Developing a dental practice marketing budget is part science, part art. It’s numerical calculations plus intuition plus experience. This means there are no hard and fast rules for predicting success. But there ARE rules, set in cold, hard stone, for avoiding failure.

By committing any of the Seven Deadly Sins when setting your marketing budget, you WILL jeopardize your marketing success. Guaranteed. So please commit these to memory. Write them down and carry them in your wallet. (Throw out the photos of your kids to make room for them if you need to.) Get them tattooed on your bicep. They’re that important.

Sin #1: Not having a budget at all

Sin #2: Reducing the budget when business picks up

Sin #3: Waiting until business is slow to allocate a budget

Sin #4: Having a budget, but not funding it fully

Sin #5: Having a budget, but not allocating it properly

Sin #6: Having a budget, but not calculating your return on investment

Sin #7: Letting CPAs, practice managers or other dentists dictate what your budget should be

Let’s take a closer look at these truly nefarious marketing sins.

Sin #1: Not having a budget at all

We get to meet and talk to thousands of dentists each year. If you were to take a guess at how many of these dentists tell us they have a definitive annual dental practice marketing budget for their practice, what would you guess?

10 out of 100?

40 out of 100?

80 out of 100?

None of the above. We WISH the number were as high as 10 out of 100. In fact, only two or three dentists in a hundred can instantly communicate their annual promotion budget for their dental practice. Why is the number so low?

We suspect it’s because many dentists still have a deep reluctance to view their practice as a business. A business that needs to be promoted, publicized and advertised just like any other—even though it’s a health service, and an indispensable one at that.

Let’s take a moment to look at the real business world. Which of the following companies does NOT have an annual dental practice marketing budget?

Coca Cola

Budweiser

Nike

Johnson & Johnson

Colgate/Palmolive

Delta Dental

Microsoft

(Bear with us please. We are trying to find one…) Comcast

Disney

Ford

Um, the pizza place down the street

Uh… the kids who sell lemonade on the corner during summer break

OK, we give up. We cannot find ANY other business that does not have a promotion/marketing budget. Even the kids selling lemonade know they have to invest in a pack of sidewalk chalk to market their product to local foot traffic. For some reason, only dentists persist in believing that they don’t need a dental practice marketing budget.

If you’re one of them, please grab a sheet of paper or open your email and list all the reasons you believe dentists should NOT have an annual marketing budget.

Did you write everything down? Good. Whatever you wrote down, it’s totally wrongheaded, and if you send it to us, we will personally contact you and prove to you why it’s wrong. Go ahead, send it—you’ll find our contact details on the Contact page of this blog.

ALL dental offices (regardless of their situation) should establish an annual marketing/promotion budget – period – no exceptions! Nothing makes you more special than major global brands, the pizza place or the lemonade kids.

Marketing is an integral part of a healthy, growing business of ANY KIND.

Sins #2 and #3: Reducing the budget when business picks up and waiting until business is slow to allocate a budget

Since these are flip sides of the same devilish coin, we’ll deal with them simultaneously.

Your dental practice marketing budget is not a band-aid. When your business is ailing, you don’t slap some money on the problem and hope that makes it better. It won’t.

Marketing doesn’t work like that. Your marketing efforts need to be funded consistently over the long term to ensure maximum benefits. The spikes and dips in your business shouldn’t affect your marketing strategy or your dental marketing budget, otherwise you get locked into a short-term, reactive cycle that wastes time and money.

For example: you’re not getting enough patients, so you decide to throw $1,000 at the problem. You buy a big color ad in the local newspaper, but the phone still doesn’t ring. Guess what? A single newspaper ad isn’t going to get the phone ringing. You need to build awareness over time by exposing the public to that ad over a long period of time—maybe even months. And for every single one of those months, you’re now going to be sitting on your thumbs and losing revenue, instead of working on new patients. If you had set a consistent marketing budget in the first place, you wouldn’t be playing catch-up and wasting valuable time.

Conversely, you don’t want to take away your marketing dollars when your business starts to pick up. Sure, you’re doing well now, but couldn’t you always do a bit better? And what are you doing to safeguard your patient revenues for the future? This kind of short-term thinking can land you back in a situation where business declines and you are left scrambling to fix the problem.

