Hey, everybody, I’m Steve “The Hurricane.” And on today’s episode of “A Drink with The Hurricane,” we’re gonna give you three tips on how you can reduce your cost for client and caregiver acquisition. So, raise your glass and let’s toast to your success. Cheers.
This is “A Drink with The Hurricane,” the talk show discussing all things growing your home care business. This video is sponsored by Home Care Evolution, where we help home care agencies adapt to changing circumstances, and transform their business so that they can thrive for years to come.
So, from the most recent Home Care Benchmark Study, there were two specific graphics, or findings rather, that I had to address during one of these episodes. And this was the cost of acquiring one client and the cost of acquiring one caregiver. Now, a lot of people don’t calculate this, and it’s something that you really should calculate because it helps you to realize just how much effort dollars and cents you put into getting both. Because at the end of the day, if you hire 100 caregivers and then you bring on 100 new clients in a year, there’s a huge cost associated just with getting that caregiver and client bonded together to be able to generate revenue.
So, first, let’s talk about the client acquisition cost. So, this is all things sales and marketing, this is your website, your SEO, this is your marketing representative’s salary, this is the cost of doing lunch and learns and having promo items, and going out and sponsoring activities and doing events. Everything is factored into this here. This is what also is going into, not your actual client itself, but your total referral numbers. Other things that are taken into consideration, is if you have a certain amount of referrals and then you only convert a certain amount, how much does it cost you to actually get the end client working for you? So, not all the referrals that you generate are going to convert. This is where strategic marketing comes in, and we’ll come through some tips on that in a second. But the national average for acquiring one client is $571. So, we’ll just say $575 for easy math, is what it costs to be able to acquire one client on services.
Now let’s talk about the caregivers. The caregivers are a different beast. You have to get caregivers from so many different sources. We have Indeed, myCNAjobs, is the two internet leading providers to get caregivers. We have referral bonus programs, word of mouth, or old-fashioned marketing things like going to schools and pounding the pavement, which we’ll talk about that in a little bit as well. But when you add up the cost of the top five ways of acquiring caregivers and then you divide it out, this gives you a national average of $475 per caregiver. And just like with the clients, this is not just caregivers that are applying for work, but rather people who apply then are interviewed and then go through orientation and training who eventually ultimately start a case with your agency. So, it costs you $475 on average just to get one caregiver to go through that entire process. So, now, when you take $575 to get one client and add to it $475 to get one caregiver to take care of that client, you’re talking about $1,050 from the day you start that case in your cost just to match the client to the caregiver. So, you’re already starting off in the hole. This is why it’s such an issue that we know these numbers and we reduce these numbers.
So, tip number one, how can I make it cheaper so it doesn’t cost me as much? This is where strengthening your relationship with your referral sources on the client side is so valuable. It costs a lot less money to maintain a working relationship with your referral partners than it does to develop a new one. Once you spend all the effort getting into an account, you should not have to spend as much money and effort to stay in that account. How do you stay in that account? Well, that comes from providing a superior service, making sure that you follow up with your referral sources in a timely manner. Something that I teach my clients in great detail, are the five touchpoints after a referral is made. Referral is made, you communicate. Once the client is signed up and they’re getting ready to start services. Once the client is started on services. At the 30-day mark, now that they know it’s not a readmission. And then once or twice for long term, 60 days, 90 days out from when they started with you. If you follow up your referral sources in person with a visit to give them an update those five times when a referral is made, I guarantee, you’ll receive more referrals and the cost of acquiring a client will go down tremendously.
The second tip I’m gonna give you, is also on reducing the cost of client acquisition, and this is coming through your power partnerships. So, power partners is something that I have been training people for over a decade on how to develop. This is if I’m a private duty agency, I’m working with hospice, I’m working with home health, I’m working with assisted livings in other places to be able to not just get into places that are not referring me, but also to have those people who are my power partners send me referrals on a more consistent basis. So, the same thing applies here. If I’m gonna spend the money to get into a hospital, which could take me five, $10,000 of, and lunches and all these other meetings to be able to get in front of people to get referrals going, if I have a power partnership and that power partner is referring me while we’re splitting the cost of doing all of that, that will greatly reduce the time it takes to develop the new relationship at the hospital. It’ll split the cost, so, instead of it being $5,000, it’s split 50, 50, which means now it costs me $2,500 to get in there. And by having a dual presence and both of us going to this account again and again and again and again, it gives us more touch points at the referral source which allows us to get more referrals with less effort and energy. Effort and energy being the time it takes for you or your marketing representative to go there and keep the relationship going, which means it reduced the cost of getting those referrals. ‘Cause remember, at the end of the day, referrals equals freedom. The more referrals I have coming into my company, the more control I have over how I run my business. So, this is a great way to reduce the cost associated with generating client referrals.
The third and final tip I’m gonna give you, is on the caregiver side. When you look at the cost of acquiring a caregiver, I want you to take it further down. This is where your metrics are really going to come into play. In the Home Care Pulse Report, they go in great detail taking a look at, not only the top five referral source ways of generating new caregivers, but then they go and talk about the top five ways caregivers are turning over, or the top five sources of caregiver turnover. And so, while Indeed is the number one source for new caregivers, and it has a cost of a little bit over $500 per caregiver, it also has the highest turnover rate. And so, when I look at it from this perspective, Indeed costs me $500 to get a caregiver. That means if I want to get 100 caregivers, it’s gonna cost me $50,000. Well, Indeed also has an 85% turnover ratio, which means that after one year goes by, those 100 caregivers that cost me $50,000 to attract, I only have 15 left. So, really, my cost of getting 15 caregivers through Indeed, is almost $3,800 per caregiver being a caregiver who will be with me for a long term. On the flip side, let’s do a different program. The referral bonus program, which has a high per caregiver cost, Home Care Pulse shows it costs about $850 per caregiver. Now, think about it this way, $800 a caregiver, well, that’s a lot of money. 100 caregivers would cost me $80,000. But the turnover ratio is significantly lower, it’s actually closer to 40%. Which means if I have 100 caregivers, a year goes by, I’m gonna be left with 60 caregivers. So, 60 caregivers at $80,000, that’s gonna be just under $2,000 per caregiver staying with me and my agency, that’s a much greater return on my investment than Indeed. So, what’s the tip here? Be strategic with your recruiting. Spend money in the areas that give you the highest retention rate. Because if you’re not turning over caregivers, you don’t have to hire as many, which makes it a lot more affordable to be able to grow your business than it would be if you’re churning and burning like the average home care agency is doing.
So, there’s the tips for you, folks. And if you want more information, I highly recommend subscribing to my magazine. It’s free if you wanna download it. You go to homecareevolution.com and then you can find the magazine where you can subscribe to it. There are great articles in here on how you can become the employer of choice, how you can reduce your caregiver turnover, how you can bring more caregivers to your agency, and so many other things that will help you to scale and grow. Because you know, at Hurricane Marketing Enterprises, Home Care Evolution, we give you everything you need to blow away the competition.
So, folks, I’m Steve “The Hurricane,” I just spent three days teaching all these people how to…
“Blow away the competition!”