Make Your Ad Dollars Work
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Make Your Ad Dollars Work
Use precise goals to determine success.
GARY GERBER, O.D.
If you run an ad in the newspaper and the ad costs you $100 and garners you $101 of net new revenue, was the ad a success? Can marketing turn around a slow period in your office? If your marketing expenses are 10% of gross sales vs. the more common 2%, is that a bad thing?
How much and when to spend your marketing dollars are very different questions than where to spend it and what to say. Let's assume you have the "where" and "what" covered, and let's concentrate on the timing and amount.
When business slows, most of us have a knee-jerk reflex to marketing, especially external advertising: "It's slow, and I need to advertise to make the practice busy." While this isn't necessarily wrong, it's often ineffective. Why? Because in most markets, it's difficult to create a market in which one doesn't exist. Take the (admittedly extreme though illustrative) example of office hours. Few patients, other then insomniacs, would respond to an advertisement that proclaims, "We've expanded our office hours. Visit us between 1 a.m. and 6 a.m. and receive 20% off your next pair of glasses." In this case, if the 20% message were compelling, it would be better to offer it where a market exists, namely, during more conventional office hours.
ILLUSTRATION BY JAMES ENDICOTT
Extending this line of reasoning to timing your marketing, it's generally a good idea to try to increase business during your customary busy season instead of a slow one. Saving your marketing acorns and running an ad blitz during your busy season usually provides a higher yield than waiting until it's slow and then scrambling to generate business.
Now let's tackle the "how much should I spend" question.
Set measurable goals
If you net $1 on a marketing campaign was it worth it? From a strictly financial perspective, you would have to answer yes. However, you must consider other factors. First, might your time be better spent doing something else — perhaps working on your staff policy manual, introducing a new clinical procedure, among other tasks that might ultimately generate more than $1? And of course, don't forget the time you spent preparing and then launching your marketing initiative. Could you have spent your time better?
These questions have no easy answers. You don't know how well a marketing program will work until you actually execute it, and every program is different. For that reason, it's best to set a precise goal to determine how you will quantify your success or failure. Track not only the money you've invested in the campaign, but also your time. Then, extrapolate out how much profit you'd like to see, and add to that the worth of your time. Done this way, a somewhat standard answer of "X times my investment" won't apply. Instead, you'll know right away that the campaign must generate an exact amount for you to consider it successful.
Generally, we set the return on investment (ROI) bar lower for new practices than established ones. Why? Because we are willing to spend more for a new patient in new practice situations. This leads to the final point of what percentage should you spend on marketing.
There is no set metric here either, as different markets command dramatically different rates. It's not uncommon for new practices in major metro markets to spend 10% to 15% of projected sales on marketing. That same amount of money in rural areas for an established practice could last three years. Because of this variability, we prefer to have our clients use the goal based on the method above. OM
DR. GERBER IS THE PRESIDENT OF THE POWER PRACTICE, A COMPANY SPECIALIZING IN MAKING OPTOMETRISTS MORE PROFITABLE. LEARN MORE AT WWW.POWERPRACTICE.COM, OR, CALL DR. GERBER AT (800) 867-9303.
Optometric Management, Issue: August 2008