AIM Marketing

Part 2 of 3

By Daniel A. Bobrow, MBA (University of Chicago) & MBA (K.U.L. Belgium)

In the last Issue, we began our presentation of the 7 keys to successfully implement your dentistry marketing strategy. We have already covered:

1. Identify Your Objectives and
2. Determine Your Budget

In this Issue we tackle:

3. Performing and Evaluating Your Benefit/Cost Calculations
4. Selecting Your Target & Frequency
and
5. Choosing Design and Message

Start off on the right foot, and on a path of your own making

It is surprising how many dentists embark on a given marketing strategy without first “crunching a few numbers,” that is, determining what constitutes an acceptable response, and return.

In most instances, an attempt is made at calculating program cost. However, without a reliable indicator of the benefit, stated most often in terms of average patient value, the measure is incomplete.

Remember: to perform a benefit/cost calculation, you need to divide Benefit by Cost so, without knowing the benefit, you’ve only got half the story.

Benefit:

Calculate YOUR Average Patient Value

There is a simple and reliable way to determine the average patient value for your practice (the one exception to this is if you are opening a new practice, in which case you may need to rely on profession-wide or (if available) area-specific averages until you build up a sufficient patient base to perform the calculation).

The method involves randomly selecting thirty patients who have been with the practice for at least a year, adding their hygiene and non-hygiene production totaling these two production types across the entire sample, reducing the product by a certain factor to reflect costs associated with delivering service (labs fees, supplies, etc.), then adding the two production types and dividing by 30 to get your Average Annual Patient Contribution to Overhead aka AAPCO.

To receive a worksheet, which both clearly illustrates the process, and may be used to actually perform the exercise send an email to DBobrow@AIMDentalMarketing.com.

Bear in mind: this is a very conservative measure of patient value, as it does not take into consideration referrals or re-care beyond one year.

Armed with this information, you can now proceed to other essential measures of strategy effectiveness such as Patient Acquisition Cost, Break Even Quantity and Percent and finally, Return on Investment (ROI). The above-referenced worksheet can even perform these calculations for you automatically.

Target & Frequency (Scope)
Now that you have the requisite tools of analysis in hand, you now need to determine who to target and how frequently to reach them, also known as the scope of your strategy. This, in turn, depends on any one (or possibly more than one) of the following: Expected Response Rate of the strategy in question, Excess Capacity, that is, how many more patients per month can your practice absorb, & Budget.

Expected Response Rate

There are several ways to arrive at what constitutes a realistic expectation for the response rate from a given marketing strategy. If, for instance, you’ve employed a direct mail strategy in the past, and do not plan on deviating too much from you did before (assuming no major changes in demographic makeup or competitiveness of your area), you should expect a similar result. However, if you are changing one or more variables, you may need to adjust your expectations accordingly. For instance, you may have relocated to an area whose demographic significantly differs from your former service area. Or, you may have targeted only new residents in the past, but now wish to broaden your efforts to include current residents. Still another example of why you may need to reassess your expectations is if you are using a channel you’ve not attempted before, in which case, you’ll want to rely on “industry standards,” ideally adjusted to reflect the characteristics of your Service Area.

Let’s say your research has determined that a reasonable expected response rate for the strategy in question is .25%. Multiplying any given number of placements by that expected response will yield the expected number of new patient opportunities. Let’s say your direct mail strategy is intended to target 5,000 resident households. Employing the above statistics yields an expected number of new patient opportunities of 12.5 (5,000 exposures times .0025).

Armed with the above, the next consideration is how many additional patients your office can comfortably absorb. Let’s say you’d like an additional 10 patients per month. If the only strategy you plan to employ is direct mail, and you are comfortable with the .25% estimated response rate, you’ll want to mail to 4,000 households. Of course, there is a point at which the return may be expected to diminish. If you wanted to attract, say, 200 patients in one month, according to the above formula, you’d need to send 80,000, which is fine, unless to capture that many households, you’ll need to target way beyond the distance a typical patient would be willing to travel to experience a new dentist’s care.

