MARKETING from the inside outPart 2External marketing tips and techniques

Jan. 1, 2003
External marketing strategies are more cost-effective and successful during hard economic times.

By Melinda Spitek

Hooks, threads, and tags.Those three words are not just the language of knitting; they also are a part of the language of pop music. A long-time radio disc jockey once explained to me that pop music is structured to tease, to please, and to succeed. Starting with that musical "hook" you can't get out of your head U leading on to the "thread" that pulls you through to the end U and sprinkled with unique "tags" that keep reminding you who the singer is. The final ingredient for success: play it very, very loud, 16 gazillion times on the radio! Presto — a smash hit!

That always seemed to me to be a perfectly sound external marketing strategy for any business or profession.

In dentistry, external marketing is the science (and art) of attracting new patients through means other than referrals. It's what most of our clients tend to envision at the mention of "practice marketing." They think of the Yellow Pages, mass media advertising, direct mailings, and the like. Compare this with internal practice marketing, which is exclusively concerned with growing productivity from within the current patient base.

Internal and external marketing strategies are typically mirror images of each other. Relative to the entire community, internal marketing is low profile, but high efficiency. External marketing is high profile, but low efficiency. Every practice has a need for both, but the way the total marketing pie is divided can vary widely.

Typically, external marketing can account for approximately 35-50 percent of a dentist's total marketing budget. In order to justify a $20,000 expenditure in acquisition (external) marketing, the practice would need to generate over $800,000 annually in collections and have a marketing budget of approximately 5 percent. This 5 percent budget would evenly balance external and internal marketing with $20,000 allotted to each.

Looking at it another way, anywhere from 3 percent to over 10 percent (for a start-up practice) of annual collection dollars should be targeted to enhance and grow a practice. On average, this marketing investment runs about $1,500 to $3,000 a month, although in many highly successful practices this figure is much higher U about equal to the cost of an employee!

As one who has spent more than 20 years managing the administrative end of various dental practices, believe me when I say I understand the importance of attracting new patients. Beyond the added productivity, there's a psychological lift that comes from adding a brand new, in-off-the-street patient to your rolls. It makes you feel like you're moving forward, growing the practice, accomplishing something.

And that's why, when dentists contemplate marketing strategies, the first thought that crosses their minds is, "I need new patients. Would a direct mail campaign work for me?"

The answer — it depends. It might. Or, it might not be the best use of your external marketing dollars. You'll never know until you closely examine your practice and your goals. Most importantly, you need to think about the kinds of new patients you want to add. Never believe research that doesn't include your own practice in the equation.

Do your homework

If you were planning to spend a significant amount of money to add a new instrument or technology to the office, chances are you'd subject it to a rigorous cost-benefit analysis before you plunked down the cash. You can't afford not to do the same for a direct-mail marketing effort. Lawyers call it "due diligence." It means doing your homework to get the facts you need in order to make a good decision

First you need statistical information obtained through outside research: a demographic/psychographic report on households within a realistic radius of your practice. Not a "typical" practice or a "median" practice — your practice! The demographic component of the report details the number of families in your area and their overall economic, marital, and lifestyle patterns. At a minimum, it helps determine whether there are sufficient numbers of households in the income bracket you want to target to even warrant a direct-mail marketing effort.

The psychographics component — the most important element — tells us what motivates the groups we've just identified to respond. That is, what print, direct mail, broadcast, and discount incentive (or not!) will best capture their attention and generate a response.

Direct mail may prove ideal for one target you've chosen and totally inappropriate for another. Or, as is often the case, you may need your direct-mail message to change depending on the audience. For example, affluent families are more likely to respond to scheduling flexibility, convenience, and personal service. By contrast, lower- or middle-income households are more apt to respond to discounting. That's why you usually waste money by sending coupons to an upscale target group, yet they might be just the thing to attract a working-class audience.

What this means is there is no "one-size-fits-all" solution. Direct mail can work exceedingly well ... or not. That's why it's always better to find out as much as you can about the people in your target group before deciding on the means to reach them and the message to motivate them.

Now, suppose you've done your homework and determined that direct mail is a viable strategy. Before you begin, know what your break-even point will be. That is, how many new patients will you have to acquire to pay for the mailing?

Determine your break-even point

A simple way to determine the break-even point is to divide your cost by $550 (the national average net profit on a new patient, although the East and West coasts boast over $750 per new patient). If your mailing cost is $2,500, you'll need three to five patients to break even.

