The Problem With External Marketing 1

And How Internal Marketing Can Skyrocket Your Profits (part 1 of 2)

by Tyson Steele

Marketing. It's a dental buzz word today. Ten years ago, no dentist would use the word "marketing." Now, it's the hottest topic on the seminar trail. Every consultant, salesman, and dental guru seems to be selling some new marketing "system" guaranteed to "blow your doors out with new patients" -- not to mention what it will do to your wallet.

I get calls weekly from dentists who want help marketing. Unfortunately, the calls usually go something like this...

"I have an opportunity to run an ad in the next issue of the Horticultural Times Newsletter," says the dentist. "Can you help me design something? I need to give it to them by Friday."

"How much will the ad cost?" I ask.

"Fourteen thousand dollars. That's with the twenty-percent, first-time-advertiser, one-time-only, use-it-or-lose-it discount."

"How many people read this newsletter?"

"Well," Doc says thoughtfully, "they're printing three hundred million copies, and my ad is on the page next to their cover article on aphids. I'm thinking about offering a tooth whitening special."

"I didn't ask how many they print," I say. "How many people actually read it?"

From here on out, my caller begins to give me a lot of "I'm not really sure" answers.

"Have any other dentists ever advertised in the publication? What kind of response did they get? How many readers are likely to already have a dentist? Assuming that a phenomenal ad or mailing targeted to a perfect audience might get you 1/4 of one percent of readers responding as prospects, what's your cost per prospect? What's your estimate on the number of prospects who won't make an appointment, won't show up for their appointment, won't accept treatment or won't pay their bill? What is your average dollar volume of treatment for a patient in the first year? Assuming that about 40% of the dollar volume of treatment on these new patients will be profit, how many patients must you attract to pay for your ad and still earn enough take home pay to make it worth your while?"

At this point, my caller is on the ropes -- dazed but not out -- so, I go in for the knock down. "By the way Doc, how much are you doing INTERNALLY to increase revenue and maximize referrals from existing patients?"

My caller wakes up, "Huh, what do you mean?"

And, finally, I've got my opening. "Doc, can we talk about REAL marketing? It costs nothing, it's highly efficient and -- although it may not blow your doors out with new patients -- it will skyrocket your profits. And that's what you're looking for after all...isn't it?"

The Four Components of Marketing

Before we discuss internal marketing, I would like to define the primary goal of marketing. It's not to attract new patients, it's not to have name recognition, it's not to do more cosmetic treatment. It's . . . are you ready for this . . . to MAKE MORE MONEY.

You see, most consultants and ad salesmen want you to think that marketing is how you get new patients. Some may even admit that you're probably not going to get many new patients from your advertising or mailing efforts. They say you are getting "name recognition," which is really a nice way to say you're gonna get a major ego boost.

However, marketing is really made up of four components designed to increase revenue. And any good marketing strategy needs to address all four of these components in order to be highly effective. So, here they are:

1. PROSPECTING

Prospecting is any marketing activity that lets people know you exist. Ultimately it's a sorting tool. You're looking for people who are interested in becoming patients. Your goal is to get them to call your practice. Examples of prospecting include ads, mailers, signs, and my personal favorite, word of mouth. Unfortunately, many people believe prospecting is all there is to marketing, but it's only the first step.

2. CLOSING

Closing is sales jargon for getting the prospect to become a patient. It encompasses the entire process of getting prospects into your practice, in the chair, willing to accept treatment and identifying themselves as your patient. But you're not just closing new prospects, you have to re-close your patients all the time. In other words you close both in the beginning of the relationship and throughout your entire relationship with a patient. Without effective closing, prospecting is useless.

3. INITIAL VALUE

For our purposes, initial value is a measure of how much economic value you get from a new patient in the first year. This value may include the dollar value of treatment you perform on the new patient, the patient's willingness to pay their bill and keep their appointments, and the value of new referrals from the patient. Maximizing initial value is the most commonly overlooked component of marketing.

4. RESIDUAL VALUE

Residual value is the ultimate economic value of a patient to your practice over time. As with initial value, residual value has a lot to do with the "quality" of your relationship with your patients. A patient who accepts treatment, has regular hygiene visits, pays promptly, keeps appointments, arrives on time, and refers others has a high residual value. Residual value is the most important aspect of marketing in a dental practice.

Each of the four components of marketing builds on the others, developing synergy -- where the total economic value is greater than the sum of the parts.

Hopefully, you're beginning to see why your marketing goals must be greater than just attracting a few new prospects. But let's look more closely at the main problem with most external marketing strategies.

Inefficiency

The problem with most external marketing strategies is that they address only one marketing component: prospecting. Because of this, they are highly inefficient.

Don't get me wrong. Many of these strategies work just fine when it comes to prospecting. Yellow page advertising, lead services like 1-800-dentist, newspaper ads, TV, radio, web sites, billboards, sponsoring the local frog race -- all of these can and do work.

It's just that I want you to consider where your money and time would be best spent. So, let's say that you're running a yellow page ad and it costs you $1,200 per month. You average twelve new prospects per month from the ad (a cost of $100 per prospect.) You're effectively addressing the prospecting part of your marketing plan.

Unfortunately, the quality of the other three marketing components is now rather arbitrary. In other words, the quality and value of a prospect who responds to your yellow page ad is almost random. Some of the prospects are great, some aren't. Some come for emergencies and are never heard from again. Some get minimal treatment and never pay their bill. Some become excellent long term patients. And some even refer their friends. It's random.

And -- this is the important part -- your $1,200 is gone every month. Your yellow page ad doesn't help you go beyond prospecting. You don't create any residual value for your marketing efforts, because your prospects look in the yellow pages just once. Each month, you start over, prospecting for new patients. That's inefficiency.

But I Don't Want to Do Any Extra Work

So, are you ready to talk about real marketing? The kind of marketing that really works in a dental practice? The kind of marketing that addresses all four components? Efficient marketing?

In other words, are you ready to consider maximizing what you do INTERNALLY to increase revenues and maximize referrals from existing patients? . . . I didn't think so.

In fact, I'll be you're sitting there thinking, "I already know all this stuff about internal marketing. I'm just looking for a marketing system where I don't have to do any extra work. I don't mind paying for external marketing. If it drives just a few new patients into my practice each month, it's worth it. The little bit of money is better than doing any extra work."

Well, I've got news for you. If you use external marketing, YOU'RE ALREADY DOING EXTRA WORK!

Where do you think the money for those ads comes from? You are already doing extra work to pay your marketing costs. In fact, the average dentist needs to do about seven crowns each month just to pay for a $1,200 monthly external marketing campaign. If you were thinking you could make your $1,200 back with just two crowns, think again. You've got lab fees, staff salaries and all your other overhead to cover -- not to mention the value of your time. And, don't forget, you're doing all this extra work and settling for random quality new prospects and generating no residual value for your marketing efforts.

Of course, when we get right down to it, the real issue isn't the extra work. The issue is that many internal marketing strategies are outside your comfort zone. But we'll get to that next month. (to be continued)