Dental Marketing Mastery #4: How to Budget Your Marketing
In this episode of Dental Marketing Mastery, we discuss one of the most important things about dental practice marketing — your budget! How much should you allocate towards marketing your dental practice? Which mediums should you spend the most in? How do you avoid a start and stop mentality? All of these questions and more are answered in this podcast!
Hello, and Welcome once again to the Dental Marketing Mastery series. This podcast is brought to you by DentalWebContent.com and New Patients Incorporated. I’m Howie Horrocks, the Founder of New Patients Incorporated, along with me once again, as my friend and partner and the President of New Patients Incorporated, Mark Dilatush.
Howie: Mark, how are you today?
Mark: Hey, how are you? Hello, group?
Howie: Good. What are we going to talk about today?
Mark: Well, um, well, first, I want to thank everybody who’s already chimed in on if you want to chime in with some questions or comments or think we’re all for, you know what, or whatever. To send Josh an email Josh at new patients Inc. com. You can always reach out to Holly and I are our email addresses are on the website. But Josh is our program director for these WebKit sort of podcast so he’ll make sure your question gets on the docket.
So the last couple of podcasts, we discussed the two halves of the dental market, whether or not you believe they exist, why you should believe they exist. And quite a little bit about the overall strategy on how to go after them. The characteristics of each of the halves, how they respond, how quickly they respond, what their return will be into your practice. And on several scenarios, when you would use each or when you would go after each half of the market.
Now for this segment, we wanted to go I don’t know if you remember but the first segment, we said we were having a hard time coming up with the very top of the pyramid for the dental marketing mastery series that the series is going to be vast. And we really had a hard time coming up with the first thing we were going to talk about, and we decided it was going to be the two halves of the dental market because that’s a prerequisite for the rest of the series.
Well, finding the first one was hard because there were so many firsts, and budgeting, what your budget should be, how to allocate your budget to the various media types, how to control costs, which media tend to increase in cost and decrease and have long bell curves or have short bell curves. And all those things seem to be the second most important.
So we’re going to start with budgeting a dental practice where the example practice would be a dental practice. It’s been in practice for five years or more. And they basically just either want to increase the word accelerate the process of growth, or maybe things have stagnated and they want to create new growth. Or in a lot of cases, especially over the last eight years, people come to us. And they say, Well, I’m working harder, but I’m taking the same amount of money home. And honestly, that’s not stagnating, that’s losing.
If you’re working harder and taking the same amount of money home, you’re not stagnant, you’re treading water, you’re going backwards. So if you have a practice that’s five years in or longer, and you fit into any one of those categories, or even I would go so far as to say maybe you’re you have a maybe you’re adding capacity, adding chairs, office hours, dentist hours, you can be in this discussion as well. People ask us all the time, and they say well, how much is your marketing plan?
Howie: I think that’s one of the questions we get most often.
Mark: Yeah, how much does NPI cost? Right? Or, or I don’t know I it here, let’s, let’s clear the air once and for all. And for every other segment in the dental mastery series, dental marketing mastery series. Howie and I the only budget marketing budget we have is for our business. It’s not for your business. We say to you, you should budget 5% of your trailing 12 months revenues as the low your budget, and you should budget 5% of your goal revenues as the high end of your budget. We’re not telling you have to do that. Right. How what if somebody came to us and said market, Howie, you have to budget X percent of your revenues for your business? What would we say to them?
Howie: Well, we would say you know what, we’ll do that. And here’s what you get for that budget.
Howie: If it’s not good enough, okay, then give us a bigger dental marketing budget that will operate within your budget.
Mark: Yeah. Okay. So that’s here’s the point. Mark, Howie some other marketing firm, some guy named Bob, or some lady named Jill, nobody gets to dictate your budget. Except for you, you’re the business owner. You use a you know, a budget doesn’t mean what you’re spending currently, budget is not what you it, it’s just a budget, it’s just a projection. It’s a it’s a percentage of revenues that you plan to spend over a period of time, it doesn’t mean you have to, it doesn’t mean you’re committing to it, it doesn’t mean anything really, other than to say, how does this expense fit into my business model? Right? 5% of your trailing 12 month revenues. So let’s just go through an easy example.