Too often we hear, "My direct mail didn't work ... I only got seven new patients!" This response begs the questions: How many did you mail? What was your total cost? What method did you use to track new patient calls? Seven new patients may have been a great success, if the doctor only knew the most appropriate way of calculating the return on investment (ROI).

The next most common question is: "What percent response should I expect?" Again, you have to go back to your break-even calculation. Let's say you do a three-mailing campaign to 2,500 people and your total cost is $8,500. You'll need 15 new patients to break even — that's two-fifths of one percent! Anything over this is pure gravy. We advise clients never to expect more than a quarter of one percent, and a half percent max.

Repetition is key

Don't expect much in the way of results from a single mailing. People need to be hit two or three or more times with the same message before it begins to penetrate their subconscious! Oftentimes, dentists fail to recognize that patients don't show up when they're needed by the practice — they come in when they need the dental services! The strategy must be: Get in front of their faces as often as possible, so that when they're ready to make a decision, your name is recognizable and your offer is there for them to take action.

You can test the logic of this in the way you live your own life. Look over your own shoulder. You come home from a hard day at the office and sort through the mail in front of the TV. How many direct-mail letters do you toss in the trash unopened (and how much attention are you paying to the TV for that matter)? That's about what you can expect from your direct-mail audience. On the other hand, if you're vaguely aware that your roof will need replacing "some time soon" and a mailing crosses your desk with an unbeatable offer from a reputable roofer, opportunity and circumstance have just linked up. This same scenario will happen with some of your own mailings. However, if you feel a 0.5 percent response rate for a three-wave mailing doesn't give you enough "bang for the buck," don't spend your money this way and wind up disappointed.

Marketing through your Web site

Another question that comes up frequently is, "Instead of doing a direct mail piece, couldn't I just create a Web site?" Certainly, you can! But, the either/or aspect of the question makes me just a bit apprehensive, since it suggests you are not fully aware of the strengths and limitations of each.

Web sites are increasingly popular these days. They demonstrate that your practice is up-to-date, sophisticated, and high tech to those who choose to access your site. That's also the Web's biggest shortcoming. With direct mail, you choose your target audience. With a Web site, your target audience must choose to come to you! A Web site also limits you to only those families who actively use computers. There are plenty of computerless households in your target area! And, even with families that own computers, the "power user" is often 13-year-olds — hardly the type to want to surf your site to score an appointment!

Some dentists perceive Web sites as being "less expensive" than direct mailings. It's a comparison of apples and oranges. Web sites are valuable assets, but they are essentially passive — even more passive than a Yellow Pages ad. (Who thumbs through the Yellow Pages just for fun?). On the other hand, direct mail actively solicits new patients. For many dentists, it is the most cost-effective, mass-media strategy of them all.

Of course, other acquisition- marketing options exist: newspaper ads, newspaper "advertorials," billboards, radio, even television. Broadcast advertising can sometimes be just the thing for acquiring new patients now. But don't forget: They call it "broadcast" because it's just that — "broad." You'll reach (and pay for) many more viewers and/or listeners than would be right for your practice. It's been my experience that, for dentists who want to go the broadcast route, radio is a more cost-effective option than TV. In most cases, it's also better suited to the message you want to deliver.

I'm always reluctant to give hard-and-fast rules regarding dental-practice marketing. One of our clients practices in lower Manhattan; another in the Texas hill country; and still another practices near Beverly Hills. However, two themes do seem to separate the more successful from the less successful practices — consistency and persistence. By consistency, I mean a uniformity of design elements — from the letterhead, to the new patient brochure, to the direct mailing, to the Web site. They all serve to reinforce each other. By persistence, I mean having a plan for practice marketing that is an ongoing, integral process — something that continues in good times and bad, not just when business is up and a bit of self-promotion seems like a treat. In fact, you could make the case that external-marketing strategies are more cost-effective and more successful during hard economic times, since that's when so many other dentists decide to slash overhead and the first thing to go is marketing.

That's just when the overall noise level diminishes from so many different messages being sent, and potential patients really begin to listen with the field narrowed. It's the easiest time for you to hook their interest U thread them through U and tag your own outstanding dentistry. Oh, by the way — make plenty of noise of your own! I've seen it succeed time and again.

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