Addiction Treatment Marketing: The Fundamentals - Circle Social Inc

Addiction Treatment Marketing: The Fundamentals

The failure of most addiction treatment marketing campaigns is that they misunderstand the fundamentals of marketing. This is not surprising as most people misunderstand the fundamentals. Like most things in life, given the right conditions and enough trial and error, it’s very possible to create a successful business without understanding the basic principles.

In an Immature Market, It’s Easy to Be Successful Because:

  • A new business, like an addiction treatment center, opens up in an area with strong need and no competition. The market need is there and competitors don’t exist to cut into patient flow. So this kind of center will automatically do well until either demand in the area drops or competitors arrive.
  • In a similar vein, maybe you’re in a competitive field, but you find a niche no one is looking at. So while everyone is providing addiction treatment, no one is providing it tailored specifically towards the LGBT community. So when you open up your specialized center, you’re able to take 100% market share of a specific niche.

  • Competition exists, but there is such a strong demand that market need can accommodate multiple centers. This was certainly the case during the initial rise of the treatment industry. An estimated 1 million Americans a month looking for treatment (not 20 million, because most of the people with an SUD are not looking for treatment), but less than 10,000 beds nationwide.

    In this environment, many competitors can co-exist and still service the most in-need patients right away. This high-need and low number of providers is what made strategies like Adwords so effective in the past.
  • High margins drive profitability. Whether it’s high-ticket coaching services or selling 747s, the huge margins drive profits from a very small number of sales. As a one-man-show selling a $10,000  program, you only need to make 1 sale a month to be successful. The same goes for selling a billion dollar airplane.

In the past, addiction treatment definitely benefited from the last two. There was a huge demand with not enough providers to meet it, and margins were ridiculously high.

All of that has passed. Competition continues to increase and margins have largely been normalized.

This also means that newer players have a harder climb as they try to compete with established brands. Imagine opening up a fast food burger joint in a town that already has 2 McDonald’s and  Burger King. Not only are you competing for limited demand, you’re also trying to take customers away from restaurants they already trust. Not easy.

At this phase of industry maturation, different marketing and business techniques are needed to survive.

The Fundamentals of Segmented Market Demand and Patient Journeys (or, Why Do I Have So Few Patients Calling My Center?)

The industry shift needed is to understand how to grow in an increasingly competitive environment. Lean operations is one important way to do that. Can you give the same or better level of service with lower overhead? But that’s a topic for another blog. What we’ll focus on today is how marketing works in a more traditional/mature business environment.

You see, at any given time, only 10% of people that may be interested in a product or service are actually ready to buy it. This is generally true across industries and isn’t hard to understand.

Think about how long it took you from idea to purchase the last time you bought a new car. Most people start thinking about it months or up to even a year prior to making the final purchase. In any given month, only 10% of the people thinking about buying a car are going to buy one.

In addiction treatment, based on Internet search data and assuming that 20 million Americans are struggling with an SUD at any given time, there are only 4% of people actually looking for treatment. In addition, out of that 20 million, there are another 15% actually thinking about treatment, but not actively searching.

That means that, in a given month, there are only 800,000 people actually searching for treatment. Of that 800,000, we’ll assume 60% are on Medicaid or have no financial resources or insurance. So now we’re down to 320,000. In the US, there are over 14,000 treatment centers. Let’s be conservative and say that the average number of beds per center is only 30. That means that there are 420,000 available beds in the US.

Hmmm, so 320,000 people looking for treatment and at least 420,000 beds. That’s more beds than people who can afford treatment. Not a very good business model.

This is also why the centers with good SEO have been winning in the past. 70%+ of all clicks go to the first three positions on Page 1. So let’s say you’re ranking for “detox from alcohol,” which has 1,300 searches a month.  Clearly, people searching for that term are looking to get help. Cut out 60% on Medicaid and you’ve got 520 left.

If you rank in the top three for that term, you can get 364 of those clicks. Let’s say 20% actually call, that’s 72.8 calls. If your center converts just 10% of those, that’s just shy of 7 admissions a month, from a single search term!

