisions. Let's dive in. 👇

How To Measure Immediate Return (Front-End Analysis)

The front-end analysis is comprised of the following metrics:

FBKD Revenue: The total revenue generated via Forever Booked for the month.

Gross Margin: The average profit margin on the services you deliver. This is set to 60% by default. Most EMRs and accounting software should pull your average gross margin across all services. If you do not know your average gross margins, you can see this video for instructions on calculating margins on your services/packages.

Gross Profit: How much revenue you keep considering the cost of fulfilling services. Calculation: FBKD Revenue*Gross Margin.

Net Profit: Final amount after subtracting marketing costs from gross profit. Calculation: Gross Profit - Total Marketing Fees.

Front-End ROI: Immediate rate of return on your entire marketing, considering all fees. Calculation: Net Profit/Total Marketing Fees.

Front-End ROI Benchmarks:

\<0: Ok - You're losing money to acquire each customer. Your marketing efforts can still be profitable, taking into account the lifetime gross profit of each new patient. Focus on patient retention to ensure new patients come back for future appointments.

0-1: Good - You’re making a profit on the front end without considering the lifetime gross profit of new patients. You’re getting paid to acquire new customers.

>1: Great - You’re more than doubling your marketing investment without considering the lifetime gross profit of new patients.

How To Measure Long-Term Return (Back-End Analysis)

The back-end analysis is comprised of the following metrics:

New Patients: Number of new patients brought in through Forever Booked for the month.

New Patient LTGP: The average lifetime gross profit of each new patient. Set to $1000 by default. Tutorial on how to calculate LTGP coming soon.

CAC: Cost to acquire a new customer. Calculation: Total Marketing Fees/New Patients.

LTGP/CAC Ratio: Measures the long-term success of your marketing. Calculation: New Patient LTGP/CAC.

LTGP/CAC Ratio Benchmarks:

\<1: Bad - On average, you're losing money over the lifetime of each new client. This will result in the contraction of clinic profits over time.

1-3: Good - On average, you're making money on each new client over their lifetime with you. For example: if LTGP/CAC = 2, you are doubling every dollar you put into marketing, taking into account the LTGP of the patients you are generating.

>3: Great - You are more than tripling every dollar you invest into marketing over the long term.

Frequently Asked Questions

Q: How do I know when to increase ad spend?

You should increase ad spend when you have open availability for new consults and have a front-end ROI >0 with a LTGP/CAC Ratio >1.

This essentially means you’re getting paid to acquire new patients and these patients are profitable over the long term.

The next step will be to maximize the return on your marketing dollars. We talk about this in the How To Increase ROI training.

Q: Front-end ROI >0 seems like a super low return to be aiming for. Shouldn’t I be expecting 5-10X returns?

A: Yes, 5-10X+ returns are ideal, but the fact is that most business owners underestimate just how expensive it is to acquire new patients. Since they don’t track or pay attention to back-end sales or lifetime value, the cost to acquire a consumer seems too prohibitive and as a result, they underinvest in marketing.

Winning clinics take a longer-term perspective and consider the lifetime value of new patients. They know that a ROI of 1X on the front-end will often turn 5-10X within a year. 

Those who take on the longer-term perspective will eventually come out on top.

The top example of this is Amazon.com. They took losses for years before coming out top as the undisputed leader in e-commerce.

Most local businesses aren’t funded by venture capital and so can’t afford to take losses for years until they turn a profit.

This is why we aim to at least be profitable on the front end with marketing so you can stay cash-flow positive while awaiting the back-end sales from the new patients.