In this podcast, Howie Horrocks & Mark Dilatush answer the question “Can your marketing impact your administrative costs?” Yes – it can! Learn how half of the market will ignore you if you are offering deals and why that is the half of the market you do not want to lose!
- Two Halves of the Dental Consumer Market
- Seeking Immediate Results Will Cost You in the Long Run
- Hidden Costs Can Kill Profits
- Top Market Half Will Ignore You
- What Happens if Treatment Plan Acceptance Goes Down?
- Someone Has to Chase Them Down
- You Create the Problem
- Race to the Bottom
Hello, and welcome once again to the dental marketing mastery series. This podcast is brought to you by New Patients Incorporated, and NPI Click.com. I’m Howie Horrocks, the Founder of New Patients Incorporated, along with me once again is my friend and partner and the president of New Patients Incorporated. Mark Dilatush.
Howie: Well, hello, everybody. Welcome again to a podcast from Mark and Howie. How are you doing, Mark?
Mark: I’m doing fine. This is the sultry voice of Howie Horrocks. He’s, he actually just redid all of our message on hold for our phone system at the main headquarters. So as soon as we get it installed, if you have no life whatsoever, at 12 o’clock midnight, you can call our office and listen to Howie’s voice if you want.
Howie: Yeah, and because I’m in Vegas, I did it in Elvis language: Thank you very much.
Mark: There you go.
Howie: This is Vegas baby.
So yeah, you’ll love it.
Mark: Hey, how’s the stadium doing?
Howie: Ah, you know, it’s coming along.
Mark: Do they have a roof on it? Where do they have the sides on last time? I was there was just steel girders.
Howie: Well, they got more steel girders up now. So actually it’s on target. They’re going to be open in 2020. For the 2020 football season.
Mark: Yeah, well, it’s in the middle of the desert. Hardly ever rains. There’s not going to be any construction delays. So cool. All right. So what are we doing today?
Howie: Well, we’re going to look at this question.
Can your marketing impact administrative costs?
Mark: You mean, besides the direct marketing costs? Right.
Can it have an impact on your practice?
Mark: Yeah, this comes up in lots of conversations that we have.
And it has to do with…
Well, let’s back up. There’s a few prerequisite beliefs that you have to have in your head before whatever else we say makes any sense. So the main prerequisite belief is that slightly more than half the women in the country will choose a health care provider (like a dentist) primarily based on a price incentive.
Two Halves of the Dental Consumer Market
Mark: Actually, yeah, it’s actually 51.6% of women. Right? Okay. So they will choose a healthcare provider based primarily on a price incentive. Then the other 48.6, or whatever, it’s 48 to 48.6% of the women in the country will absolutely not choose a health care provider for their family based primarily on a price incentive. Okay, so that’s the background belief, a statistical fact that you have to have in your head. Okay, before we start talking about admin costs, marketing strategies impacting admin costs, because the, the place to get the dentists in trouble, or one of the places that gets dentists in trouble is they have this need.
When we spend money marketing our own company, we want instant results, right? Instant gratification, they call it right? Wouldn’t it be cool, Howie, if we could just spend $5,000 and $20,000 and clients walk through front door? That would be awesome.
Howie: Yeah, the next day, preferably.
Mark: Yeah, that would be all right. But that’s not necessarily the best thing for our business and for dentistry. The dentists get caught up in promoting the practice based largely on a price incentive. So they’re really only communicating to the 51.4%. I think for the 51.6% of the market, who will choose a dentist based primarily on a price incentive. So they make a postcard they do EDDM. And they have five boxes on it. And each box has its own little discount. You can’t combine the discounts if you have insurance, there’s qualifications and only on Tuesday, whatever. Okay?
Howie: Right, then there’s usually all kinds of restrictive language in it, “you may not do this or combine it with that.” You know, it sounds insulting sometimes.
Mark: Well, besides that, okay, they do work. Because clearly 51% of the women out there will choose a dentist based primarily on a price incentive. If you put a five price incentives for them to choose from on a postcard, they’ll choose one of them. Okay. The driver behind doing that is the dentist wants immediate results.
Seeking Immediate Results Will Cost You in the Long Run
Mark: And what they do is they choose the result that they want. And they put volume of calls before revenues. Okay, in other words, their priority is always filling the schedule. It’s never about long term, or even midterm. And it’s almost never ever takes into consideration admin costs. Okay, now we’ve come full circle. Everybody understands the background, everybody understands the percentage of the market that you’re speaking to how to speak to them. And almost every dentist here listening to this would say, “Well, yeah, I mean, if I have my choice I’d like to have results come in sooner rather than later.” Where they get in trouble is the when they say the word result, 99.9% of dentists out there will say volumes of appointments rather than revenues.
