Marketing and Your Budget

Over the years I have been asked comment on how much should a medical practice spend on marketing and advertising.  Well, the conventional recommendation most consultants point to is 3-5% of collected revenue.  While that number can vary, the most important thing to know is what the return on investment (ROI) is.  After conducting many financial revenues, the percent of collected revenue spent on marketing can be highly diverse.

First, recognize, there is no right answer.  What you choose to spend depends greatly on your type of practice.  Start up practices can expect to have a higher percentage early on, then settle back towards the norm.  Established practices may spend very little simply because of their position within the community.  Again, it is not how much you spend, but are you getting an appropriate return.

In evaluating return, you first need to where you invest your marketing dollars.  Do you do internal marketing?  That is, are you actively seeking to satisfy the needs or explore the value of new services/products for your established patients?  Again, conventions suggest this is the best spend.  It is very expensive to seek new patients and selling new products or services to established patients greatly increases your ROI.  I have found most practices "mine" their patient data poorly.  As a suggestion, take a look at your current product or service offering.  Are there products or services that naturally go together?  Probably so.  Now, search your data for patients who have received one of those services, but not the other.  Congratulations, you have just "mined" you data.  The next step is to create a marketing communication to those patients to sell the "other" service.

As you might expect, external marketing, can and is expensive.  It is also difficult to evaluate ROI.  I once conducted a marketing training program for a group of plastic surgeons.  One physician asked what my thoughts on the use of billboards.  Well, not much.  Three reasons. First, cost and limited ability to track ROI.  Second, are the unlikely patients that respond to the billboard the patients that you want?  And thirdly, is this the proper communication to your community about your practice.  Unless you have exhausted all of your internal marketing opportunities, and you have $3-5,000, just sitting around, billboards are probably not your best investment.  

There are some clear choices to be made when it comes to deciding how you are going to market your practice and how much you spend.  In today's environment, the power of the internet marketing and having a solid website is key.  If you are curious what the next phase in internet marketing is, well, it's already here.  Can you say Twitter, FaceBook?  Yes, social networking, the next big thing in medical practice marketing.