Instead of seeing your dental marketing budget as a band-aid, see it as a vitamin pill. It’s not a short-term fix, it’s a daily part of your prevention regimen. Even when you wake up feeling great, you remember to take your vitamins—so that you don’t wake up feeling rotten the next day. With a consistently allocated marketing budget, you know your marketing strategy is working for you day in and day out.

(Let’s skip to Sin #7 for a sec)

Sins #4 through #6 are going to take up a fair bit of time, so we’d just like to get Sin #7 out of the way.

Other dentists, CPAs and practice management professionals are all smart, insightful people who can help you make your business better. Salt of the earth. Love ‘em.

But none of them has ever managed marketing budgets for dentists. It’s just not what they do.

We have seen dentists get bad marketing advice from lots of different quarters. Dentists share anecdotes about what worked for Fred or Elaine or Ralph, without actually knowing how it worked or whether it really did work as well as Fred or Elaine or Ralph told them it did. Or they tell you all about some great marketing gimmick that worked great for them. Maybe it did, maybe it didn’t, but borrowing another dentist’s great marketing idea is like borrowing their shoes—it’s just not gonna fit. Every practice is unique, and marketing is not a one-size-fits-all proposition.

Sins #4 through #6: You have a budget, but you’re not making it work for you

Let’s assume you have the good sense to assign an annual dental marketing budget because you recognize the need for consistent, strategic marketing to support your business. Congratulations—you’re in an elite minority of dentists!

But you may still be wasting money and missing great opportunities because you’re still guilty of Deadly Sins numbers four through six. You may not be allocating ENOUGH funding to your marketing efforts, or you may not be allocating funding to the right places. And finally, you may be missing that final, critical feedback loop that helps you recognize today’s successes and determine tomorrow’s strategy—calculating your return on investment.

So, let’s start by looking at how to calculate a healthy, effective marketing budget. Yes, there is a ‘magic formula,’ and here it is in its most basic form:

MARKETING BUDGET = (Previous 12 Month Revenues X 5%) to (Annual GOAL Revenue X 5%)

In plain language, you should allocate an annual marketing budget than falls between five percent of your actual revenues for the year and five percent of your goal revenues for the year. This formula should be used for practices that have been in business at least five years, and that earn $1.5 million or less per year:

For instance, if you own a solo GP practice that earned revenues of $600,000 last year, and you would like to grow your revenues to $800,000 per year, your annual dental marketing budget range would be between $30,000 and $40,000.

If your practice has been in business at least five years, and earns more than $1.5 million per year, you follow the exact same formula as above to determine your first year’s marketing budget range. Then for each subsequent year that you see an increase in business, you will decrease your marketing budget by .25 of a percentage point.

For instance, if your practice earned revenues of $2 million last year, and you would like to grow your revenues to $2.5 million, your dental marketing budget range would be between $100,000 and $125,000 for the first year. If your revenues went up to $2.1 million in the second year, your marketing budget range for that second year would be between $99,750 ($2.1M * 4.75%) and $118,750 ($2.5M * 4.75%). Here’s an example:

Baseline:$2M actual revenues, $2.5M goal revenues
Y1 budget:$2M actual

$100,000 to $125,000 ($2M * 5%) > ($2.5 * 5%)

Y2 budget:$2.1M actual

$99,750 to $118,750

($2.1M * 4.75%) > ($2.5M * 4.75%)

Y3 budget:$2.3M actual

$103,500 to $112,500

($2.3M * 4.5%) > ($2.5 * 4.5%)

Y4 budget:$2.4M actual

$96,000 to $100,000 ($2.4M * 4%) > ($2.5 * 4%)

Essentially, larger practices should be able to grow their revenues while reducing their marketing budget year over year. Over the years, they will find the budget ‘floor’—a spending limit below which business growth begins to stagnate. When you find your budget floor, you can simply add .25 percent to the budget the following year to jumpstart growth.

These are VERY general guidelines, based on average marketing expenditures, but following these calculations will allow you to estimate the kind of marketing budget you’ll need to achieve your revenue goals.