A few weeks ago, we talked about the Number One Key Practice Indicator (click here if you missed it). This week I want to piggyback onto this idea of direct referrals while looking at marketing. Everyone is looking for the best way to get new patients. Internal marketing with a dramatic increase in the volume of new patients is always the best way to go. I want to make sure that you understand what I said: It is not just internal marketing. It is internal marketing that always results in an increase in new patients. If you define internal marketing to be massage chairs, hot wax hand dip, and/or any spa like treatment, you have missed the point. It goes back to the fact that we no longer operate a consumer driven business with a golden rule standard (do unto others as you would be done unto). It has gone far past that to “do unto others as they would be done unto”. This is a much higher standard that requires sensitive, caring staff with the talent to identify what each and every person they interface with really wants, not just needs. Internal marketing encompasses everything you do: Hours, convenience, location, answering the phone, handling every patient’s situation and condition, etc. If you think about it, we make the mistake of throwing thousands of dollars at ill-fated marketing strategies hoping for more new patients while ignoring internal marketing that guarantees an increase with no associated cost over what we should have been doing all along. In fact, having an ever increasing budget for marketing without having at least a 50% direct referral rate is the number one symptom of a Donor practice. You continue to look for an external solution to an internal problem (people don’t like some aspect(s) of your office). Wouldn’t it make more sense to figure out how to use internal systems to correct the direct referral problems?
What about the widely held misconception about the true cost of external marketing? Most dentists (if they look at all) just take the total amount spent on marketing and divide by the total number of new patients to arrive at the cost per new patient.
So if you have a $100,000 a month practice and spend 5% on marketing ($5,000) and get 50 new patients, most dentists would say that’s $100 per new patient, which isn’t bad. The error lies in the fact that we need to take the total numbers of new patients and subtract the direct referrals and insurance patients that just picked us off of their approved dentist list that the employer supplies. Your external marketing did not prompt these patients to call and come in, a trusted friend’s referral did that, or they were directed by their employer’s benefit package to consider you as a “provider”.
So let’s say 30 of those new patients were referred from other patients (which is 60%, so very good so far) and 10 of them came in because you take their insurance. This leaves 10 patients that came from your marketing efforts. Do the math again and you’ll find that each “marketed for” new patient cost you $500 each. I’ve got to guess that you would do better by just waving three hundred dollar bills at people walking past your front door than doing whatever you are currently doing. And you would reduce marketing costs by 40%.
Understanding the relationship between key practice indicators will always result in a lower overhead and a larger return on your investment. To Summit, you always want to “Produce More, Collect All, and Keep Half”.
Michael Abernathy, DDS
PS — Stand by. In the next few weeks BEST for Dentistry will be adding at least 3 new Alliance Partners adding even more opportunities for cost savings while creating excellence in your practice. Don’t miss the opportunity of joining the largest group preserving the independent practice of Dentistry. And it costs you nothing. No one else is worried about how you are going to survive the onslaught of Corporations, Insurance companies, and predatory greedy dental suppliers. I look forward to hearing your suggestions and comments about BEST.