Do You Think Your Marketing "Costs" Too Much?
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Greetings!
For many people reading this email, their practice is managing their marketing based on how much money they have in their checking account or what their gut tells them to do. It is NOT based on any hard facts or related analysis. In reality, you should look at a number of factors to determine your 2009 marketing budget. They are:- Percentage of revenues
- Desired patient or revenue growth
- Target marketing
- Desired market share
- Revenue Per Patient
- Case-related Variable Costs Per Patient
- Your Marketing Margin (For many of you this is a new concept.)
Armed with this information, any savvy orthodontic practice can determine the value of a new patient.
Focusing on the true value of a new patient, rather than the "cost" of
your marketing, will motivate you to map out a 12-month marketing plan,
budget, and strategy for 2009.
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Consider the 2006 Annual Practice Profitability Survey by the McGill & Hill Group
and their analysis of the financial statements of 85 orthodontic
practices. The average net profit for an orthodontic practice was
41.7% of collections. Fixed costs (occupancy, clerical wages,
non-operating supplies and expenses, clinical wages) accounted for
46.8% of collections. The remaining 11.5% of collections covered variable costs (professional supplies used in treatment of patients, and lab fees.)
Please note...the important statistic from the previous paragraph is NOT the average profit margin of 41.7%.
Rather, if like virtually every orthodontic practice in America, your
present staff and practice size CAN handle more new starts generated by
your marketing campaign, your only costs for those cases are the
variable costs - the professional supplies used in treatment of those
patients and lab fees - which average 11.5% of total collections. Your Marketing Margin on these cases is 88.5% before marketing costs!
This
means that for every extra $5,000 generated by your marketing (an
average full case in many areas of the country), the practice profits
$4,425 because for every additional full start, the practice is only
paying for the supplies and lab fees. Let's face it - you're going to
have your fixed costs (rent, clerical wages, clinical wages) whether
you market your practice or not...those fixed costs are the cost of owning and operating your own orthodontic practice.
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RETURN on Marketing InvestmentFor Orthodontic Practices That Can Handle New Patient Starts
With Their Present Staff and Practice Size  The
table above assumes a practice has an average full fee of $5,000 with
an 11.5% variable overhead (professional supplies used in treatment of
patients, and lab fees), and illustrates the NET return to the practice
on their investment in marketing.
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Still Think Marketing Costs Too Much?
On the contrary, you can't afford NOT to market your orthodontic practice in 2009. No longer are you in the practice of orthodontics. You are in the business of marketing orthodontics. Many orthodontists don't like the thought of that, but it is your reality. Don't shoot the messenger...thank us for bringing it to your attention.
You do not have to like a marketing action for it to work.
People do not like root canals, or having their transmission fixed, or having to stop smoking. Most do not like to hire lawyers, either, but winning a lawsuit and staying our of jail makes the "liking" part immaterial. What counts is that your practice grows.
To quote Helmut Flasch, from the August 2008 edition of Orthodontic Products, "If you keep looking for that one marketing action that will bring your practice growth, then you will end up overworked and in financial hardship. There is NO one marketing action that increases your patient volume - it is always a combination of several actions done together."
He continues, "Most people engage in a 'bee-hopping' approach to marketing. They try one thing, and if that doesn't work immediately, then they try the next. This approach does not help you, unless you want a smaller practice. Go for marketing systems - complete marketing plans that involve both internal and external marketing activities, and that can be done without your spending a lot of personal time to implement them."
For help planning and budgeting a 2009 marketing plan for your practice, you need to start NOW, not in January.
Call GetOrthoCases TODAY at 1.888.657.2762.
We can help you.
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