September 2008, Volume 4, Issue 8
Published by AEGIS Communications
Marketing Dollars Meet Common Sense
Here’s how most practices decide if their advertising is working: The dentist asks, “How’s that new ad campaign working?” Then the front desk staff answer, “Oh great, we love it,” or “Just a bunch of no-shows and shoppers.” The end.
What’s the problem here? All of the information is anecdotal. It reflects the mood of your staff at the time more than actual statistics, which means any decisions about whether to continue the campaign aren’t based on facts. The truth is dental marketing works gradually and cumulatively, and the only way to truly judge its effectiveness is with proper tracking.
So, how does a dentist track properly? Simple: Use your software to input where every patient came from. And if a patient is a word-of-mouth patient, track one step further to where the person who referred them came from. For example, say a new patient responds to a direct mail piece and then later sends his father in for implants. You want to track that both he and Dad essentially came from your direct mail campaign. After you can see where your patients are really coming from, you can look at the production generated from each source and then assess the return on investment (ROI).
Keep in mind that a dental office is a different business model than most. Most of your income from a patient doesn’t happen in the first visit—it accrues over the life of that relationship. In fact, statistically most patients don’t accept comprehensive treatment until they’ve been in the practice 18 months or more, which means that what you’re really looking for from your advertising is new patients, not instant returns. The short-term goal of your marketing should simply be to pay for itself, knowing that the big money will come later. I’ve seen many an office abandon their advertising only to discover later that it generated a tremendous amount of production, it just didn’t happen right away.
My rule of thumb about advertising spending is: If a campaign brings you one good patient case that pays for your ex-penses, then the rest is gravy. You’re building tiers of production that will manifest later. This mindset also will keep you from over-presenting at the first visit, which can often scare new patients right out of the chair. Don’t try to make your money right away. Start a relationship and the production will come.
Here is a helpful exercise. Take a mo-ment to calculate the lifetime value of a patient in your practice. What would someone spend over 15 years, including some restorative procedures? (If you do a lot of cosmetic work or implants you can factor those in as well.) What does that amount to? $10,000 per patient? I’ll bet it’s much higher, but let’s work with that number for now. Now consider the general rule that each new patient from advertising should, over the next few years, bring you five more patients (if your internal marketing is working properly and you are asking for referrals). That adds another $50,000. Therefore a new patient, conservatively, is worth about $60,000 over the life of the practice. Even with a 70% overhead, that’s still $18,000 profit for one patient. Most businesses would kill for that kind of ROI. Keep that in mind when you’re trying to decide whether it’s worth spending a few hundred dollars in advertising to get your next new patient.
When it comes to making specific advertising decisions, you constantly should be asking, “Is this sustainable?” In other words, can you expect the same results for a year or more, or is it a flash in the pan? Some things work very well for a very short time, and then you’ll waste tons of advertising dollars trying to chase those same results to no avail. Other times you can get stuck in a campaign for a year when it only paid off in the first month or two. That’s precisely the reason I dislike phonebook advertising—such a long commitment, with no opportunity to change the ad or pull out completely if you’re dissatisfied. Find something that you can stick with, something that will continually bring new patients in the front door.
So given all these factors, what should your advertising budget be? I would say 5% of the gross of your practice. But I know practices that, once they get to a certain level, spend as much as 10%. After you get past $600,000 in production, your margins are much better, making it possible for you to afford to get the ball rolling even faster. However, keep in mind that you have to spend the money first. Dentists have a tendency to wait until they have extra money to advertise, or worse, they cut advertising spending when money gets tight. Advertising takes time to build momentum and create results. Remember, you’re looking for lifetime patient spending here. Advertising is the fuel to generate future spending.
MAKING SENSE OF IT ALL
There is one more aspect of your advertising campaign we haven’t touched on. It’s an area that most dentists don’t consider “marketing,” but where 80% of practices consistently fall short: Answering the phone. It sounds simple, but the statistical fact is that one out of four calls to a dental practice goes to an answering machine when the office is open. For your marketing to do any good, someone has to be there to greet new patients when they call. And just as importantly, they need to answer each call nicely and speak in a caring, considerate manner. New patients form their first impression within the first few seconds and, if you lose them during that first call, your advertising campaign is useless. If your staff currently views answering the phone as an interruption, hold off on wasting advertising money until you fix the problem. I can tell you from experience that the majority of dental advertising fails not because it’s not generating calls, but because of how those calls are (mis)handled. Make every call count.
One final note: Advertising is a profession. Art direction, copywriting, media placement, Web site development—these are all full-time jobs for people with skills honed over years. Don’t try to do this stuff yourself. Get help from experts in the marketing field, just as you would in an oral surgery or orthodontic case. Don’t try to be an advertising guy (I promise you, you can make more money as a dentist). Just like a good accountant, a good marketing company will more than pay for itself.
In the end, it’s all about understanding how dental marketing works and doing your part to make it successful. If you use your software and your staff to track results, answer the phone well, focus on long-term production, and get outside help with your marketing, all of the pieces will fall into place.
|About the Author|
CEO and Co-Founder
Los Angeles, California