In our most recent podcast, Howie and Mark discuss budget allocation, and where it should be in 2019.
-The 60/40 – 40/60 balance. (Part of the Secret Sauce)
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: All right, everybody, welcome to another edition of our podcast, and I’ve got my good buddy Mark on the other end of the line. How you doing, buddy?
Mark: Good, good podcast number 9,473,264.
Howie: Yeah, or something like that.
Mark: Does it feel, like does it feel like your life is a bunch of connected podcasts?
Howie: Yeah, kinda does.
Mark: I know.
Mark: So we’re going to keep going with them until dentistry starts promoting itself the proper way.
Howie: Yeah, yeah, we won’t shut up until you guys start doing it. Right.
Howie: One way that you can start is by proper budget allocation. And as we anybody with a calendar next to them knows 2019 is on the way.
Mark: Yeah, by the time this podcast airs, it’s even going to be closer.
Mark: Than it is right now. Because I think we have like a two-week delay.
Mark: So yeah, procrastinators rejoice, right.
Howie: You put it off and put it off, put it off,
Mark: Right. Yeah, December, December becomes a really a basically from Thanksgiving through, basically, the middle of January, um, becomes a very busy season for us as who actually has been busy now since like, the middle of August. But,
Mark: But, especially now until about the middle of January. Because there’s this, like this artificial start and stop of life called January 1, right? Like everything stops. I know what it is. It’s tax its taxes. That’s what does it. It’s the government says, okay, start and stop.
Mark: Yeah. Everybody else does the same thing. Right. So, anyway, so there’s this artificial, it’s very real. I’m not saying it doesn’t exist. I mean, it but there’s this planning thing that goes on this time of year for 20. The following year, in this case, 2019. And people plan for taxes, they plan for vacation, they time off, they plan CE right. Okay. And one of the things they plan for? Is their marketing, like what the hell are they going to do in 2019? With their marketing, right. So, we get I’m not gonna say inundated or never like really inundated but the volume of inquiries goes up. And the escalation of panic goes up. Okay.
Mark: So, let me, let me just let everybody know that improving your marketing can happen in April, July. September can happen anytime. Okay, doesn’t have to happen in December in January, planning. If you if you like to plan in November and December. That’s great. That’s awesome. You’re very much like we are, Howie and I do exactly the same thing when we plan out our following years, our budgets or departments our you know, divisions, all that stuff. So, we 100% get it.
When you’re budgeting or when you’re planning for 2019, you’re probably going to be speaking to your CPA this time of year. And they’re probably going to go over some numbers with you. One of those numbers might be for what you’re spending on marketing and how specifically to this podcast…it’s not really how you’re budgeting, although we’re going to go through that. It’s what you’re spending your money on. In other words, what categories of media types are you using your money to promote your practice? Because you got to start, you know where your CPA starts, says, by Bob Dylan good. Last year, you spent five and a half percent on marketing, or 6% or 3%, or whatever the numbers, whatever the number is. And the CPA is going to say, Well, what are your plans for 2019? And Bob says, I’m stuck, I want to grow, I want to grow X, whatever Bob’s vision for the practices is fine. And the CPA says okay, you should probably do things the same, because that’s what CPAs always do. We love you guys because you refer to us. But anyway,
Howie: Also do the opposite, though, Bob, I think you should cut back. Then Bob comes back, he goes, I cut back on my marketing. I’m getting half the result.
Mark: If you’re a CPA listening to this. We just took a jab at you feel free to have your own podcast and take a jab at us.
Mark: So anyway, um, so you started budgeting, right? So, you say, Okay, well, you spent five and a half percent next year, Bob says, Well, I want to grow next year. And the CPA says, okay, you know, let’s leave it at five and a half percent, because you grew in 2018. There’s no reason why you won’t grow in 2019 with the same budget, and we would agree, if you’re already growing, there’s probably no reason for you to do anything differently with your allocation.
Mark: But most people who call us Oh, I’m not most I’m going to say over half over half of the people who call us, oh, they’re not growing, they’re not growing as fast as they want. They’re not doing the procedures they want. They’re not you know, their revenues or capacity isn’t filled, or something’s going on, right in the practice. So, we say all right, let’s, let’s budget. So, for 2019, let’s start at 5%. So, I don’t know, we’ll just use a round number. Let’s say you’re doing a million a year, and 5% of that is 50 grand. So, there’s your budget.
Now, what do I spend my money on? That is budget allocation. That’s a whole different ball game than just establishing a budget. A budgeting number is easy. You just take your revenues multiply at times a percentage and there’s your budget, bam. You say, Okay, well, there’s a pile of money that I get to use to promote my dental practice. Now we have to now we have to divide that up to where you’re going to spend it because proper budget allocation, especially these days, man, that’s part of the secret sauce. I mean, you know, people wonder why there’s so many dentists who have been, you know, I mean, I’m bragging on us right now. But we have clients who have been with us now for 15-20 years. And then people wonder why this is part of the reason why because we allocate their budget properly. So I’m going to share with you how we do it.
Howie: Yes, you are going to share that right after we get back from this important message. Don’t go away.
