“Without the data, you are just another person with an opinion.”
W. Edwards Deming.
By Stephen Tweed
You’ve heard me say it, or you have seen it in my writing.
“What gets measured gets managed, what gets rewarded gets repeated.”
It’s become the mantra that I have used with home care company leaders who want to grow their business and get ready for the future. And it has come true in our Home Care CEO Mastermind Groups. The largest companies in our groups are led by owners and CEOs who have a firm understanding of the data from their businesses.
Let’s start with the first phrase. “What gets measured gets managed.”
What you track in your business determines your priorities. If you only track dollars, that shows us where your priorities are. If you track sales and marketing results, that shows that you put an emphasis on attracting new clients. If you track caregiver recruiting and retention, that shows that you put an emphasis on finding and keeping the caregivers you need to grow your company.
Leaders in the largest, fastest growing companies in home care track metrics, analyze results, and make strategic decisions based on their analysis. They evaluate programs, gather new data, and change directions when their analysis shows that what they have been doing is no longer working.
Let’s Look at Some Industry Data Points
For over a decade, we have worked closely with Home Care Pulse on their annual Home Care Benchmarking Study. This annual report gives us the best available data on most elements of a successful home care business. Let’s look at a few interesting data points from the 2021 Report. What could you learn about your business if you captured these same data points from your own company and analyzed the data?
- The median sized home care company in 2020 was $1.95 million in annual revenue. The companies at the 95th percentile generated $8 million in revenue
- The gross margin for the median sized companies was 35.9% of total revenue
- The median sized company spent 5.1% of revenue on sales and marketing
- The median sized company spent 3.2 of revenue on caregiver recruiting and retention
I suspect that most of you reading this newsletter are subscribers to the annual Home Care Benchmarking Study, and you have probably compared your numbers to these data points. There are some other data points that perhaps you have not looked at.
- The number one source of new clients is referrals from current or previous clients and their families
- The number three source of new clients is referrals from caregivers and other employees
- Companies over $5 million in annual revenue convert 41.7% of callers into clients
- Companies under $1.5 million in annual revenue convert 29.7% of callers into clients
- The median client acquisition cost across the industry was $595.00
What do you know about your sales and marketing activities from looking at your own data? How has that data changed over the past two years since the Pandemic began? How have you adjusted your sales and marketing activities based on what you have learned from your own data?
One of the things we have learned by examining case studies from specific Home Care CEO Mastermind Members is that not all referral sources are created equal. New clients coming from certain categories of referral sources have a much higher lifetime dollar value of a client than clients coming from other referral sources. For example, we know that clients referred by Bank Trust Officers and other Trusted Advisors generate more hours per client per week, and long lengths of service, than clients referred by hospitals, home health agencies, and skilled nursing facilities.
What do you know from your data about the dollar value of your clients by referral source category? Would it be valuable if you could direct your sales and marketing efforts at those referral sources that bring the most valuable clients?
What Can You Learn About Caregiver Recruiting and Retention From Looking At Your Own Data?
Here are some interesting data points from Home Care Pulse about caregiver recruiting and retention:
- The number one recruiting source in 2020 was Indeed.com
- The median caregiver acquisition cost was $497 on Indeed.com
- The turnover for new hires form Indeed.com was 76.1%
- Turnover in 2020 was 65.2%
- 57% of turnover happens in the first 90-days.
- The number two recruiting source in 2020 was Employee Referral Programs
- The median caregiver acquisition cost for employee referrals was $661
- Turnover for new hires from employee referral programs was 63.8%
- The number five recruiting source in 2020 was word of mouth
- The median caregiver acquisition cost for word of mouth was $347
- The median turnover rate for new hires from word of mouth was 47.1%
What could you learn from analyzing your own data about recruiting that would help you attract more new caregivers?
Learn About Your Company by Discussing Your Data with Your Peers
One of the most valuable activities in our Home Care CEO Mastermind Groups is our internal benchmarking process. On a regular basis, our members submit financial and statistical data. We create a table of that data so that members can see the mean and median for their entire group, and they can compare their own data to the group. Then we have in-depth discussions about each category so that members can learn what other members are doing that works, and the numerical results they are getting.
As Edwards Deming said, without the data, you are just another person with an opinion. You can have a conversation with other home care owners about various aspects of your business but without the data your are just discussing opinions. When members share data, results, and best practices, everyone in the group can learn and grow from the discussion.
If you would like to have this opportunity to examine confidential benchmarking information with other owners of similar sized home care companies who do not compete with you, then explore becoming a member of a Home Care CEO Mastermind Group.