Most medical practices are not strategic about their marketing budget. Their approach to determining how much to spend on marketing is often random – picking a number that feels right or that they can feel comfortable spending. Does your practice fall into this trap? Your marketing budget should be a number that you can back up with results, not just because you think it’s the right amount.
In my experience, there are two methods to determining a marketing budget that gets the best results.
The first method is a percentage of revenue. The exact percentage is determined by the type of medical practice. The range for marketing a medical practice varies from 3 to 15% of annual forecasted revenue. A medical sub-specialty that markets directly to the patient for services not covered by insurance, such as plastic surgery, cosmetic dentistry, or Lasik eye surgery, can expect to be near the top of this range. An audiologist who dispenses hearing aids should find their marketing budget to be in the 10-12% range. The high markup on hearing instruments plays an important role in the equation. On the lower end of the range there are medical professionals who acquire their patients mainly through professional referrals. These sub-specialties include urologists, oncologists, and physical therapists. Their marketing budget typically ranges from 3 to 5% of revenues.
The second method of determining your marketing budget is the Return-on-Investment (ROI) Method. You have all heard the old adage: You need to spend money to make money. The basic idea of the ROI Method is that for every dollar spent, you will make more than that dollar in return (optimally much more). You can usually forecast your investment from between 3:1 to 8:1 by analyzing two factors about your practice. The first is the size of your practice. How many locations do you have? Also, the maturity or age of your practice is important. How established are you in your area? A large, well-established practice should expect a much higher return-on-investment than a small practice that is just starting out. Where does your practice fall on this spectrum?
Of course, there are many ways to market your practice for little or no money spent. However, certain methods do require an investment if they’re necessary in order to compete in your market. Having trouble determining the appropriate marketing budget for your practice?
