Many doctors and dentists may consider cutting back on advertising during a recession as a defensive move for short-term cost-saving measures. However, the truth is that marketing during economic uncertainty provides an excellent opportunity to capture the attention of potential patients, increase market share, and build a post-recession footprint.
Marketing Studies During A Recession
In our lifetime, the United States survived the Great Depression, the energy crisis of the 70s and 80s, and the Housing Market Crash from 2008 - 2010. Recently the COVID-19 pandemic has caused long-lasting instability, and the world seems to be preparing for yet another recession. As a result, medical practices and business owners worldwide are making decisions about cutting their advertising budgets.
Cutting back on marketing during a recession stems from the belief that marketing has little impact on long-term sales. However, history and research tell a different story.
Over the decades, numerous studies have been conducted on the short and long-term impacts of advertising during economic decline. Such studies have included hundreds of companies in several industries that have kept, reduced, or eliminated marketing budgets. The concluding studies are clear, businesses that continued to market their products or services during a recession saw increased market share and higher sales than their counterparts post-recession. On the other hand, companies that chose to eliminate marketing during the economic downturn had zero market share increase. Moreover, once the economy regained traction, companies that stopped advertising had an insignificant rise in sales, while their counterpart, those who kept marketing going, saw over a +100% increase in sales.
When a company fails to maintain its market share during an economic recession, current and future sales are jeopardized. However, maintaining market share costs much less than rebuilding it later on.
"When times are prosperous, you should advertise. When times are difficult, you must advertise."
Balancing Marketing Budgets During Economic Trouble
When medical practices see declining sales, new patient conversions, etc., expenses are cut. Marketing and advertising budgets are often the first to be reduced, as they are viewed as a discretionary cost.
Reducing marketing budgets makes sense. Why continue advertising your brand when consumers begin to spend less on healthcare and limit non-essential purchases? The truth is spending on advertising offers enormous opportunities during a recession to gain market share, increase brand awareness, and stretch the advertising dollar to more consumers. If you can continue spending on advertising, a recession is the best time to do it.
Naturally, many business and practice owners must consider reducing budgets when times get tough. Below are a few considerations to make to reduce your operating costs during a downturn:
- Conduct a spending audit
Many business owners sometimes need to learn where their money goes. Pull financial and invoicing reports, and conduct an audit. Doing a self-audit is the first order of business.
- Review and adjust your business operations budget
Start with a detailed report of your finances. Some discretionary business expenses may include subscriptions or digital conveniences. In many cases, you may be able to lower your overhead by limiting business "comforts" and going back to something more manual or simple. Once you've identified the shortfalls in your spending, it's easier to reduce operating costs.
- Business Upgrades
Hold off on any business or practice updates. Updating equipment is best done in times of plenty. When considering selling your medical practice, you may think an "update" is required to get your desired price. However, in most cases, the valuation of your medical practice is determined by something other than the most up-to-date equipment, and you'll most likely receive significantly less than what you had in mind for the upgrades.
- Staff Overhead
Reevaluate your staff overhead. Pulling back on employee perks without hurting employee morale can lead to significant savings.
- Supply & Resource Evaluation
Is there space or equipment not being used, costing you resources? Examine supply chain costs and inventory levels. Some suppliers may be willing to broker a deal to shave expenses, such as discounts for bulk purchasing.
- Reevaluate Marketing
Reevaluate marketing tactics. Some tactics work better than others. During a recession, marketing costs may reduce to target the same number of consumers. Advertising price reductions will allow you to refocus budgets or focus on other marketing tactics. Make your advertising work harder and smarter during economic uncertainty by utilizing marketing experts. Finding ways to trim fat without cutting into the meat of your marketing is a challenge, but one that can produce great results.
Economic downturn impacts everyone. However, medical practices still need to acquire new patients if they want to continue to be in business. New patients are only achieved in and through the use of marketing. Reevaluating your business operations and overhead provides far more success than assuming marketing is discretionary during economic troubles.
Please get in touch with us today if you would like a reevaluation of your current healthcare marketing strategies. Medical Marketing Guru specializes in healthcare marketing, medical websites, and digital marketing tactics.