And that’s the core of the problem. What we do in our client practices is we go after revenues, and then fill in volumes of patients after the revenue starts to go up. It’s very different take on dental marketing that we do. Okay? Because almost anybody you could get, you could probably get an 11 year old to go online in one of these design studios and create a postcard with five deals on it.
Seriously, it takes no skill, no testing, no anything. Right? And honestly, that’s one of the reasons why so many people do it that way. Okay? But what are they trading? It’s like making a deal with the devil. Right? What are they trading? What part of their soul are they trading in the future? And the answer is, revenues. Because the ROI will be 11 times less. But let’s forget revenues for a second, let’s just look at costs. What admin costs are we trading our soul for?
Hidden Costs Can Kill Profits
Well, if Mom’s going to choose you based primarily on a price incentive, it’s going to be one of the five deals that your nine year old put on your postcard. Oh, and you then pre appoint her?
Howie: Yeah, that’s another hidden cost.
Mark: Right? And she needs work and you present treatment? That’s the first one. Okay? What are the chances that Mom’s going to accept her treatment or dad, that doesn’t matter? What female is agreeing to this is going to come in with a very low value point for dentistry, because she just accepted a deal to come see you to begin with. And she’s not basing her decision on anything other than the deal. Because you sent her a postcard with nothing but deals on it. She has no other information to make her decision on. So she takes one of the five.
So here she is, she’s in your office and she needs I don’t know, a couple of crowns and a bridge, maybe an implant maybe some ortho whatever. Maybe there’s $8,000 – $9,000 worth of work she needs. She hasn’t really taken care of her mouth for a while. Or if she has she’s been going from deal dentist to deal dentist to deal dentist for the last seven years, she has seven different dentists. And what are the chances that you’re going to get her to complete treatment?
Are your opportunity costs going to go up? Or down? You’ve already given away $59 of your exam fee. Now you’re going to give away a lot of your time doing the exam. If she doesn’t accept treatment, what’s your cost? So if treatment acceptance goes from 80% to 60%, what is the cost – the admin cost to the practice? It’s staggering.
Howie: Yeah, we know it will. We may not have an exact number, but we know it’s not zero.
Mark: It’s different in every practice, but it’s big. Okay, it’s a big number. You know what, Howie… This might be a good spot to take a break.
Howie: Yeah, let’s do.
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Howie: Alright, we are back. We’re talking about the costs of promoting to the bottom half of the market. Especially the administrative costs in the two halves of the dental market.
Top Market Half Will Ignore You
Mark: And we discussed if you’re going to promote dentistry based primarily on a price incentive, and when I say primarily, I mean, if you’re advertising has two or three deals on it, and there’s a big star burst with number, you’re pretty much primarily advertising a low price. Cuz the moms in the top half of the market are going to ignore your piece anyway.
It doesn’t matter what else your piece says, they’re immediately going to brand you as the “deals” dentist and move on. Okay, because they’re not going to choose you. Okay? They’re just not I don’t care what the deal is. Okay. They’re just not going to choose you. So what we did is we move that forward. And we said, well, if you’re going to give money away from your for your exam, and when they come in the treatment plan acceptance drops (we just gave an example 80% to 60%). What’s the long term revenue impact and negative revenue impact on a dental practice over the course of a career? And the number is staggering. Okay, let’s forget staff costs. Let’s, let’s not even go there yet.
What Happens if Treatment Plan Acceptance Goes Down?
Mark: Just think about that number. In your own practice. If you’re listening to this podcast, if right now you’re at 70, what happens if the goes to 60? Because if you promote to the bottom half of the market with price incentives, that’s where it’s going. It’s not going up. Okay, so that’s the first admin costs.
The next big one is, is almost self imposed. If you’ve if you’re a fan of our podcasts, and you’ve listened to them for a while, you’re going to find in our library, or maybe you’ve already heard us rail on pre appointing hygiene. Okay. So let’s go through this scenario. You send your postcard your nine year old designed, and there are five deals on it. And mom chooses one of them, she comes in, and she just wants her teeth cleaned. And she wants an exam. Maybe she says okay to the x rays. And its $111 and it used to be $219. But that’s the deal. And she needs $8,000 worth of work. You present treatment, do everything, you take your pictures you show her whole mouth condition.
