They Didn’t Teach This in Dental School Thomas Giacobbi, DDS, FAGD, Dentaltown Editorial Advisor
Kim Crawford, Dentaltown Managing Editor

What percent of gross income should be spent on marketing?
Fred Joyal, 1-800-DENTIST: I would recommend between 4-5% of the practice gross, but the better question is: What should your ROI be on marketing? Essentially, anything that generates production at 3-to-4 times the cost makes sense. But you need to track the referrals that are generated and, more importantly, the production generated from secondary and tertiary referrals. Without proper tracking to two or three levels, you won’t know what really works.

My dental office is four years old and I want to increase new patients. My annual marketing budget is $20,000. What is the best way to divide this money among the many different forms of marketing? How do patient demographics play into this decision?
Ed O’Keefe, Dentist Profits, Inc., 1-866-723-0420: First, internal marketing has been proven to be six times less expensive than external marketing and in almost every case is the best way to start. I would recommend starting a monthly patient newsletter at the bare minimum. Most people want to skimp on this strategy. However, the ONLY way to ensure high retention rates, increase unsolicited referrals, and get your patients back in for more care is a monthly patient newsletter. The Direct Mail Association has proven that for “every month you don’t communicate with your patients, the value of that patient diminishes by 10%”. Which means if you haven’t communicated in 10 months, that patient is about as valuable as a cold name.

Just like any kind of relationship, if the only thing you send these people are bills and recall cards, then what kind of relationship do you expect from it?

The other thing you should be doing monthly is to send out a monthly special offer to your current and inactive patients. My clients who do this find they make more money every month by sending out inexpensive postcards.

The reason is most people are “Interested” in doing some esthetic dentistry or know that they need to come in for a crown, or whatever. Since all of your patients are procrastinators, all they need is a reason to come in. You can offer “Free Smile Makeover Consultation”, “1/2 Off Whitening”, etc. What we do is surround the “special” around an event of that month. It works like a charm. I challenge you to try both of these strategies for the next three months, and I guarantee you the only thing you’ll notice is that you are seeing more patients and you are doing more care—with the ones you have!

Everyone tells me word-of-mouth marketing is the best way to grow a dental practice. What is the second best method of marketing?
Howie Horrocks, New Patients, Inc., 1-866-DENT-ADS: Our experience with direct mail over the last 15 years has shown it to be the best ROI. Of course this assumes that it’s done correctly. There are many ways to do it wrong and it’s too large a subject to detail here. Check out the wealth of information on this subject on Dentaltown.com. Look in the marketing forum and type “direct mail” into the search engine. You will get enough information on this subject to get you started.

Is a practice Web site primarily an internal or external marketing tool? What is an appropriate budget for development of a good practice Web site?
Joel Harris, Intrinsic Dental Marketing, 1-877-942-8855: A Web site should be used as both an external and internal marketing tool. However, most dentists don’t know how to promote their site, and many dental Web sites are poorly designed and executed. A dental Web site needs to educate, promote offers and improve the image of the practice. In short, a good Web site builds credibility. A wimpy site or a less-than-professional site is almost worse than nothing. A good budget for a dental Web site should be at least $1,500 for the initial setup and up to $75 per month for hosting and site maintenance.

What role does PPO insurance participation play in an office marketing plan? Since the “list” will generate new patients, should I focus my marketing dollars on internal marketing or direct mail searching for FFS patients?
Howie Horrocks, New Patients, Inc., 1-866-DENT-ADS: Here’s the deal with insurance participation. Insurance companies consolidate the market (your potential new patients), bundle up your services, and sell them back to you for about 70 cents on the dollar. So basically, you’re paying 30% (instead of the 5% to 7%) you would normally spend on a marketing budget. A wise entrepreneurial dentist would carefully track the ROI on the insurance participation right along with the ROI of their marketing (internal & external). When the practice reaches a point where the marketing alone can supply a good number of quality new patients – you’ve met the critical transition point in your practice where you can consider not participating with plans that have the low return on investment. Over time, you drop the low ROI plans until you only have the good plans remaining. The direct answer to this question is you ALWAYS market internally. A wise dentist will carefully measure the ROI for their PPO participation along with the ROI from their external marketing. Direct mail is a great way to market for FFS patients but it’s not the only way.

Why should I market if my practice is already busy?
Dave Stone, DC Marketing Specialists, 1-800-736-3632: You need a good internal marketing program regardless of how busy you are. The average dental practice loses between 15 to 20 percent of their base every year; 7 to 8 percent move out of your marketing area each year and the rest leave for various reasons – the biggest reason being that you didn’t stay in touch to tell your patients you care and to give them a reason to stay loyal to you. A good internal marketing program, along with a minor external marketing program, will help keep your practice from eroding out from under you––doing damage that you may not notice for a year or two, possibly too late to get the momentum back.

