Dental clinic marketing budget guidelines
When you were at university learning dentistry, your professors considered that promoting your services as a dentist was not professional. Of course, they probably came from a period when a dentist was doing a favor by accepting a new patient. Those days are gone! Today, competition is intense in dentistry. There have never been so many dentists for so few patients. Consequently, dentists must invest to actively promote their clinic in order to gain new patients. But how much should you budget for marketing?
Normal patient attrition rate
Each year, you will lose a certain percentage of your patients. They will move, change insurance plan, move to a new job, die, prefer another clinic, etc. Whatever the reason, you need to replace those patients or else your income will diminish.
A normal dental patient attrition rate is between 10% and 15%. If your active patient files are 8 years old on average, your attrition rate is 12.5% (100/8). With such an attrition rate, a clinic with 3000 active patients must find 375 new patients each year (31 monthly).
Lisa Philp is President of Transition Group, and provides consulting services in dental practice management. According to her, a budget between 2% and 7% of gross revenue should be set aside to promote the clinic. The exact rates will vary depending on the desired growth strategy:
- Stability: between 2% and 3%;
- Moderate growth: between 4% and 5%;
- Aggressive growth: between 5% and 7%.
For example, a clinic with an annual income of $1.3 million and a strategy of moderate growth should spend annually between $52,000 and $65,000 on clinic promotion.
Note: The choice of a growth strategy must take into consideration the potential for new patients in your area. If you are in a mature neighborhood with a very stable population, patient growth will be very difficult because it will have to be achieved by stealing patients from your competitors.
Degree of competition
Competition for new patients is stronger or weaker depending on where your clinic is located. Percentages presented by Lisa Philp must be adjusted upward or downward, depending on the degree of competition around your clinic. If competition is intense, add 2% to the percentage based on your growth strategy.
If your treatment rooms are always full and you cannot add capacity, it is useless to seek more new patients than what is needed to replace normal attrition.
If your treatment rooms do have availability, if you consider increasing capacity by adding a room or extending your hours of operation, then it becomes very profitable to seek new patients. Indeed, the additional revenues bring more profits because the fixed costs are already covered. To operate at maximum capacity and maximum profitability, an adequate promotional budget must be set.
According to the ACDQ November-December 2012 “Point de contact”, a survey conducted among general practitioners revealed that the cost of advertising and representation in 2007 was 2.2% of revenues.
Too many dentists rely on word of mouth to promote their services. Those who are most successful allocate a substantial budget to market and promote their clinic.
And yourself, how much do you spend annually? Now that you have substantially reduced your cost of advertising in Yellow Pages, did your transfer that budget on the web?