You do everything you possibly can. You took all the CE courses on the planet to try and get a better treatment plan acceptance rate. But she doesn’t accept treatment. So we’re already aware that we have some admin costs there. But then she comes up to the front desk and what does your front desk do? Schedule her for six months down the road. She wasted our time today. Why don’t we schedule her for six months down the road to come in and waste our time again? Okay? Because it was so much fun today. Okay, now, people who know me and know my sense of humor, please don’t get offended to my tone. Okay? My tone is meant to teach. It’s not meant to ridicule. Okay, I’m trying to get dentists to recognize that they’re creating lot of their own pain. Okay. So now let’s say now here’s the here’s the best case scenario you your nine year old designed your postcard, yours five deals on it, Mom selected one of the five she came in spent $119 didn’t get any of the treatment accepted, you pre appointed her for six months from now. What happens if your marketing is wildly successful and 60 of these moms come in this month? You have about $7,000 in your pocket.
Then your treatment plan acceptance rate tanks, somebody in your office is going to follow up with those treatment plans. They’re 60 appointments in your hygiene chair, six months from now, somebody is going to have to chase these people down six months from now. Because you know, they’re not going to come in. You know the majority of them are not going to come in. Certainly not on the day and the time that they appointed. They’re not really patients of record yet.
Someone Has to Chase Them Down
So now down the road some poor soul employee of yours, let’s call her Mary. Because every Mary I’ve ever met was very pleasant. So let’s call her Mary. Let’s see. So it’s a very pleasant, hardworking, motivated employee. And you’re going to give her this list of whatever 700 patients who are overdue for recall, and we’re going to call Mary, the hygiene coordinator. And, in reality, what you’re saying is; “Mary, I don’t really do my marketing properly, I market the wrong message to the wrong half of the dental market. And because I did that, and pre appointed them for hygiene, I pretty much know they’re not going to come back in. But I want you to chase them down. And I want you to do that between the hours that you work, which are traditionally nine to five, which is when they’re not home, because they’re at work.”
“So literally, I want you to leave 700 telephone messages, that’s what I want you to do. Okay, and the result of your work will be very nominal. In other words, you won’t really have hardly any successes, so you won’t really feel good about yourself, and then you’ll leave.”
You Create the Problem
Okay, dentists listening to this, if you’ve gone through hygiene coordinators, you’re doing it, you’re creating the problem. If you’re scheduling coordinators are finding it more and more and more and more difficult to hold down the no shows and keep hygiene full. Your systems are part of the problem. One of your systems might be marketing, that might be the first problem. The second problem is the business system called recall. Now here’s the top of the pyramid at the very beginning of this whole process. The dentist said, “How can I save money on my marketing? I know, I’m going to design my own postcard, and I’m going to sort them by 100, put rubber bands around them, I’m going to get an EDDM list from the post office next door. And I’m going to send all these out because I’m going to save money.”
What that dentist ACTUALLY did was cost hundreds of thousands of dollars in order to “save money.”
Does everybody understand what happens when you promote to the bottom half of the dental market to your admin costs? They will always go up! Versus spending your marketing dollar on the top half of the market. The right message is going to get less volume initially, but your revenues will grow. And then you can spend marketing dollars to fill capacity in your schedule after the revenues begin to grow. And your admin costs are less so your profitability is greater. This is an enormous issue in dentistry right now.
Race to the Bottom
There’s, I would say, what do you think, Howie? Out of all the dentists in the country who do their own marketing or do marketing through a firm? It’s like 90/10. It’s like 90% of the dentists are just racing to the bottom of the toilet with deals.
Howie: Yeah yeah… we call it we call it the race to the bottom.
Mark: Race to the bottom. Right. It’s the race to the septic tank. That’s what I call it. Right?
And you don’t have to do it. So if you don’t have to do it, why do you do it?
Hopefully this podcast today shines some light on things that you may think are going on in your practice, like you think you’re treatment plan acceptance is going down, you’re happy with the 60 new patients came in but you think you know, they weren’t that willing to accept treatment.
And then you pre appointed them and you think hygiene, it’s just, it’s just getting more and more difficult to keep full. Right. On a daily basis. You know, each week, you know, having less than maybe one opening a week or two opening two openings a week per hygienist that’s getting more and more difficult to do. And you’re looking and you’re saying, “My god, I need all this staff to follow up with all these treatment plans and all these overdue recalls. And I don’t know why things are falling apart.”
You created this problem.
Okay, so good marketing understands the whole impact through the whole life cycle of the patient, and the whole career cycle of the dentist. And that’s what we tried to shine a light on today for you. So if you feel any of those things going on in your practice, take a look at what you’re doing on the front end and what type of patients you’re attracting.
Howie: Yeah, good point. Well, my friends, we’ve reached the end of this podcast. We hope you all tune in again next time and until then, have a great day.
We hope you’ve enjoyed our podcast today. You can get all our podcasts on iTunes, Stitcher, and Libsyn.com, and on our websites, newpatientsinc.com, and npiclick.com