How do I determine ROI from my marketing plan?
Dave Stone, DC Marketing Specialists, 1-800-736-3632: Very Simple. You need to know the dollar value of a new patient and your cost to obtain one. Most experts agree that $800 for the first 3-9 months a new patient is in your practice is a good average. To determine your cost per patient, for each new marketing program, divide the number of new patients gained from that program into the dollars invested in the marketing program. If you have a 3 or 4-to-1 or higher differential between your cost per patient and what a new patient is worth to you in the first year, then you have a good ROI; you need at least a 3-to-1 return to continue with that marketing program.

One piece of advice: Quit looking for the big bonanza, a windfall from every marketing plan. A 3 or 4-to-1 return, reactivating old patients and one or two referrals per month from existing patients you weren’t getting into the office before, can turn into very big dollars on an annual basis.

I live in a community that reads a local free paper every two weeks. How many times should I repeat an ad in my local paper before changing the message? Also, what are the most effective messages in this medium-special offers, unique qualities of our practice or new technologies?
Jim Gray, Avandant Dental Marketing Strategies, 1-800-355-5534: Many ads can run forever without being changed and still pull response because there is always a section of the market who needs or wants dentistry. Test several ads, track response and if several of them get similar response alternate between them. If only one pulls reasonable response, just run that ad until you have more to test. If you’re continually satisfied with the response from that one ad, then run it until it doesn’t pull anymore. Every ad you run whether it be direct mail, newspaper, radio or anything else should always focus on what the public cares about, not what you as a dentist care about. Additionally you should always offer something…something to take them to the next step in the sales cycle. You can talk about unique qualities, equipment AND make an offer…just make sure what you’re saying actually matters to the reader.

Direct Mail

I want to do a direct mail piece but I do not know what will work best. Should I send a postcard or letter? How many pieces should I mail and how often does this need to be repeated? Do I need to include a special offer or discounted services for a successful mailing? What is the approximate budget for a project like this?
Dave Stone, DC Marketing Specialists, 1-800-736-3632: Many doctors are drawn to mailing postcards because they think they are less expensive than a larger publication. However, after many years of research and mailing, literally, millions of pieces, it has been our experience that mailing postcards will give you very little return on your investment. Surprisingly, with the volume a direct mail company does, it is less expensive to mail an 11” x 17” full-color publication than to mail a postcard. And, a long letter will always out pull a short letter.

The combination publication we’ve found to be most effective, that out-performs millions of other test pieces that we’ve tried in every market we’ve been in, includes a personal, typewritten letter to the reader, as well as a lot of color and some good editorial educational articles.

It’s also important to include an offer because 91% of the people who come to a new dentist, come in for either a cleaning or an exam; you need to give them a reason to choose your practice. Your marketing goal should not be to make money on that initial offer. Don’t lose sight of the fact that a new patient represents an average of $800 in other services, as well as potential referrals that may increase your income $2,000 to $5,000 after the first visit.

For optimum benefit, a minimum of 5,000 pieces should be mailed. The cost to mail 5,000 pieces of a quality, effective publication, should be approximately $2,000. If you get a 6-to-1 return, you could make $12,000 on your $2,000 investment in about 30 to 60 days. That’s a good return on your investment!

How do I determine where to send the marketing piece?
Jim Gray, Avandant Dental Marketing Strategies, 1-800-355-5534: You can do what most of the industry does and mail to the closest 30,000 households in cycles OR have your database analyzed and determine where, geographically, a majority of your patients come from. Then mail within that area. In Manhattan they may all come from within the city block. In a rural area, they may come from 25 miles away.

Telephone Book

I practice in a large city with multiple telephone books, but my patient base is concentrated within 5 miles of my office. Would it be better to spend my marketing dollars on page ads in the phone books, or should I have a small in-column ad and spend the remaining money on direct mail?
Joel Harris, Intrinsic Dental Marketing, 1-877-942-8855: My recommendation would be to spend little or nothing on yellow page advertising unless you live in a small rural area with few competitors. Yellow page ads are not targeted and in most cases they are bursting with dozens of ads making it impossible to stand out. On the other hand, direct mail allows you to be targeted, time sensitive and in control of your own marketing destiny. Other marketing tools such as Web sites, patient loyalty programs and case presentation tools need to be part of your plan as well.