Let’s say that last year, you did 600,000 a year 5% of 600,000 is $30,000. That’s the low end of next year’s budget. Let’s say you want to get to 80 $800,000 5% of $100,000 is $40,000 $40,000 is the high end of your budget. You make those two calculations, “Where am I now?” and “Where do I want to go?” and you multiply both times 5%, and that gives you a very narrow range. You should not spend under the low end and you should not spend over the top End it protects you both ends.
There are many, many, many, many, many dentists out there over the years who have made the classic mistake of starting and stopping. This is why this conversation is at the top of the pyramid or one of the blocks of top of the pyramid of discussion. The one of the most expensive things you can do when you promote anything is start. So a start and stop approach is bad. And dentists are famous for starting and stopping because and it’s perfectly natural. We’re not you know this, we’re not making fun of dentists or anything. It’s just it makes sense that when you get busy, you don’t spend any time, attention, energy or money on marketing your practice right now, why would you do that? If you were busy? I would you go home on a Friday night and look at your dental practice marketing.
Howie: We don’t need it right now. things wrong. We got new patients coming in the door. What the heck,
Mark: yeah. Well, I might as well save the money. Right?
Mark: yeah, put some more money in my IRA make me happy and make my family happy. And everybody’s happy. Right?
Mark: So when it’s busy, dentist tend to not pay attention to marketing, when it’s slow. DENTIST tend to panic, oh my god, it’s slow, I gotta take money, I have to make a decision. Like, now, I have to do five times the amount that I probably really you need to do, just to restart the grow. So what you end up with, is you end up with a start, stop, start, stop, start stop career. And go back to what I said at the beginning of this paragraph, which is the most expensive thing you can do in marketing is start something.
When you start radio ads, it’s the most expensive when you start a new website, it’s the most expensive, when you start a mail campaign, it’s the most everything that you ever do dental practice marketing. When you start, it’s the most expensive it will ever be.
Howie: And my point is that, that’s when you have absolutely no traction from your marketing.
Howie: hasn’t any momentum yet. You’re just dipping your toe in to market penetration, you’ve got a long, long ways to go with that marketing effort, whatever it is direct mail, radio, TV, whatever. And just getting started. And if you if you exceed your expectations aren’t in line with that, what’s going to happen is that you’ll expect a whole bunch of results right away and that almost never happens.
Howie: in any marketing, you have to be in it for a longer haul, you have to agree your expectations way down the line. And that’s and that’s why it gets expensive when you start and stop you starting to go 30 days later, well. Let’s do something else. And that’s horribly expensive for the practice.
Mark: Yes, it is. It’s like paying for the beginning of the bell curve over and over and over and over and over and over again and never actually getting to the top. Right. It’s like somebody, it’s like 27 of your best friends just said, hey, let’s go climb the Himalayas. But we’re not going to actually get to the top. We just want to try really hard.
So I guess the takeaway here is that the audience can take it, you know, is have a budget a dental marketing budget is not it’s not a marriage, it’s not a contract. It’s not a it’s not something written in stone, it’s not Gordon Game of Thrones, where you slit your hands and you shake hands or anything. It’s just a budget, you’re just saying I’m going to spend whatever, 33,000 a month on marketing. That’s what I’m going to spend for next year. I that gives you a starting point. Because the next question is after you figure out what you want your budget today is where you spend your budget. And that can be adjusted as an important decision as how much your budget is. So let me go down a fairly common.
Our team of advisors, at New Patients Incorporated uses of a formula. We use a formula that’s been tested for basically 26 years. The formula is basically a template, it’s a starting point for an advisor to build what’s called budget allocation for a doctor’s marketing budget. Can you hear me Howie?
