Marketing your dental practice is a key part of its success and growth. Too many businesses see marketing as a “nice to have” rather than a “need to have.” In fact, when things get tight, lots of business owners have the knee-jerk reaction to either decrease their marketing spend, or maybe even cut it altogether.
The truth is that a decent marketing budget is a non-negotiable part of a successful practice. Setting an annual marketing budget will help you ensure that you’re investing enough in the future of your business. But what constitutes a decent budget? How do you know what to spend on marketing your practice in a year?
I’ve put together a few tools for you to use to help you build your 2019 marketing budget.
Start With a Budgeting Strategy
There are plenty of options in terms of budgeting strategies. Some businesses take a percentage of last year’s revenue and call it their marketing budget. Other businesses take a percentage of their projected revenue for the next year and call that their marketing budgets. Neither of these is inherently wrong or bad. But we find the third option to be the most effective.
We recommend taking a flat percentage of last year’s revenue and a flat percentage of the projected revenue for this coming year.
The percentages are up to you based on what you’re trying to achieve and what other initiatives you’re focusing on. The average marketing spend for dental practices is somewhere around the 2% mark. That number is definitely lower than what we’d recommend.
Outline Your Goals
Before you determine your budget model, it’s important that you consider and define your business goals for the coming year. At the very least, your goals should always include maintaining the practice growth you saw throughout 2018 and retaining those patients through the coming year.
You should also focus on outlining what kind of growth you want to achieve throughout 2019. This could refer to patient volume, average spend per patient, patient demographics, or even just driving interest to more specialized services such as cosmetic dentistry.
Our Recommended Model
It’s always more expensive to bring in new patients than it is to retain current patients. That’s why your budget should draw from your desired growth as well as last year’s revenue. The percentage of last year’s revenue should be enough to maintain your current size. The percentage of your desired growth should be enough to get you there.
We recommend you take 3% of 2018’s revenue and 10% of your desired growth for 2019. So for example: let’s say you made 2 million in 2018, and you’re hoping to grow by 15%.
3% of 2018 revenue= $60,000
10% of $300,000 in desired growth= $30,000
Your 2019 marketing budget= $90,000
Remember that as your practice grows, so too should your marketing budget. Your budget last year is only enough to maintain the patient base you had last year. As long as you want to grow, you need to increase your marketing budget on an annual basis.
Other Tips to Keep in Mind
It’s one thing to develop a strategy before the year starts. It’s another to stick to that strategy if things don’t go quite as planned. Here are a few tips to help make sure that your budget stays in line with your practice goals as the year goes on.
Invest in What’s Working
It might seem obvious, but if something works, stick with it and make it a bigger part of your plan going forward. You don’t have to try to make a less effective avenue work for you.
For example, if YouTube pre-roll ads haven’t been giving you the results you wanted, but your display ads are working wonderfully, you don’t need to spend time and money trying to make your YouTube ads live up to your expectations. Instead, lean into the display ads that are performing well. Devote more resources to them so they can do even more.
To do this really effectively, you should invest in tools that give you some insight into your marketing efforts. Call tracking software, for example, will help you determine which leads are coming from where.
Evaluate ROI as You Go
Keep an eye on your metrics like impressions and click-through-rates. Compare what you’re spending on each platform to help you determine your return on investment. Evaluating these sorts of numbers on a monthly basis helps make sure you stay on track with your goals or gives you the information you need to regroup if your marketing strategy isn’t producing the results you’d expected. Which brings me to my next point.
Pivot Towards Performance
Stay flexible. Things may not always work the way you predict they will. Evaluate the success of your strategy as you go and be ready to pivot if something isn’t quite working. Work with your marketing team or service providers to alter the course of your marketing strategy slightly as you go. It’s important to plan ahead, but it’s just as important to be ready for the unexpected.
What to Spend Where
Every business is unique and thus, needs a different budget. There is no standardized budget model that makes sense for every business. But one principle that does apply to everyone is this: every business needs to invest in lead generation for growth today and brand development for growth tomorrow.
If you need a little more information on how to create a budget for your practice, contact SmileShop Marketing. Our expert team would love to help you out.