Hello, everybody. This is Howie Horrocks and along with me is Mark Dilatush, the president of New Patients Incorporated. How you doing Mark? Hey Howie, how are you? This is the part of the podcast where we get to brag about our company. Yay. So sometimes it gets lost and all these podcasts what new patients incorporated actually does. We have final know how many podcasts 75-80 one a week for well over a year. And all of you listen to these a half hour at a time and you might lose sight of what we do. So here’s the short answer. We do everything we’re talking about in these podcasts on behalf of our clients. Okay, we do the podcasts are there for our clients, of course, just so they understand what the heck we’re doing. But also, for the doctors who are do it yourselfers. If you’re not a do it yourselfer, and you want someone to do this for you, newpatientsinc.com, there’s an icon in the dead center at the top of our homepage where you can get a complimentary marketing plan, a series of questions will need to be completed. And once you complete that, we will analyze your market area, develop a marketing plan and get on the phone with you discuss all the sections of the marketing plan just to make sure you understand a couple of things, what you’re up against, what your expectations should be, and what market, how we would do if we owned your dental practice.
Howie: Alright, we are back. We have to get our promotion in there too. You know, its part of our budget allocation.
Mark: Yeah. Alright. So, the budget allocation for 2019. And some of you are in a position where you can’t do this. That’s okay. You have to you need to work toward this. Allocate about 5, 7, 8 percent to internal promotions, you always you always invest in internal promotions. So, in this case, on our example, it was a million dollar practice wants to spend 5% on marketing and budgets $50,000. And let’s say they’re going to spend four, three or $4,000 a year on internal promotion. Okay, well, what’s an example of internal promotion? Well, you have patient communication systems, emails, texts, reminders, you have review generators, you have.
Mark: Right, you have newsletters that you send out to your existing patients, all you know, all those things go into the internal promotion category, so that that allocation pays for that, boom. Okay, so there’s five to 7% of your total budget.
Now, here’s the secret sauce part, because it’s coming back around now to where it should be. We’re getting more and more calls from people who have misallocated their budget for two or three years. And they’re all basically coming back. And they’re saying, Oh, you know, the guy promised me this, that and the other thing from whatever media type. And it worked for a little while, and it ended up not working for a long time, or I didn’t really get the quality new patients I was looking for. You know, I was getting patients, but they were, you know, I could have sent postcards out with a free movie tickets and gotten the same kind of patients. Okay. That makes sense.
So, what’s the sweet spot? I can tell you where we have 95% of our well, yeah, about 90% of our clients, I can tell you where their allocation is. Their allocation is, once you get internal promotion off to the side, you put that off to the side. And now you have two main categories you have online, and you have offline. Those are two big categories. How much money am I going to devote to online? And how much am I going to devote to offline? Because basically what you’re saying, not perfectly. But basically, online is passive advertising. Offline is aggressive advertising.
Basically, what you’re saying is, is how much money am I going to use passively? To be there for the audience that has a real or perceived need? So, they find me? And how much money am I going to spend introducing the services, amenities and technologies to the surrounding community? To drive them to my website, even though they didn’t ask for it, even though they don’t have a perceived or real need at this moment? There are a million things about general dentistry, they don’t, they’re not aware of I can interest them. Okay, so those are your two categories online/offline, passive/aggressive. They’re the same basic, same basic categories.
What percentage are you going to allocate to those two? Our sweet spot is 40-60, 60-40, somewhere in that range, normally, we it takes two or three years for us to massage the budget, invest in the liabilities, build them up, and get the total budget to where it fits inside that 60-40 to 40-60 allocation. Let me explain what I’m talking about. 60-40 means 60% online and 40% offline. 40-60 means 40% online 60% offline. Somewhere in that range is the balance that has statistically proven to pay off the best. And it actually marries quantity and quality quite well. You can get quantity of responses off the internet, you can get quantity of responses offline as well. But the ones online tend to be at a lower cost. But the quality ends up being mostly offline. So, you can manage and orchestrate both of those together. And that sweet spot the dead center of your driver. Now I did that for Howie, I am not involved but Howie is. Right that dead center that round spot on your driver.
Howie: Yep. Always. I always hit it there. Yeah.
Mark: Yeah, yeah. 60-40 40-60, somewhere in there. So, when your CPA and you talk over the next month or two, because you’re going to. That’s when all these… I don’t know how CPAs do that they have all their meetings, like in two months, for the whole year. Anyway, I’m glad I’m not a CPA. Anyway, um, when you look at all the results you got in 2018, and how your budget is currently allocated, and you still want to grow and you want to use basically the same budget for next year, then one of the ways you might get more results out of the same money is proper budget balance between online and offline, passive and aggressive. That’s what we’re finding to be the best, the best mix in I’m just going to say, all markets, I mean, well, densely populated urban centers that’s not true, like downtown Manhattan. It’s not true. downtown Chicago, downtown San Francisco, but if you’re not in a downtown somewhere, that budget allocation will serve you very well in 2019.
Howie: Yeah, well, does that about wrap it up today, Mark?
Mark: Yeah, I think so. I’m, yeah, I’m, I don’t think we can insult more CPAs, can we?
Howie: We could, but we’re going to cut it off right here. No, we love you guys out there. All right tune in again next week. And thank you again for listening. Bye now.