On the flipside, what that means is that there are only 156 clicks left for everybody else. And, if you’re not on Page 1, you will get 0 of those.

So, in the past, people used Adwords. Adwords has a standard click through rate of 1% for a given search term (since most people skip the ads and only click organic links). So out of those 520 people, about 5 of them might click on your Adwords campaign. 20% call, so we’re down to 1. If you convert 10% of your calls, that means you’d need 10 months of this Adwords campaign to get 1 admit. Of course, you only paid for 80 clicks, so it cost you $7,200 at $90 a click.

Marketing Options that Work to Grow Census

But the issue here is that there is not enough volume to fill a center. That creates a problem, so what do you do? Here are your options:

  • Spend a ridiculous amount on Adwords each month to compete for 1% of traffic on each keyword term with no long-tail advantages (as always, we’re very bearish on Adwords).
  • Invest significantly in SEO to get on page 1 and then into the top 3 positions. This is an excellent strategy as it drives strong inquiry volume. The drawbacks are it takes many months to achieve those kinds of rankings and requires a level of expertise that most centers don’t have. In addition, many other centers are competing for the same keywords, so you’re constantly fighting to maintain your top position once you get it. Stil, it’s a very good investment to make. Also, remember that to run a local SEO campaign, where competition is much lighter, it’s much cheaper or more cost effective. For our clients that are not in treatment hot spots and who draw most of their patient mix locally, this is the best way to go. In fact, it’s possible to rank a local site in a light competition area in 3 months or less. The fastest we’ve ever done is some map rankings for high-volume search terms like “detox in cityname” or “best rehab in cityname” in under a month.
  • Build brand, reputation, and relationships, both B2C and B2B. Traditionally, centers have been OK at doing the B2B. Let’s say you’re a PHP/IOP that builds a relationship with a detox. They’re probably going to send you a high volume of admits each month. The problem is you’re dependent on their marketing ability. If they don’t market well and census drops, yours does as well.

    Where centers have largely failed is the B2C arena, understandably so as it wasn’t necessary to invest in that kind of marketing in the past. B2B and and SEO/Adwords used to be enough.

Let’s go back to our 20 million Americans struggling with an SUD. Let’s actually shrink that to just the 15% thinking about treatment, but not actually searching. That’s 3 million people. Cut out the 60% Medicaid, now we’re at 1.2 million.

Hmmm, so I can focus my marketing budget all on SEO and Adwords and compete for the 320,000 people a month searching for treatment, with all the reductions we saw above due to positioning and competitiveness.

Understanding Top, Mid, and Bottom-of-funnel Marketing Strategies As It Relates to a Patient Journey (or, How to Grow Census in a Mature Market).

Or, I can target 1.2 million people that might not be a patient today, but could be in a week, a month, or a year.

If we expand beyond that to the other 81% not even thinking about treatment now, but who probably will at some point, there are 16.2 million people we could be marketing to. And if they’re familiar with and trust your center when they do decide to get treatment, who do you think they’re going to call?

This is how marketing works in a traditional, more mature industry. Should you be allocating some of your budget to SEO, B2B referrals, and other bottom of funnel marketing channels? Absolutely! But it cannot be the majority of your budget unless you know there is enough potential volume to fill your center that way. For example, a small 10-bed center can usually still survive off of B2B relationships and the occasional Adwords campaign supplement. A 50 bed center cannot.

We always recommend an 85/15/5 split of marketing budget, at least to start out. At least 85% of your budget needs to go into cold or top-of-funnel audiences, meaning people who have never heard of you, to raise awareness of your center and get their attention.

From there, 15% of your budget goes to engaging and nurturing a smaller portion of that original audience, often called warm or mid-funnel, whom you’ve identified as being further along in the decision-making process (there are specific, direct response marketing and data analytics techniques to figure this out). Then 5% goes to the hot or bottom-of-funnel audiences, the people looking to get into treatment right now.

