Part 2 of Prioritizing Marketing Resources Key to Return on Investment Goals.
How do healthcare marketing executives allocate marketing resources? In today’s complex environment, determining what gets funded and what doesn’t, how much to invest and what your team should be spending time on can be a daunting task.
Marketing resource allocation decisions must be made across multiple dimensions. What services offer the best opportunity for growth, profitability and improved competitive performance? Within those programs, what specific marketing strategies and tactics should be used to achieve goals? What staffing and infrastructure investments are needed to improve marketing performance?
While it’s not an exact science, the process of marketing resource allocation modeling will help CMOs better invest limited marketing resources in initiatives that improve business performance, build brand equity and position the organization for success.
The first decision point is determining what lines of business, clinical programs, market expansion initiatives and customer segments offer the best opportunity for growth, profitability and competitive advantage.
ESTABLISHING TARGETS AND OBJECTIVES
Effectiveness of the marketing resource allocation model is supported by the discipline to target and select the FEWEST, MOST IMPACTFUL programs in which to concentrate resources. Priority growth program investments are derived from the analysis of key elements such as:
- Volume, revenue and profitability contributions of by lines of business (e.g., inpatient, ambulatory, physician services, etc.), service lines (e.g. cardiovascular, orthopedics, etc.), new market initiatives (e.g. joint venture partnerships, facility development, etc.) or customer segments (e.g., geographic, demographic, psychographic, etc.)
- Overall utilization, volume and demand projections
- Rate of market growth for encounters and procedures
- Reimbursement and profitability rates and trends
- Organizational capacity for new growth
- Physician supply, access, capacity and alignment
- Health system competencies, technologies, facilities
- Patient experience and satisfaction
- Quality indicators and rankings
- Competitive positioning, brand strength and market distinctiveness
This will require some work but the outcome will be well worth the effort. By comparing this information across major business initiatives and service lines, it becomes obvious that a focused subset should be targeted.
The following is a simple framework for ranking business lines, services or segments in accordance with their potential for contribution. Tier one programs are those with the greatest potential for financial or strategic returns on investment. Tier two and tier three programs are supported at lower investment levels. In this example, the health system allocates 60% of marketing resource investments to tier one projects and the remaining 40% is spread across tiers two and three, with three receiving a minimal amount.
These percentages can be adjusted up and down – keeping in mind that the objective is to adequately resource those projects most important to organizational performance.
I’ve found this process to be particularly helpful in arming the marketing team with an effective, data-driven platform to ward off requests that that seem to fly in from left field on an all too frequent basis. You know the ones I’m talking about. It also helps the CMO build agreement with his or her peer executives on a focused growth agenda.
In the next post, I’ll discuss decision point two: within priority programs and service lines, what strategies and tactical initiatives will best achieve marketing goals?