The last step in the process involves determining your budget. Let’s say you’d like to attract 25 new patients, your expected response rate is .25%, your per mailer cost is $.35, and your monthly budget is $2,000.

To attract 25 new patients you’ll need to invest 25/.0025*$.35 = $3,500. In this case, you’ll either need to revise your desired new patients downward or your budget upward.

Frequency

Extensive research can be performed to determine optimum frequency and interval but the most important thing to understand is this: frequency matters. Just ask yourself how many times you need to be exposed to the same television commercial before you a) know who they are b) know what they are selling and c) know what they’re asking you to do. Consider this, and you’ll ‘get the picture.

Suffice to say that it is a fundamental principle of marketing (and psychology) that people need to be exposed to a given message several times before taking action.  In terms of direct mail marketing for dentists, we’ve found that a minimum exposure of once quarterly for four consecutive quarters yields a positive return (once a month for twelve consecutive months, budget allowing, is even better).

Another principle to remember is message consistency. Do not make the mistake of thinking you need to vary the message to keep from boring your audience. Your objectives are more modest: a) get them to recognize you b) get them to trust you & c) get them to respond to you. Before what we term saturation and fatigue become a cause for concern, your marketing program will need to be highly aggressive: most dentists never reached that level.

Having more than one strategy in place simultaneously should, if executed in an integrated manner, result in that elusive but desirable phenomenon called synergy, where the whole (response) is greater than the sum of its parts.

Design & Message

As with frequency and interval, a great deal of research (as well as trial and error) can be committed to determining your optimum message and design elements. It is made even more challenging because what was new, exciting, and appealing yesterday may be old, boring, and uninteresting today.

That said, there are certain design elements, which more or less transcend time, and fad, and have proven to be fundamental to, and essential for an acceptable response rate.  Depending on your objective, your design will be general or specific, passive or aggressive, bold or understated. For examples of these various design elements: click here (for currently tested, proven, and recommended designs, text, and offers, contact your marketing specialist).

Our next Issue will conclude this section by covering the two remaining topics of Scheduling and Implementing Program Tracking Systems.

Sincerely,
AIM DENTAL MARKETING
Daniel A. ‘Danny’ Bobrow,
President

Part 3 of 3

By Daniel A. Bobrow, MBA (University of Chicago) & MBA (K.U.L. Belgium)

Internal and External Marketing
Internal marketing concerns itself primarily with communication among your patients of record. In a general sense, anything, which has an impact on your patient’s perception of your practice, is a form of internal marketing.

External marketing is intended to create awareness and induce a response among people with whom you’ve not yet established a relationship.

As mentioned previously, some practices need only create awareness of their existence and location to induce a response. Marketing, where the element of persuasion is absent (or subtle) is called Institutional (or Awareness) Marketing. Its sole concern is to brand the practice.

Examples of internal marketing include; treatment presentation, patient recall and reactivation, on-hold messages, referral programs, and cause-related event marketing.

The distinction between internal and external marketing is somewhat blurred when one speaks about referral programs. This is because, while directed at patients of record (internal marketing), their intent is to attract prospective patients by encouraging the patient of record to refer his/her family, friends, and colleagues (external marketing).

Examples of external marketing include; web-based outreach (PPC, SEO, social media, directory listings, etc.), community outreach e.g. making presentations on dental hygiene to school children, speaking and networking at Chambers of Commerce, Direct Mail, Yellow Page advertising, and Professional Call Handling (also called telemarketing). Owing to the fact that convenience is such a strong motivator in an individual’s decision to join a practice, most dentists should consider themselves to be local area marketers. The so-called broadcast marketing channels (advertising on radio, television, newspapers, etc.), therefore, are seldom cost-effective since they are attempting (and you are paying for the attempt) to contact people beyond your Service Area.

