Are you wasting your dental office advertising money or is it actually paying off? Will you ever be able to achieve a completely referral-based practice? Or, are you doomed to spend more and more each year on marketing? To answer these questions, you need to consider, Marketing; the Four Levels of Return. And know this: at least two of these levels are often overlooked. Failure to take these into account will give you a wildly inaccurate picture of the REAL dental office marketing ROI.

LEVEL ONE – The Initial Responders

Let’s say you are sending a direct mail piece to homes with certain specified income levels and into zips codes that are near your practice. Or, you are running a print ad in a local magazine or you are doing a radio or a Facebook ad or any kind of advertising for that matter.

The first level of dental office marketing ROI is, of course, those who respond and make appointments and actually show up to receive and pay for dental treatment. We call these the Initial Responders.

The income generated from these responders can be traced very directly to the dental marketing effort that you have done. The income from initial responders can occur on the first visit but can also occur on subsequent visits as the patient completes your treatment plan.

When considering the dental office marketing ROI, most dentists stop at the initial responders. They figure that if the initial responders do not produce at least a 3:1 ROI then the marketing effort is a failure. This is a mistake and will cost them, and you, LOTS of money if you’re making the same mistake. Why? Because there are at least three additional income streams that you are likely not fully considering. If you bail out early you won’t realize your complete ROI.

LEVEL TWO – Referrals

If your practice is like most others, one of the biggest sources of new patients comes from referrals. (If this is not the case and your patients aren’t talking about you or referring their family and friends, then you’ve got much bigger problems than poor marketing!)

So your second level of return is the income generated by the referred patients. Now, we don’t know how many of the Initial Responders will refer their family and friends. All we know is that it WILL occur to a large or small degree. An effective way to measure your referral rate is to divide the number of patient referrals each month by the total number of new patients. For instance, let’s say you get 10 new patients each month and 5 of them are through direct patient referral. That’s a 50% referral rate. Let’s now say that you start marketing and 16 new patients a month are the norm. A referral rate of 50% would produce 8 patient referrals a month. Once you start marketing externally, you will also see your patient referrals going up.

All income from the referred patients of the Initial Responders can be sourced to the original mailing or ad or radio spot.

LEVEL THREE – Referrals from the Referrals

The patients referred by the Initial Responders will, in turn, refer their family and friends. Again, we don’t know how many or how often but we can safely assume that there will be some degree of referring going on.

Actually this third level of return can and does go on for years (really for the life of your practice when you think about it!). In other words, you will end up with a genealogy or patient family tree. Because the referred patients refer other patients who in turn refer others, ad infinitum, the tracking of all this can be tricky. That’s why it’s almost never done.

But even though it’s not tracked, the fact remains that you are and will be MAKING MONEY from these third, fourth, fifth and subsequent referrals for the entire life of your practice.

ALL of this is sourced to the original marketing effort – your mailer or ad or whatever it was that brought in Initial Responders. THAT’S where it all started wasn’t it?

LEVEL FOUR – Referrals Ad Infinitum

Here we introduce the element of TIME.

Let’s say you do a direct mail program that consists of 5,000 mailers per month for 10 months. That’s 50,000 pieces of mail spread out over most of the year.

Let’s then say that the mailing program produced a total of 50 Initial Responders. (This is quite conservative by actual historical tracking over the last 15 years by our agency) which in turn generated X dollars.

Out of the 50 Initial Responders 15 referred family and friends.

These 15, over the course of the year, referred 4 patients.

These 4 referred 2.

The total for the year? 71 patients.

The fourth level of return says this; a percentage of these 71 patients (maybe 100% but more likely less) will be with you for many years. Even if you complete their cases they will at least be in recall until you either make them mad or they move away or die. And if that’s not enough, an unknown – but not zero – a percentage of these 71 patients will continue to refer others.

Natural attrition will, of course, take its toll but you still can count on many years’ worth of income from a significant portion of the previous three levels of return.

And if you really want an accurate picture, track ALL these levels of return for FIVE full years. We are confident you will be amazed at how well your initial investment has paid off over this time period.

LEVEL FIVE – Going Organic; All Referrals, All the Time

Didn’t we say there were only FOUR levels of return?

There’s actually another one.

The new patients added to the practice because of your marketing efforts. And the resultant referrals may be able to take you to a point where you can actually decrease your marketing budget.

This is what we call “going organic.” The practice now grows organically – on referrals alone.

Here’s hoping that you too can go organic!

William Howard (Howie) Horrocks

Mark Dilatush