Howie: Yeah, I can.
Mark: Okay. So what that means is allocation is very much like you would allocate your investments in stock, your investment, portfolio manager would say, don’t put all your money in one stock, there’s too much risk. And that’s exactly what you would say, when you’re investing your marketing dollar, he wouldn’t put all your money in one media. So a classic template or a classic formula for a practice that’s been in existence for five years or so has a decent patient flow. And he’s just looking for additional growth is to allocate 5% of their trailing 12 months revenues to 5% of their goal revenues. But then take that whole budget, let’s use our example 30,000 to 40,000, let’s just use $35,000.
Let’s go right down the middle and use 35,000 you will always take 10% of your annual budget. Or you should always take 10% of your annual budget and apply it to internal promotion. Internal promotion or things like when they smile reminder revenue well demand for the things that the monthly subscriptions Yeah, be the monthly subscriptions that you paid for that. Communicate, send texts and emails and reminders for appointments. Okay, there are about 300 a month right now is somewhere around there.
Howie: I believe so yeah.
Mark: Well, there’s 30 $600 30 $600. There’s just about 10% of 35,000. When you say pretty close, okay, so there you go, your internal promotion is allocated. Now, you can do more than 10. Internally, you can go up to 10%. So what else do we talk about internal promotion, Howie. But give me some examples of internal promotes?
Howie: Well, one is, you know, the old referral brochure, you want to encourage your patients to bring their friends and family and to you. So there are there’s a printed piece. We’ve had one for many years, it’s gone through an evolution over time. Of course, that’s one method of internal promotion, you’re building to your patient base, already knowing exactly like you. You work on them, they’ve given you money, so that they’re probably very willing to spread the good news about your practice.
Mark: Absolutely, there’s a great example of internal promotion, I can think of a classic example. And if you’re a dentist listening to this, you’re probably going to be shaking your head in about two minutes, he’ll be shaking it up and down. When was the last time one of your own patients walked into your office was a new set of veneers that you didn’t do. They probably walked in with a new set of veneers that you didn’t do because they didn’t know you did veneers. And they probably didn’t know that you did veneers because you didn’t tell them. Internal promotion is the act of telling your existing patients all of the benefits of all of the dentistry you do not just what you specifically have done to them.
Your patients don’t want to be there to begin with. And they can’t wait to go home after they leave. They will only remember, physically, they will only remember the outcome physically of what you have done to them. They will not realize the breadth and the depth and the scope of all the other beneficial services that you provide all of your other patients.
A 33-year-old is not going to understand the benefits of Implant Supported dentures. Not unless you tell them, they may have a mom or dad that lives right down the street that’s been complaining about their dentures to their son or their daughter for the last 27 Sunday dinners in a row. But you didn’t tell that 33-year-old about the benefits of Implant Supported dentures. Why? Because you didn’t have any of your budget? Well, first of all, you didn’t have a budget. And second of all, because you didn’t have hardly any of it allocated to internal promotion. The bottom line is, the best place to promote your new services or your existing services really is to your existing patient base. They always cost the least to reach out to, and they will always provide the highest impact. Would you agree Howie?
Howie: Absolutely. Absolutely. It’s an old saying, but it has to be true retaining or trying to get a new patient into the practice of the six times more of us just to retain the ones who already have.
Mark: Exactly, exactly. Okay. So internal promotion 5%-10% of your annual budget, the internet. Depending on where you are 15 to 20%. Then we would and when I say 15 to 20%. That includes everything that includes the website, any SEO, social media that you’re doing to it on any AdWords that you might want to invest in. So that leaves about 45% of your budget leftover.
We typically don’t like to fully allocate a budget. We like to leave 5% on the back end, just in case something, some really cool opportunity pops up that the audience wants to take advantage of like, the church across the street has a church bolt, and then it cost 50 hours a month to advertise in it and we get 9000 patients from it. Some of those things still do exist, and you do want to be able to take advantage of them.
