Reversing Your Negative Revenue
When you notice your revenue is in a downward spiral, most practices look to start cutting expenses. Rightfully so. If you have less revenue coming in, you must surely need to cut some expenses proportionately.
One of the first expenses many dental practices think to cut is marketing. However, when revenue is moving in the wrong direction marketing is where dental practices should actually increase their spend. This is not something that marketing companies tell you just to increase their own sales. There are real-life examples, after real-life examples of how cutting your marketing budget will cut into your revenue even more. Do not fall victim to this common mistake.
As an example, during the Great Depression, many companies cut their advertising spending out completely which put some of them out of business and left others hanging on by a shoestring. Those companies that continued to advertise throughout the depression benefited from not only from better awareness in the marketplace at the time but also from better positioning when the depression was over. A few of those companies and what occurred: Kellogg’s bested C.W. Post, Proctor & Gamble claimed the role in creating the soap opera, Chevrolet took the lead over Ford, and Camel cigarettes increasing their ad spend at the height of the depression overtook Chesterfield.
In most U. S. cities there are many dentists to choose from. So, how do you stand out from your competitors in this cluttered environment?
You need a good marketing mix that will create top-of-mind awareness.
Top-of-mind awareness is when a brand or business comes to a consumer’s mind first when thinking of a specific industry or product. Top-of-mind awareness is created by building brand awareness via multiple media channels like print publications, television, radio, social media channels, website, online advertising platforms, direct mail, patient communication, internal marketing and more. We believe that a good marketing mix contains both traditional (offline) and digital (online) marketing outlets.
We have even gone so far as to identify 75 potential areas you could utilize to double your patient revenue. 75. It’s not about using all 75, it’s about picking the right ones and getting them implemented. Then measuring the results and either rinsing and repeating or moving on to another avenue.
Interested in getting your hands on our 75 Point Double Your Patient Revenue Checklist?
Email me to gain access.
You may now be wondering how much you should spend in order to maximize your revenue but not waste dollars.
The following statistics come from a study conducted by Vital:
- Companies that grew from 1% – 15% per year allocated approximately 16.5% of gross revenue to their marketing budget.
- Companies that grew from 16% – 30% per year allocated approximately 22% of gross revenue to their marketing budget.
- Companies that grew from 31% – 100% per year allocated approximately 50.2% of gross revenue to their marketing budget.
The takeaway from these numbers is not to allocate 50% of your revenue to marketing, it is simply to show a correlation between marketing and growth.
The same study by Vital found that on average, companies selling B2C services spent 10.9% of their revenue on marketing. However, there are two scenarios where this number should increase: when you have a lot of competition and when your revenue is declining.
When your revenue is declining we suggest that you increase your marketing budget by 3 – 10%.
Each practice is different with regard to marketing spend.
We have some practices that are increasing revenue by spending as little as 5% of their gross production and others where that number is 10% and higher. In all of these practices, they are making money on what they are spending. Marketing should not be viewed as an expense but an investment. You should be getting a measurable return. You should know what that return is. It should never be guesswork whether or not to continue with a certain type of advertising. Your numbers should speak for themselves.