Welcome to the Recession pt. 2

The new challenge to dentistry after September 11, 2001 (part 2 of 2)

by Tyson Steele

In our last issue, we looked at the first two of four strategies to help you weather the potential economic fallout from the weakening economy. (See www.tysonsteele.com, articles, "Welcome to the Recession - part one") We also discussed the fact that many practices have begun to experience increased last minute cancellations and no shows; more patients deferring treatment; slowing hygiene schedules; decreased production; reduced new patient flow and more. Even those practices that have not yet been affected still face potential trials.

In this issue, we will look at the final two strategies you can use to protect you, your patients and your team.

STRATEGY 3 -- INCREASE PATIENT RELATIONS EFFORTS

Many dentists suspend their patient relations and marketing efforts when they face an economic crunch. They naturally assume that their best defense is to cut overhead. However, patient relations and marketing are not "overhead" items but, rather, an "investment" in the future of the practice.

Now is the time for you to improve your patient relations program. By actively growing your relationship with patients, you can improve patient retention and increase referrals -- two things that are imperative during any economic downturn.

If you do not already have one, you should establish a "Patient Relations Committee" comprised of several key staff members. This committee should review your current patient relations tactics and suggest ways to improve upon them. The committee should also review practice management materials for new ideas and present them to the team.

Some tactics that we have seen be highly effective include: making after-care calls, sending gift certificates to referral sources, sending handwritten notes to patients, sending "patient appreciation" baskets of cookies or treats to businesses where several patients work, and, of course, many others. Keep in mind that the primary goal of patient relations is to increase your frequency of contact with patients and build patient trust. (See www.tysonsteele.com, articles, "Who Do You Trust?)

STRATEGY 4 -- CONSIDER EXTERNAL MARKETING

In our analysis of the dental recession of the early 1980's, one thing was quite evident. Most of the practices that weathered the recession actually INCREASED their marketing efforts during the recession.

This makes great business sense if you think about it. Regardless of how hard you work to retain patients during poor economic times, you are likely to see some patient attrition. The only way to counteract this attrition is to increase the flow of new patients.

Decreased Prospect Pool

However, during a recession the total "prospect pool" of new patients shrinks. In other words, the number of people actively looking for a new dentist is temporarily reduced as they limit what they consider to be "discretionary" spending. This means that you have to compete with other dentists to attract new patients from a smaller pool of prospects. In marketing terms, this is called attracting a larger market share of a depressed total market.

So, how do you do this? Essentially, you do it by out-marketing your competition. Fortunately, this is pretty easy during a recession. Remember when I said that the first defensive strategy adopted by many dentists is to reduce their overhead? Well, that's what most people do. They reduce their overhead by suspending marketing efforts. "After all," they muse, "how can I afford to market my practice when I don't have enough production to cover my overhead?"

But, of course, you're smart. (Hey, you read this newsletter -- you must be smart!) You immediately recognize that as circular logic.

The fact is that you must make marketing a top priority when production is low. After all, that's when you need new patients most. Granted, during a recession, you have a depressed total market, but that doesn't mean there is NO market. Ultimately, even if the market is depressed by 30 percent, you still have 70 percent of the market still available to you. You can still attract new patients!

Increased Opportunity

In fact, you may even have better odds of attracting the type of patients you want during a recession. This is because the prospects with the most money still probably have the discretionary income to prioritize dentistry, while the "fringe" prospects with limited resources will put off their care.

If other dentists are running scared and curtail their patient relations and marketing efforts to save money, you may actually have a better shot at the "high quality" new patient market than you've ever had. (Of course, I can't prove this, and other factors will affect this outcome. However, you can probably see that this is a reasonable hypothesis.)

How to Market Externally

So, maybe you see the need to market externally. But how do you do it? When do you do it? What are the best tactics? How do you evaluate this type of marketing?

These are complex questions that require complex answers, and I will address them in a future article. You probably knew I would try to keep you tuned-in! (For an overview of practice marketing strategy, see www.tysonsteele.com, articles, "The Problem with External Marketing.") For now, however, let's just look at some generalities:

1. Ramp up your INTERNAL patient relations tactics first! -- This is imperative. The real return on external marketing is not the production from patients that come from your ads or mailers. It's the production you get from the REFERRALS of those patients. If you don't have top-notch internal patient relations, you will lose much of the value you could accrue from your marketing efforts.

2. Avoid radio, television, newspaper and other traditional mass media outlets. -- This, of course, is a generalization. At the right price, mass media advertising can be a good investment. (But so can flying a blimp over your city.) For the most part, mass media is a poor marketing vehicle for dentistry. This is due to the fact that mass media has a limited ability to call people to action. Prospects see or hear your ad and your phone number, but rarely do they have any way to refer back to it later. Your marketing dollar is generally better invested elsewhere. (For those of you who are about to bury me in email with the "exceptions" please remember that this is a generalization.)

3. Yellow page advertising has pros and cons. -- Yellow page advertising is generally cost effective in smaller communities due to lower ad rates and the fact that patients are willing to travel to you. In larger cities, yellow page ads can be a weaker investment. This is because you have to pay higher rates based on the bigger market and total number of books distributed. However, many readers may not live or work close enough to you to warrant considering your practice. This means you're paying to market to people who may not even be prospects. (Again, this is a generalization and there are exceptions.)

4. Direct mail is generally the best investment. -- Direct mail brochures combine the positive qualities of mass marketing exposure with the added benefit that the patient can refer back to the mailing piece later. This is important because some prospects are not yet looking for a dentist. However, they can save the brochure for later reference. The best direct mail campaigns we see are full color brochures (not postcards) mailed to every household in your market at repeated intervals. (Of course, we do these. But you can use just about any good dental marketing firm or local advertising agency. Just be sure they understand dentistry.)

5. Referral services need to be evaluated. -- New mover welcoming services, dental referral services and website directories do generate new patient flow. However, these services need to be evaluated on a case-by-case basis. Often, marketing dollars are better spent elsewhere.

6. Website marketing does it all, but not immediately. -- Dental website marketing can attract new patients, build your reputation and educate current patients. It is rapidly replacing the yellow pages with the "techie" crowd and offers many patient relations benefits. However, this is a long-term marketing tool and the ramp up time is too lengthy if you need new prospects now.

So, take your time and do your research. In a time of economic adversity, external marketing can be a great adjunct to your internal patient relations campaign.

HARNESSING THE FUTURE

So, there you have them -- four strategies to help you weather the current economic storm: communicate with your team, focus on hygiene, increase patient relations efforts and consider external marketing. Wield these strategies well, and you can look the coming economic adversity in the eyes and laugh. (Okay, maybe that's going a little too far.) Nevertheless, you will survive and even prosper.

One last note, in our analysis of dental practices that successfully dealt with the dental recession of the early 1980's, one thing was clear. The best practices not only survived the recession, they actually came out of the recession stronger than ever. This is because while other dentists were running scared, these top producers were laying the groundwork for future returns.

Every adversity carries with it the seed for a greater opportunity. So, welcome to the recession. May this be a time of great growth for you, your team and your practice.