1. Make a budget and a plan. Stick to it
Think about retirement investments. Your advisor allocates how much of your savings to put into high, medium-high, and low-risk investments.
By spreading your savings across investments with different risks, you minimize those risks, while taking advantage of investments with potentially big payoffs. The same principle is at work with your dental marketing budget.
2. Start with low risk
Below are the risk factors associated with each medium and ways to minimize risk to your dental marketing investment.
Our focus here is eliciting a direct response as opposed to establishing brand familiarity. Most dentists are more interested in dental marketing that gets a direct response than they are in general brand-building activities.
Internal Promotion: Dental marketing through referrals is the most efficient form of marketing and carries a very low risk.
It is not a good idea to hammer your existing patients with promotional materials but you probably haven’t done as much as you could with this reliable business builder.
A five percent allocation should be enough.
- Risk level: very low.
- Upside: reliable.
- Downside: slow growth; could irritate your patients if done too often.
Signage: There are virtually ZERO risks in having well-designed signage. This includes banners, sandwich boards, and window designs. If depreciated over the practice life, the cost is next to nothing.
- Risk level: very low.
- Upside: low-cost, negligible ongoing costs.
- Downside: higher initial costs.
Practice website: This is also low risk, but that depends on how it is designed, what it communicates, how many visitors it draws, and whether the site converts visitors into calls. Even a BAD website produces a new patient occasionally. 5 percent risk and 95 percent upside.
This will be your BEST secondary medium, which means all your promotions will refer people to your website. People will go to your site to “check you out.” A certain number will convert to new patient calls.
A good website and an effective web marketing strategy is a foundational staple of your marketing. If you do it poorly (or not at all) the lost opportunity costs are staggering.
Allocate 10 percent of your budget to website and internet marketing.
- Risk level: low.
- Upside: potentially your best source for new patient contact.
- Downside: A bad site and poor search engine position are major lost opportunities.
Direct mail: This is the most effective form of advertising we use for our clients. We achieve success in 96 percent of all US markets. It is also BY FAR the least risky external marketing.
That doesn’t mean you focus on direct mail alone—it needs to be part of an overall marketing strategy. But if you want to diversify the allocation of your dental marketing budget, direct mail is a great place to invest and presents the least risk of all external mediums.
- Risk level: low.
- Upside: successful in most markets; great ROI.
- Downside: takes time to build momentum, some up-front costs.
3. Know when to take more risks
Print media: Newspapers and magazines are in this category. But there are others. You may have a subdivision nearby with a monthly community newsletter— that would be considered print media.
This medium can be feast or famine. We have had clients deploy the same newspaper insert in the same market for over a dozen years and enjoy success every time.
We have also seen that in some markets, it takes us (their dental marketing company) two or three attempts to find a print media that works. That is why print media has a 62 percent success rate. However, once you find the winning formula, this medium can be very reliable.
- Risk level: moderate.
- Upside: ROI can be high on a successful ad/insert.
- Downside: may take time and money to find the right print venue.
These should be considered once you have fully exploited the low and moderate-risk mediums.
Mass media: This includes television, radio, and billboards. In general, and without the support of the low and moderate risk mediums described above, you are looking at a 44 percent success rate.
Do NOT diversify into mass media until you exploit less risky mediums and are generating a reasonable ROI.
4. Low, moderate, high—putting it all together and finding the right mix
Finding the balance between mediums with different risk levels can be confusing. Here is an actual example showing how the principle of diversifying risks looks like when applied to a dentist’s long-term marketing.
Dr. Smith’s practice is general, she is in an average market and is average in terms of her competitiveness with other practices. She has been open for five years and has invested little into promotion.
Here is our counsel to Dr. Smith on budget allocation over the next six years:
- Marketing budget – year 1 (Previous 12 Month Revenues X 5% to Annual GOAL Revenue X 5%
- Actual revenues = $600,000
- Goal revenues = $800,000
- Budget range = $30,000 to $40,000
- 5 percent – Internal projects (referrals)
- 15 percent – Website/Internet
- 80 percent – External (targeted direct mail)
Rationale: In the early years she focused on low-risk mediums while taking advantage of dental marketing mediums whose potential she hadn’t begun to explore. Mass media was not an option.
The budget wouldn’t stretch to cover both mass media and supportive mediums—referrals, mail, and web marketing.
5. Know the risk/reward going forward
For the next three years, she recalculates the budget based on the formula above, allocating the same way.
- Marketing budget—year 3
- Actual revenues = $900,000 Goal Revenues = $1.1M Budget range = $45,000 to $55,000
- Budget allocation 5% – Internal projects (referrals) 15% – Website/Internet marketing 50% – External projects (targeted mail) 30% – Print media
Rationale: Dr. Smith’s practice has grown and her marketing tactics are working. There is now more budget room to diversify into the next logical medium—moderate-risk print media. This assumes her website and mail campaign are still providing positive returns.
- Marketing budget – year 6
- Actual revenues = $1.3M Goal revenues = $1.6M Budget range = $65,000 to $80,000
- Budget allocation: 5% – Internal projects (referrals)
- 10 percent – Website/Internet marketing
- 30 percent – External projects (targeted mail)
- 20 percent – Print media
- 35 percent – Mass media
Rationale: Dr. Smith’s practice has grown as her marketing has paid off. She will still funnel a portion of her budget into the low-risk mediums that continue to perform, but now, with increased revenues, she has a bigger budget.
She can afford to diversify into higher-risk mass mediums. She will have the luxury of taking slightly bigger risks with her dental marketing services budget without cutting into her bottom line.
6. Experience the synergy
For the first six years, Dr. Smith relied on reliable, low-risk marketing fundamentals. Referral campaigns, web marketing, and direct mail gave her solid returns and helped grow revenues and the dental marketing budget.
As her marketing mix evolved, she allocated more budget to higher-risk mediums. Being in more mediums allows her to benefit from the synergy that happens when wider coverage increases and focuses on consumer awareness.
Every practice presents its own challenges. No two strategies will be identical. The example above illustrates the fundamentals of dental marketing budget allocation and provides a good guideline in helping you minimize risk to make the best use of your dollars.
Disclaimer. The views and opinions expressed here are those of the authors. They do not purport to reflect the opinions or views of IdeasPlusBusiness.com. Any content provided by our bloggers or authors is of their opinion and is not intended to malign any organization, company, individual, or anyone or anything.
For questions, inquiries and advert placements on the blog, please send an email to the Editor at ideasplusbusiness[at]gmail[dot]com. You can also follow IdeasPlusBusiness.com on Twitter here and like our page on Facebook here. This website contains affiliate links to some products and services. We may receive a commission for purchases made through these links at no extra cost to you.
Sachin Bathla manages content & SEO clients at New Patients INC. We are here to help! For a complimentary dental marketing plan, call New Patients Inc at (855-950-5335) or visit us at: NewPatientsInc.com