A lot of people will ask, well why don’t I put all my budget into the people ready to get into treatment now? You don’t for exactly the reasons outlined above. You’re dealing with a much smaller pool of people and much higher competition from other centers, meaning costs will also be really high. It’s just not sustainable in today’s treatment market of lower reimbursement and increasing competition.

How Full-Funnel Marketing Can Easily Generate 60 Admits a Month

Plus, when you are the first person a potential patient sees and you continuously engage them through marketing, you eliminate your competition. That 4% audience going to Google to search for treatment? They’re comparing 5-7 centers on average these days in terms of who they call and talk to. That drastically reduces your chances that they will choose you.

If you’ve engaged them over a long period of time through regular marketing efforts, they’re not going to compare other centers. They’ll just choose you.

In addition, the pool of potential patients is huge. Now, the big drawback to normal marketing practices is that it takes serious time and money to make those initial pushes. You’re spending a full 90% of your marketing budget on people that are not ready to get into treatment.

That’s the part businesses coming from an immature market time hate. They used to be able to run limited, direct investment and see a 1-to-1 correlation in business outcomes. Because the nature of a mature market requires long-term strategies, upfront investment costs are heavy and returns aren’t realized for months down the line. However, once mature market campaigns start firing on all levels, returns are much higher and more sustainable.

This pays off in spades over time because, while at first you’re only getting admits from that 5% of marketing spend going to bottom of funnel, let’s say 3 admits a month, as the campaign progresses, in month three, some of that 15% of mid-funnel audience starts coming in. Now that’s 9 admits a month PLUS the 3 from your bottom of funnel campaigns (12 total).

Then, in month 6, you start to get the top of funnel audiences to finally call. Since that’s most of your spend, that’s a big number, say 51 a month. Now, in 6 months, you’ve got 60 admits a month coming in from campaigns because your marketing “funnel” has driven people through the various stages of the decision-making process over a 6-month period.

The really nice part here is that you can then start to reduce overall marketing spend. Let’s say you’ve only got 60 beds. Over time, the number of people in mid-funnel, my warm audience, has grown since I invested so much in top-of-funnel before. So I can start to shrink my top-of-funnel spend and invest some of that into mid or bottom-of-funnel.

Remember, through good extended marketing like this, I’m not competing nearly as much with other centers. So if I invest more into bottom-of-funnel one month, I’ll be reaching a pool of potential patients interested only in me that no competitors can market too. These patients aren’t even going to Google to search, right? So you’ve effectively beaten out the competition by not even letting them compete with you.

It’s also much, much cheaper to convince someone who knows and trusts you to get into treatment. So marketing to brand-built warm and hot audiences is much cheaper. You simply don’t have to spend as much to convert them.

This is exactly why we’ve run campaigns for clients where costs dropped from $7,000 per admit to $400 over eight months of campaigns. Cost is very high in the beginning because you’re in high competition with other centers and investing most of your budget into audiences who won’t convert for weeks to months from the start of the campaigns.

But, over time, admissions accumulate from each stage of the campaign and patient journey, driving cost per admit way down.

Of course, the reality here is that, eventually, everyone in a mature market starts to do similar things. That’s why you see Burger King, McDonald’s, and Hardees ads all in the same place. That’s the nature of competition. But, right now in addiction treatment, probably besides our clients and a few others, nobody is running long-term, integrated strategies. Right now is the time to invest in order to build the brands and build trust among target audiences to make sure you are the number 1 choice when they decide to get treatment.  

We hope this little lesson in Marketing 101 helps you understand the shift in strategy needed as addiction treatment continues to shift from immature to mature business market and how you can succeed in riding that trend to the top. Need help (We’ve been in a ton of centers across the country, we know you do:)). Reach out below.

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About the Author

Nick Jaworski is the CEO of Circle Social Inc. Seeing a real need for innovative, ethical recovery center marketing and growth, he launched Circle Social to help the best addiction treatment centers connect with people who needed their help the most. He is also the proud father of the most beautiful girl in the world. You can most often find him sharing thoughts on business strategy, addiction, and behavioral health online.