We have finally made it to part four of “The Road To $10 Million.” In part one, we discussed how many locations, how long it’s going to take, and how we can scale this business quickly. In part two, we discussed the office staff, managing them, and the roles that everybody is going to play to be able to pull off $10 million a year in revenue. In part three, we discussed the recruitment effort. How many applicants, how many interviews, and how many caregivers do we need to hire in order to be able to staff $10 million worth of services? And finally, now here we are with part four, where I’m going to discuss the marketing and sales effort it takes for us to be able to generate over $10 million in private pay revenue every single year.
DEFINE YOUR TARGET CUSTOMER
The first part of it is knowing our target customer. Our target customer is an acronym, the word NERD.(see picture) The N stands for great need. Specifically, we are looking for patients that suffer from five or more chronic conditions. These patients are taking more than a dozen medications and need a lot of assistance in order to remain home safely. This will allow you to build your census around clients that will most likely stay with you for a long period of time. Second is E which stands for elderly, a patient who is aged 65 and older. The third is R which equals resources. These are people who have the financial resources to afford private pay services. It does not mean unlimited resources, but they or their family can afford the services needed to remain home. The last D stands for disabled and/or dementia. A patient who is permanently disabled is not someone who is going to need services once or twice, but rather every single day for an extended period of time, maybe even the rest of their life. As for dementia, there isn’t a cure and so you’re looking at a long-term client, who needs much supervision. Building your business around this type of patient will allow you to take care of a few patients, making it easier to manage their care, while having those patients with full-time (or more) care. This will definitely get you to the goal faster. (and you will be providing the ability for those with the greatest need, to remain in the comfort of their home for their remaining time.)
HOW MANY N.E.R.D.S IN OUR TERRITORY?
Just how many target customers exist in our marketplace? This is the second part of the equation here. If you look at the demographics on the page here, you’ll see that for every million people in one area, the statistics show that you will have 6,000 N.E.R.D. patients. That means if I have half a million people in my service area, there are 3,000 N.E.R.D.s. Even if I have only a quarter of a million people in my service area, there are still more than 1,500 N.E.R.D.s. The point is, there’s plenty to go around and we can focus our efforts on obtaining these referrals.
HOW MANY PATIENTS MUST WE SERVE TO GENERATE $10M?
How many N.E.R.D.s does it take for us to be able to generate over $10 million in total annual revenue? To start, let us use a rate of $30 an hour. To generate $10M, we divide by $30 to determine the number of hours per year. Next, we divide by 52 weeks in a year, so we can determine the average number of hours per week we need to bill. Last, we divide the number of averaged hours per week by the volume of care given per client. Being the limitations of our patients with 5 or more chronic conditions, your average hours per client should be well over 40hrs. So for a round figure, we used 40 hours a week. The image here shows us that if we maintain approximately 165 patents on our census for an entire year, that will generate over $10M. The math works every single time.
HOW MANY REFERRALS DO I NEED TO REACH/MAINTAIN $10M?
Patients come and go frequently, but because we are focusing on Disabled/Dementia patients, we can expect our patient attrition to be much lower/slower than normal, as these patients will need help for extended periods of time. Therefore, we can estimate a need to start care for 300 patients to maintain a census of about 165. Using a conversion ratio of 33%, we would need to receive about 900 referrals to sign up 300 patients. Now having a successful marketing team of 3 FT marketers, this breaks down to each of those representatives averaging 5-6 referrals each week (about 25 per month). The best thing about this is your website (SEO, Adwords, etc) should also be generating leads for your company and so to get this type of volume is definitely attainable. (Remember while these numbers seem steep, you’re also talking about having a full staff as mentioned in a previous issue)
WHERE WILL WE FIND THESE PATIENTS?
This is where our strategic development of referral sources is essential. We have to be able to get these patients from hospitals, rehabilitation centers, long-term acute care hospitals, and skilled nursing facilities. The other places that have these types of patients are our power partners, which are other home-based providers, such as the skilled Medicare home health agencies and our in-home hospice agencies. by having a basis of around 30 to 40 of these types of entities referring us consistently just two to three patients per month each, that will generate the number of referrals needed for us to be able to sign on and start 300 new patients. To achieve this, I recommend having three full-time marketing representatives where each marketing representative is managing approximately 20-25 accounts each. Then that should allow each rep to get 10 or so that will refer you about 25 times per year. (Just 2 referrals a month) Then the other accounts will send referrals here or there to make up the difference.
In closing, the numbers don’t lie. There is a huge demand for private duty care in all markets. By understanding the KPIs mentioned here, being strategic in your marketing efforts, and mastering your inquiry/closing process, you will be well on your way to generating the demand to scale your revenue to and beyond $10 million annually. I hope you enjoyed this four-part series, and if you need help accomplishing this goal, check out our services at homecareevolution.com and let’s get you started
today.