Help! How do I spend my money?
The formula to determine your marketing budget range is pretty simple, isn’t it? All you need is a dollar-store calculator to figure it out. Heck, you can practically use your fingers and toes! But figuring out the best way to SPEND that money is a little more complicated.
First, there is a difference between budgeting and cash flow reality. Let’s say your budget should be $50,000 per year. You don’t necessarily have to have $50K sitting in the bank—just make sure you have about $4K per month allocated within your practice cash flow. See the difference? You want to spread your promotion efforts throughout the year anyway, so it only makes sense to spread out the funding.
Now, the first year of establishing a marketing budget and sticking to it will be the hardest. It always is, for all of our clients. After the first year, (assuming you have allocated and spent the budget wisely), you’ll start to see this type of spending like a utility bill – a regular and necessary expense that you hardly even notice.
So how do you allocate your budget wisely? You start by making a plan and sticking to it.
Think about your savings or retirement investments. Your financial advisor uses the word ‘allocate’ to determine how much of your savings to put into high risk, medium risk, and low risk investments. By spreading your savings across investments with different exposures to risk, you can diversify and minimize the overall risks you take, while taking advantage of riskier investments with potentially big payoffs.
The exact same principles are at work when it comes to your marketing budget allocation. Your marketing budget is an investment, just like your retirement investment. And like your retirement investments, your marketing investment comes with some level of risk. Anyone who tells you otherwise is lying to you. But by controlling your allocation, you have total control over the size of the risk you take with your marketing dollar.
But where should a dentist start to invest their marketing dollars? Which mediums provide the most impact and the least risk? And which mediums complement one another well and achieve better, synergistic results together?
The answers to these questions it really depends on your starting point. Since nearly every reader of this blog is going to have a different starting point, it makes sense for us to list the investments in low-risk to high-risk order. If you’re just starting to explore marketing options, you’re going to want to know that you marketing expenditures will pay off with an immediate impact on your business. If your marketing campaign has been running for a few years with good success, you are in a position to be able to experiment with marketing mediums that are riskier, but also offer some pretty spectacular potential gains.
Let’s take a look at the risk factors associated with each medium, and look at ways to diversify and minimize the risk to your marketing investment.
Low, moderate and high-risk mediums for direct response marketing
Before we drill down into the three risk levels for your marketing budget, we need to clarify that the focus in this section is on the risks involved in eliciting a direct response using the various mediums, as opposed to establishing brand familiarity. We chose this focus because most dentists are more interested in marketing strategies designed to elicit a direct response from potential patients than they are in more general brand-building activities.
Internal Promotion: Internal promotion, or promoting your dental practice through referrals from existing patients, is one of the best and most efficient forms of marketing, and a very low risk activity if done correctly. However, few practices can rely solely on referrals to grow at an acceptable rate. It’s also not a good idea to constantly hammer your existing patients with promotional materials. BUT, if you are like many dentists, you probably haven’t done as much as you could with this reliable way to build your business, and you certainly shouldn’t ignore its value. This would be a good place to allocate some marketing dollars each year. Five percent or less of your marketing budget should be enough.
Risk level: very low
Upside: nearly risk-free and reliable
Downside: very slow growth; could irritate your patients
On-location signage: Here’s one that dentists overlook all the time. There is virtually ZERO risk involved in putting up well-designed signage in front of your dental practice, including banners, sandwich boards and window designs. If depreciated over the life of your practice, the cost is next to nothing: once your sign is designed and installed, no additional budget allocation is needed.
Inexpensive, very low risk, and minimal upkeep expenses are all good things. If you don’t have a sign yet, and there is almost any amount of foot or automobile traffic that can see your sign, you are missing a potentially great opportunity. If you do not have signage and it is warranted – allocate some marketing budget toward it.
Risk level: very low
Upside: low-cost, negligible ongoing costs
Downside: higher initial costs
Practice website: The risk level with a website is typically low. But it really is dependent upon how it is designed, what it communicates, how many visitors visit the site, and whether the site has the ability to convert visitors into new patient phone calls. Even a BAD dental website should produce one new patient from time to time. Let’s set the practice website at 5 percent risk and 95 percent upside, just to put it into perspective.
Your practice website is going to be your BEST secondary promotion medium, which means that all of your external and internal promotion will refer people to your website. A certain number of those people will go to your website to “check you out” so to speak. And, in turn, a certain number will be converted into new patient phone calls.
A good website and an effective web marketing strategy is a foundational staple of your overall marketing campaign—and if you do it poorly or don’t do it at all, the costs to you in terms of a lost opportunity are staggering. You should likely allocate about 10 percent of your budget each year to your website and Internet marketing.
Risk level: low
Upside: potentially your best source for new patient contact
Downside: needs to be done well—a bad site and poor search engine position are major lost opportunities.
Direct mail: Direct mail is one of the most effective forms of advertising we use for our clients. In fact, we achieve success in 96% of all US markets with our direct mail campaigns. Amazing, huh? Direct mail is also BY FAR the least risky external marketing medium available to you. That doesn’t mean you can focus on direct mail alone—it needs to be used as part of an overall marketing strategy. But if you want to diversify the allocation of your marketing budget, direct mail is a great place to invest and presents the least risk of all external (deployed outside your practice) mediums. If you are not actively promoting your dental practice and are considering doing so for the first time, this is a great place to start.
Risk level: low
Upside: successful in most markets; great ROI
Downside: takes time to build momentum, some up front costs
Print media: Print media can mean almost anything that is physically held and read by consumers near your dental practice. Newspapers and magazines are likely the first two to come to mind in this category. But there are many others. You may have a local subdivision nearby with a monthly community newsletter— that would be considered print media. In general, this medium can be feast or famine. We have had clients deploy the same basic newspaper insert in the same basic market for over a dozen years and enjoy wild success every time.
We have also seen the other side. In some markets, it takes us two or three attempts to find a print media outlet that provides a sustainable and consistent return. That’s why print media comes with a 62% success rate. However, once you find the winning formula, this medium can be a high-performing, reliable part of your marketing mix. We recommend looking at print media once you have exhausted the potential of lower-risk mediums.
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
Higher-risk mediums should be considered once you have fully explored the potential of low and moderate-risk mediums.
Mass media: Mass media include television, radio, billboards and yellow pages. In general, and without the support of the low and moderate-risk mediums described above, you are looking at a 44% success rate. So, do NOT allocate and diversify into mass media until you have fully exploited less risky mediums, and are generating a reasonable return on investment. There are circumstances where you might want to use mass media at an accelerated pace to initially generate familiarity with your dental practice.