Find a balance with your practice’s marketing budget
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“Life is like riding a bicycle. To keep your balance, you must keep moving.”
– Albert Einstein
Not to put too fine a point on it, marketing is the crank on the great wheel of commerce. Some practices crank hard and grow faster than their peers. Others spend less than they should, losing market share each year. And some overcrank, overspend and exhaust their financial resources while overwhelming their clinical capacity.
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Your practice constantly has marketing of some sort going on, whether you are consciously aware of it or not. Let’s make that easier to see by defining “marketing,” which is simply: establishing and then maintaining an exchange relationship with a customer. “Exchange relationships” are what you and your staff cultivate all day long.
You get (by giving up your time):
- the joy, pride and prestige of a professional calling;
- the fun that comes with competently helping others solve their problems; and
- economic abundance, if your practice is well run.
Each patient gets (by giving up their money and their payer’s):
- relief from pain and worry;
- reassurance they are doing all they can for their eye health and function; and
- the practical benefits of seeing as well as possible.
There are hundreds of potential marketing activities to keep these exchanges going. The three most important of these take place inside the four walls of your practice:
- Providing great service to existing customers, which stimulates patient-to-patient referrals. Alumni referrals like these are almost always the most important and least expensive kind of marketing. This includes easy access to your services, reduced waiting time, friendly/caring staff, solving today’s chief complaint in a manner that engenders confidence and skirts confusion, and (when you drop the ball) being excellent at what marketeers call “service recovery” to win back the patient’s loyalty.
- Patient satisfaction studies to confirm that you are indeed providing great service, not only in medical outcomes but in all the other ways that only customers keep score.
- Continuity of care and zero-defects recall, which not only expands the business side of your practice but also assures optimal quality of care. (We find that more than 80% of new clients have recall defects costing an average of $100,000 or more in lost annual collections per provider.)
Most marketing activities — there are hundreds to choose from — are external and less cost-effective but can still be critically important. Some of these you probably do or have tried and abandoned. Here is a very limited list of things that can work well in eye care:
- outreach to referral sources (and formal referral source satisfaction studies);
- digital marketing in all its forms (websites, SEO, social media, blast emails, etc);
- old-school patient newsletters and mailings;
- signage;
- community lectures;
- old-school collateral material such as cards and fact sheets;
- senior vision screenings and health fairs;
- donations;
- publicity/press relations; and
- all manner of paid direct-to-consumer advertising, including TV, radio and print.
The puzzler is to find the right mix of marketing tactics, dialed in at the right volume to deliver your desired number of new patients of the right type each month, without overspending or marketing so effectively that the volume of new patients exceeds your capacity.
It is all about balance.
Why do some practices find it essential to spend 15% of every dollar they collect for aggressive advertising, while others spend 1% or less on little more than a modest website and holiday baskets to local colleagues? There are many reasons for the differences between these two extreme kinds of practices, but they boil down to just these 10 (Table).
Beyond all of these nuanced motivations to market with a light or heavy hand, it simply boils down to comparing the number of new patients you presently serve each month and your goal for new patient volumes.
New patients in a general practice typically represent 10% to 20% of total visits. This will range somewhat higher, 25% or so, in a subspecialty or referral-based practice. Newer offices will obviously have a much higher ratio of new patients. Higher percentages than this baseline for an established practice may indicate poor continuity of care and recall protocols, which should be audited for gaps.
The most important single determinant of how much — and how — you spend on marketing should be the desired mix and number of new patients.
In the same general ophthalmology practice, it is normal to spend about 3% to 5% of collections on the total marketing function (excluding, by convention, internal sales staff and surgical counselors). An old-line, established practitioner, approaching retirement, with no further growth aspirations can get by on 1% or 2%. New practices, elective care surgeons and surgeons in overserved, competitive markets may need to spend more than 10% of collections, at least for the start-up phases of a new campaign.
To assess your situation, prepare a simple Excel graph for the past 24 months showing the monthly number of new and total patient visits in the practice, including postop visits. In multi-doctor practices, prepare a separate graph for each provider, as well.
Graphs like this will reveal much better than dry tabular data where your practice is heading. Are new patient volumes heading up, down or sideways? Is the percent of new patients in the healthy 10% to 20% of total range or lower than 10%? Look simultaneously at your annual financial reports. If your collections are not growing at least 5% per year, you are probably losing market share.
The relationship between your marketing activities and new patient volumes is like the relationship between a drug’s dosage and frequency and its clinical efficacy. There is an analogous dose-response curve in marketing. But unlike drug dosing, in which the pharmaceutical firm has already worked out the details for you, you have to figure this out for yourself through trial and error.
Marketing, as a department within your practice and as a business discipline, is annoyingly resistant to cost-benefit analysis. The old saw applies: “Half of our marketing budget is wasted — we just don’t know which half.” Experience has shown that we can perhaps decrease the wastage factor if we stick to activities proven in fellow practices to work well.
Every doctor within your practice should declare and periodically update their volume performance goals so that the marketing budget aligns with the composite growth goals of the overall practice.
- For more information:
- John B. Pinto is president of J. Pinto & Associates, Inc., an ophthalmic practice management consulting firm established in 1979. He is the country’s most published author on ophthalmology management topics, including John Pinto’s Little Green Book of Ophthalmology: Strategies, Tips, and Pearls to Help You Grow and Manage a Practice of Distinction, UP: Taking Ophthalmic Administrators and Their Management Teams to the Next Level of Skill, Performance, and Career Satisfaction (with Corinne Wohl), Simple: The Inner Game of Ophthalmic Practice Success, and Ophthalmic Leadership: A Practical Guide for Physicians, Administrators, and Teams. Available now for purchase at slackbooks.com. Receive 20% off with promo code PINTO20. He can be reached at 619-223-2233; email: pintoinc@aol.com; website: www.pintoinc.com.
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