How Can Medtech Companies Determine the Return on Investment for Application Development?

Custom application development is not a small investment by any means, so medtech companies engaging these services will naturally want to understand their return on investment.

When the application is the primary component of what you are selling, then it is easier to figure out if you are getting a return on investment based on your sales, number of customers, etc.

But when the application isn’t the primary component of a product–maybe it’s an add-on feature or an accessory to the device itself, or an internal tool meant to improve upon your current processes–it can be a bit more difficult to determine whether or not your investment was worthwhile.

While it may be harder to tie an internal tool or accessory component of your medtech product to actual sales dollars, there are some things you can do to determine whether or not your investment was worthwhile.

Here are some steps we recommend taking for medtech clients who want to track the ROI of a custom application that is not the primary product:

1. Start by identifying your desired outcomes–and make sure they are measurable.

What are your ultimate goals for this application? Why are you developing it? Start there, and then figure out measurable metrics out of those goals.

Perhaps you want an application to help physicians review post-procedural data, help hospital admins review larger trends related to the procedure, and/or help your engineers address problems. Or, maybe you want a physician locator that helps connect patients with physicians that use your device, or a tool that helps your sales team track field events.

What measurable outcomes might you be able to draw from each of those applications?

• For an application that tracks post-procedural data, you might want to track how many users are logging in on a weekly/monthly basis, how often they come back to use the application, what features they are using within the app, and segment the data by user types if your application serves multiple types of users.
• For a physician locator, you might track how often it is being used, what people are typing into the search bar, and what results they click on/interact with.
• For a tool that tracks field events, you might track how long it takes to complete each step in the planning process, event turnout, and how long it takes to put together the reports you need compared to your previous methods.

These are just a few examples to help you think about how you can tie measurable objectives to your goals.

2. Find an analytics tool that enables you to measure the objectives you identified.

Not all analytics tools are created equal. A lot of organizations use Google Analytics because it is free, but sometimes it isn’t the best tool for the objectives you need to measure.

If you are trying to measure things that happen behind a login, which is often the case with most medtech apps, free tools are often not going to give you what you need. You will likely need an analytics tool that allows you to really customize your configuration and what data you’re pulling in. If your app collects patient data and/or allows patients to log in, you will also need to ensure that your analytics tool is HIPAA compliant–few actually are, so you really need to do your research there.

We use an analytics tool called Matomo because they offer a version that we can self-host on a HIPAA compliant server for the clients that need compliant analytics, and it offers a lot of capabilities for pulling in and creating reports from data that is specific to our customers’ tools. There are others out there that can do similar, depending on your needs and budget.

3. Set up your tracking prior to launching your application (ideally).

You want to have your analytics tracking in place before your application launches so that you can start out with a baseline of your key metrics. This way, you’ll know if you are hitting your targets from the beginning, or where you are lacking so that you can develop a plan to get there.

If you’re reading this after your application has launched–no worries! You may not be able to go back to the beginning, but you can still set up your analytics tracking to get a baseline for where you are now and go from there.

Correlating Device & Application Data with Sales Information

While it’s harder to directly tie app usage to sales dollars when the app isn’t your primary product, there are some insights you can gather from the data that you can potentially correlate with sales information.

Here are a couple of scenarios where you could compare your application usage data with sales:

• If you developed an application that tracks post-procedural data collected by your medical device, what trends are you seeing with the health systems that use the application more often? Do they buy more devices than health systems that don’t use the application as often? Do they use the devices more often?
• If you built a physician locator, are the physicians that are getting more traffic from the locator ordering more product than those who do not?

If you can drill down to these kinds of data points, you can start to tie it to sales numbers and round out the success story of your app. It requires a bit of groundwork and consulting different systems to get this information, but if you can make those connections, it will be easier to get buy-in.

What To Do If Your Application Isn’t Hitting ROI Goals

With application development, it’s important to understand that you will rarely get it 100% right the first time. We always recommend budgeting for periodic update phases for any custom application you build.

Even if you work with focus groups composed of people within your target demographic during the initial development phase, it is nearly impossible to predict wider usage trends for a new application until you can get a larger group of people using it.

This is why we recommend having your metrics and tracking in place from the start. It identifies some of the areas where your target audience is not behaving as you expected, which gives you a better idea of how to correct the course in the next iteration so that you can get closer to meeting those goals. By gradually tweaking along the way and planning for it in the beginning, you can also ensure that the project is more budget-friendly.

You may not always be able to directly tie app usage to a dollar amount in sales, but continuing to measure and get that feedback will tell you whether or not the application is meeting the goals you set out to accomplish.