Telephone Call Handling is another area where internal and external marketing can overlap. This is because current, as well as prospective patients, call your office (and, yes handling incoming calls to your office is a form of telemarketing). Proper etiquette in handling these calls is absolutely crucial to the positive perception of your practice among current and prospective patients.

Use of the Internet has proliferated to the point where it is used for everything from academic research to grocery shopping and well beyond. Its use in the dental profession has increased significantly as well, both as an internal and external marketing tool. Used as part of an integrated marketing plan, the Internet can serve an internal marketing function by, for example, facilitating cost-effective communications with your patients of record (periodic emailed newsletters, appointment reminders, etc.). External marketing is facilitated both by including your website address prominently on more conventional communications, such as direct mail (so called bricks to clicks marketing), and via direct Internet promotion using such strategies as search engine optimization and listing on high exposure directories like www.888NowSmile.com. In addition, your website can help increase practice efficiency by serving as an administrative tool to e.g. streamline the new patient enrollment process.

Links In A Chain

We stress that the programs offered here cannot work in isolation. A chain is only as strong as its weakest link. For example, the success of your external marketing programs will depend to a great extent on having your internal marketing systems in place (and vice versa). This is the case because external marketing programs are best at generating inquiries. It’s what you do with that traffic (and here is where internal marketing and other essential systems enter the picture) that can mean the success or failure of your external marketing efforts.

Other “links in the chain” that are equally important to continued practice growth are: overhead control, patient financing, website design, soft tissue management, treatment presentation, human resources management, patient communications, technology integration, and offering an array of oral-systemic health-related services and protocols.

STS IV will present Tools To Make Reliable Marketing Decisions.

Part 2 of 3

By Daniel A. Bobrow, MBA (University of Chicago) & MBA (K.U.L. Belgium)

There are three paradigms used to describe the dentist-patient relationship.

The Guild Model views the patient as incapable of making judgments, not only about treatment modalities but the need for therapy in the first place. Since there is deemed to be no justification for decision-making by the patient, there is no justification for attempting to educate the patient or differentiate the practice.

The Commercial Model holds that the relationship between dentist and patient is simply that of producer and consumer. The watch phrase here is caveat emptor, buyer beware.

The April issue of CDS Review elaborates on the Commercial Model as follows:

“Dentist and patient are viewed as equal bargainers who have no obligation to one another, except for a prohibition of coercion, an obligation to truth (not necessarily the whole truth), and a duty to keep contracts once made.”

The goal of the dentist, according to the Interactive Model, is to enhance patient autonomy. This assumes both that the patient is capable of understanding, and the dentist owes a duty to assist the patient in making his or her treatment choices.

What distinguishes the Interactive from the Commercial Model is its belief in the moral, not merely the economic, equality of the doctor and patient, and it is the model we believe ought to characterize the patient-provider relationship.

Awareness and Persuasion

Most marketing programs consist of two components: an awareness creation component, and a persuasion component. There are those who maintain that persuasion has no legitimate role to play in dentistry marketing. In our view, persuasion has a valuable role to play, provided it has as its primary objective providing necessary and high-quality services to the un-served and under-served public.

It may well be that very little persuasion is necessary to achieve your practice growth objectives. We work with a number of practices where, for example, owing to the shortage of providers or rapid population growth in the area, all the practice needed to do was create awareness of its existence. An excellent example of this was a doctor in (pre-Katrina) downtown New Orleans who merely needed to inform businesses of his location to realize a substantial influx of new patients. The state of the economy also has a significant effect on the extent to which incentives are indicated as part of the message directed at prospective (and even current) patients.

Another example of the awareness-creation component of marketing is related by a Health Partner practicing just north of Chicago who invested a lot of money to make his office wheelchair accessible. “I just assumed people knew about it. Apparently, they didn’t, and I no doubt missed a lot of opportunities to treat these people.” By simply mentioning this benefit in the copy of his mailings, the response among senior citizens increased markedly.

STS III concerns examples of and distinctions between Internal and External Marketing.