But first the “TL;DR” (Too long; Didn’t read)
A friend of mine is on me for probably explaining too much. So here’s the TL;DR on how much it should cost to market your dental practice:
- If you’re not spending 7-10% of your gross revenue on marketing, and ~85% of that on digital, your practice isn’t growing and you’re losing potential revenue. So for instance if your gross monthly revenue is $100,000, you should be allocating approximately $6000 towards digital marketing.
But I’d prefer to “teach you how to fish”, and not just take my word for it. So please: suffer this fool gladly and read on.
Setting the stage
Whether you are starting up a brand new practice, purchasing one or establishing yourself as a partner in a practice, you should know and understand what is required to market a successful dental practice. You are not just a dental professional, but a business owner. And not unlike any other viable storefront business, there are marketing requirements that will ensure you have profitability for years to come. Maintaining solid monthly marketing costs will ensure your practice:
- Acquires new patients
- Retains current patients
- Increases average spend per patient
- Improves word of mouth
For a dental practice to grow, a single dentist should be seeing 24-50 new patients per month.
Let’s review some high-level, general numbers regarding revenue and spend. Your own numbers should be in the ballpark. When it comes to determining the dental practice spend on marketing, use the numbers below as a guideline, but ultimately your own research and concrete data will be critical for evaluating your practice. These numbers are a good place to start:
- 17% average patient attrition rate
- Need to generate 24-50 new patients per month to counteract attrition and grow
- Word of mouth referrals can’t keep up
- Marketing needs to overcome price / basic practice features
- Cost Per Acquisition – $150 – $300 per dental patient
- In year one, a new patient spend averages $700-$1250
- Average dental patient stays with a practice for 7-10 years
- Average Patients spend – $653 per year (ADA average – 2016)
- A new patient will generate at least $4500 in revenue (excluding referrals) in their lifetime with a practice
Let’s dig in to what goals you’ll need to do to establish a robust marketing strategy:
1) Acquire new patients
Manageable growth for any practice is critical for weathering the ups and downs of a typical week, month and year. It helps insulate your practice from the unpredictability and severity of economic downturn and recessions. It also increases your practice’s valuation and contributes to your succession planning. It’s also the most expensive way to fill your calendar. Leveraging the cost, flexibility and performance of digital marketing can take some of that cost sting away. Keeping your Cost Per Acquisition (CPA) spend as low as possible is much easier to do with digital, and that’s where a lot of your prospects will be doing most of their research:
- 43.3% of patients indicated that they would select the dentist with the best online reviews.
- Leads generated from search engines are 8x more likely to convert into patients.
- Data suggests that email marketing generates 4400% returns on investment.
- There are 5.03 billion people active on the internet.
- According to a 2022 survey, 70% of marketers are actively investing in content marketing*.
- Statista 2020 report states that mobile web traffic has consistently accounted for about half of all global web traffic.
These compelling facts should instil a sense of tremendous importance and urgency in building and carrying out your digital marketing strategy.
2) Retain active patients
Patient retention is by far the most cost-effective way to spend your marketing dollars, and would be considered “getting your house in order”. Ignoring patient retention means having to onboard about 17% of your core active patients every year! Each dentist in an office should have between 1300 and 1500 active patients (an active patient is someone who has had billable work done in the last 18 months). Also referred to as Internal Marketing, this portion of your marketing strategy can also be valuable as the tactics here can often be contributed to by your office team and often witnessing the fruits of their labour firsthand can be incredibly fulfilling. Some digital marketing-specific patient retention activities can include:
- digital signage.
- follow-up email and QR code placed by reception asking for a Google Review.
- Email newsletter describing advanced technology, new services offered, quick bios on team members etc.
- Videos sent through various channels (YouTube, email, digital signage, social media) describing dental hygiene techniques that can be done at home.
- Contests to capture email addresses and marketing consent.
3) Increase average patient spend
These days, lives are very busy. Your patients are concentrating on their career, family, sports and other fulfilling activities and sometimes dental health can unintentionally take a back seat. Using readily available tools and technology, you can keep your current patients engaged and aware of your services even when they may not have you top of mind. In addition to basic practices like recall lists, usage of social media, email newsletters and even mobile SMS messaging will ensure your patients are cared for and appreciated. These activities will continue to help build trust and thought leadership while also being a helpful guide in their lives to remind them of the essentials like convenient times to take care of their dental health and when their insurance plans may renew. Naturally occurring products of trust can be spend frequency and total dollar amount, resulting in an overall greater patient lifetime value.
4) Improve word of mouth
Let’s expand the definition of “word of mouth”. Previously, word of mouth meant two or more people talking face to face and the topic of who your dentist is comes up. The current definition of word of mouth means so much more. It now ranges from the stuff you can see like google reviews, Maps locations, public social media posts (e.g. Twitter, or directly to your Practice’s Facebook page, for example) to the ones you can’t see like personal Facebook feeds, DM’s, texts etc. – the truth is people are having entire conversations about your practice all around you. Opting to not engage, interact and manage those spaces means you do not have a seat at the table, and your competition who is actively monitoring and engaging is eating your lunch.
OK but how much …
So how much does it cost to market your dental practice? Budgeting for marketing will vary – how many dentists and hygienists there are under one roof, whether or not there is a new dentist that requires a new core patient portfolio, etc. Some key rules to help you establish a strong path forward to develop and execute on your practice’s marketing strategy:
- Depending on your yearly revenue, your budget allocation will differ.
- General rule of thumb formula is somewhere between 7-10% of a practice’s gross revenue should be allocated for marketing activities.
- Of that, the traditional/digital marketing spend should be 15% and 85% respectively
- NEW dentists should expect to invest 20% of gross revenue into marketing yearly until their core patient base is up to 1300-1500 active patients.
- Google Ads, SEO, social media, and other digital marketing channels need to work in tandem to yield successful results. Piecemeal will see diminished results. Ensure you set aside a reasonable amount for each of these activities.
The numbers mentioned earlier regarding practice size and revenue are ballpark numbers – your practice’s actual data may be different. I can’t stress this enough – your marketing strategy should be as thorough as your patient’s treatment plans: As your business evolves, you need to know how much revenue every dental service and service provider brings, every patient’s worth, and your operational and patient acquisition costs while planning a marketing budget, which will inform your ROI metrics. And those can be beautiful.
Conclusion
A dental practice’s value proposition will be its strongest campaign message. Dentists need to highlight their expertise, technology advancements, the excellence of their staff, quality patient care and practice management. They need to develop trust. Trust builds advocacy and loyalty. Based on these four strategic goals, It is absolutely possible to stay competitive against the larger dental chains who have allocated marketing spend and are aggressively advertising or owner-operator practices who have already implemented their marketing strategy. Once you’ve seen the early results of your strategy, you’ll be less concerned about upfront costs to market your dental practice and focused on operationalizing your marketing activities!
Working with an experienced marketer that focuses on the complexities of the dental industry will help ensure your dental practice isn’t exposed to legal or College of Dental Surgeons of Alberta (CDSA) advertising guideline violations.
* Content Marketing: The purpose of content marketing is to create and share relevant written, downloadable, and visual media so your target audience can learn about your brand, expertise, and products or services. Content marketing statistics inform your strategy and provide insight into the ways other content marketers are solving the pain points of their target audience and generating leads. This will allow you to determine which techniques will work best for your business, customers, and leads. (Source: https://www.hubspot.com/marketing-statistics)
