Is Your Advertising Working For You?
Both my dad and my grandfather were dentists, so I remember what dental practices were like 45 years ago. It was truly a different world. I remember my father telling me how one could actually be “in the black” (making a profit) in as little as a few months, and there was literally ZERO advertising (it was actually not allowed). In case you didn’t think you read that right, he spent no money whatsoever on advertising. In his words, and the words of many of his colleagues from that period, you could “throw a dart at a map”, get an interest free loan from an equipment company, set up shop where the dart landed and make a living rather quickly.
Crazy, huh? Could you imagine zero advertising today? No Facebook ad, no school sponsorship, no mailers, no gift baskets and no patient reward system. Seriously, can you imagine that?!?! Nowadays, unless you have a very unusual practice, you do need to advertise in some way, even if it’s just subtle. But the real question is: “How much does one need to spend on a marketing budget?”
I have an oral surgeon friend who is extremely successful. He has a huge practice and sort of owns the area where he practices with nobody a close second to him. Every year he invests almost 9% of his gross income to marketing. The more he makes, the more he puts back. If he’s grossing $2million/year, it means that he’s reinvesting $180,000/year into just marketing his practice. One could say that he’s spending too much, but others would argue that’s what is helping keep his practice so successful.
Other specialists I know have chosen to spend a lot of money (up to 10%) in the early years to get name recognition and then have eased back when they’ve become more successful, kind of like an airplane reaching cruising altitude.
Yet other friends have taken the exact opposite approach, borne mostly out of fiscal responsibility. They spend very little early on (1-2%) allowing their practice to grow simply through word of mouth, then growing the percentage lightly every year until it hits a comfortable level and just leaving it there.
The point is that every successful orthodontist I know has a certain amount they spend on their marketing, but it’s done using a plan they’ve developed. They set aside a certain amount with the idea that they will use it in a specific way. Whether you’re a young startup with a tiny budget or an established practice with a marketing team, you need to be judicious in the way you spend every penny and it all starts with a plan.
Forbes magazine had a great article in May 2017 where they offered the following advice for businesses developing a marketing budget:
“Determine your business goals by asking yourself the following questions:
- What are your business objectives for the quarter?
- What are your business objectives for the year? How about three years out?
- How many of those contacts need to be delivered to your sales team, based on their close rates, to impact revenue enough to achieve those objectives?
It’s common for small businesses with revenues less than $5 million to allocate 7-8% of their revenues to marketing, splitting that between brand development costs such as websites, blogs, sales collateral, and promotion costs, as well as campaigns, advertising, and events. Never base your marketing budget simply on what’s left over after covering all other expenses.”
Did you read the last line of that quote? Unfortunately, that’s how many clinicians develop their marketing budget.
The end of the year is coming and it’s a great time to sit down and develop your marketing plan for the coming year. Whether you spend a lot or virtually nothing, it’s up to you, but have a plan, stick to it, then reevaluate it again next year.
Unlike my father and grandfather’s eras, advertising and marketing is simply a part of our lives and we need to embrace that. Nobody is saying that you need to spend $100,000/year to market your practice, but while making my budget I often remember the advertisement the local movie theatre used to display to get people to buy advertising space there. It flashed across the screen before the feature presentation and read:
“A funny thing happens when you don’t advertise…
So, go out there and do something.
Wishing you an amazing day,
If you want to come to learn more about an amazing business meeting for orthodontists, simply visit OP2018.com . We’ve got a world-class lineup of speakers, amazing food and an ambiance that will make you want to come back year after year.