For some dental practices and other businesses, having a marketing budget can be too limiting. Whilst business planning and close financial control are vital, dispensing with the idea of a fixed marketing budget represents a fundamental change of thinking. Firstly, it starts with thinking of marketing as an investment, not a cost. That’s a mindset change.
So what is the alternative to setting a fixed marketing budget? Start by calculating the ‘lifetime value’ of your patients or customers, say over 3 years. Whether it’s a patient coming in regularly for routine treatment or a patient that has had some cosmetic work, braces or root canal treatment, practices should be able to calculate patient value over a period of time.
Then it’s a case of working out what you are prepared to spend to win each new patient or referral. There are many industry stats banded around about the cost of acquiring new patients e.g. £70 for a private patient, £290 for an orthodontic case, £380 for a dental implant case and so on.
So if a patient is worth say £5k over the next 3 years, are you prepared to spend £250 for a new patient of that type, or more or less than that? It’s all about setting return on investment targets for marketing activity, whether a practice rebrand, poster campaign promoting dental implants, a specific ‘Whitening Wednesdays’ campaign or a patient open day being organised at the practice. It’s also about measuring what’s working best, on an ongoing basis.
There are several benefits of this approach. It encourages dental practices to analyse their patient list/database. This doesn’t get done nearly enough. It helps them to identify their most profitable patients, the good old 80:20 rule. It also allows them to think about whether they are targeting the right patients or referrals for their practice. Last but not least, a crucial benefit of this approach is discovering whether the most appropriate media is being used to maximise return in investnent.
For alternative ways to look at improving profitability, contact us on 0845 287 3051.