So now you have about 30% 50% of your total budget leftover, where do you put it? And the answer is, as you put it into your local community in such a way that will either Garner and immediate response direct, or drive the recipient to your website, where you can get an indirect phone call. Now if you have your internal taken care of, and you have your web presence with the other part of the budget, taking care of how he and I have a statistics on what works and what doesn’t work for every media type, believe it or not, the doing direct mail the right way, is, is effective and 96% of the US markets, it’s actually point 4% more predictable than the internet, because the internet is 96.
So what we would do with that extra 40 to 45% of that budget is we would pour that whole chunk into getting as many impressions on the streets as possible to the most qualified candidates as possible over the next year. And we would hope to secure and when I say secure when I mean is claimed. If I’m a dentist, I want to claim the top 40% of the local market is mine. If you’re a competing dentist, you can’t have them hands off.
So what I’m going to do with that portion of the budget is I’m going to reach out to the top 40% of the households within a very short drive of my dental practice. And I’m going to proclaim mine. These are mine, I’m going to hit them three or four times over the next year with the benefits of my dental practice the conveniences technologies, my public relations assets, I’m going to hit these households, I’m going to allow them to choose me and they can choose me either directly through calling the number on the mailer, or they can go to my website, which many of them do and they will do more research about me and they will call me from there. But I am going to claim this center core as mine.
That’s what I’m going to do with my first year dental practice marketing. But how about you Howie? what are you going to do?
Howie: OH there, bro. Yeah, and this this, this description of what you should do with it with your marketing budget, is it? It doesn’t, it’s just comes from experience. That’s all we’ve tried all kinds of other ways to do it. And you know, and accommodate some figure that they can get all of their nations from the internet. And we haven’t yet is actually done that. So this is a try this try that hit or miss thing this this comes from 26 years of doing it. Say direct mail is old school if you want go ahead our clients will it be a matter of doing it correctly? retargeting, right message, best return on investment you can make?
Mark: Yeah, it’s an L. I’ll try and draw our, our listeners attention outside of dentistry for a second. And I’ll list off some websites, overstock com. Amazon in the early years Yahoo. Um, I don’t know, Southwest. There’s three or four websites right there that almost everyone or even Facebook. Almost everyone who’s listening to this has visited. Right there very popular websites. And sometimes I think dentists think that they can skip the step of driving people to their website who are local. But that’s exactly what overstock, Yahoo Amazon and Southwest Airlines did. They use television, radio and print media, offline advertising, to drive web traffic to their website. And this has been going on around you as a matter of normal commerce for the last 20 years.
So if somebody comes to you and says not gonna put 100% of your annual budget in, I don’t know, Google AdWords. Okay. Nobody does that. Even the gigantic companies, the fork if Ford could get all their sales, all of their interest in the new aluminum body f1 50. off of the internet only. Why would you see Ford F 150 commercials on TV. The point is, as a dentist, you’re working in a circle, about a 15 mile diameter around your practice. If you’re not going to move your practice, you have to claim that as yours, you have to do offline promotion. Good online promotion, yes, and good internal promotion.
If you are in a market, that is at least average competitive makeup. You’re going to need to do a combination of those three things. What we just presented to you was the right mix the right budget allocation of those three things. And that’s what we have for this installment.
Howie: Yes. Yes.
Mark: The next installment will go deeper into budgeting. And we’re going to start to peel off the layers of some of these media types. And we’re going to start going through do don’t do this, but don’t do this with these media types. Those should really help you. Um, and again, it’s all situational. Everything that we talked about is not 100%. Perfect. This is still the subject of marketing. But we say it all the time that you could walk into a casino and you had a 96% chance of winning would you play? And the answer is yes. Okay. So anyway,
Howie: Las Vegas, I’ll take that bet.
Mark: Absolutely. Well, thanks. Thanks, everyone for listening. And we’ll be back. We’re back with another episode shortly. Thank you.