Theory

External marketing is intended to create awareness and induce a response among people with whom you’ve not yet established a relationship.

Examples of external marketing include: community outreach, as in making presentations on dental hygiene to school children, speaking and networking at Chambers of Commerce, direct mail, Yellow Page advertising, and professional call handling (also called telemarketing), and Internet marketing (website and email). Owing to the fact that convenience is such a strong motivator in an individual’s decision to join a practice, most dentists should consider themselves to be local area marketers. The so-called broadcast marketing channels (advertising on radio, television, newspapers, etc.), therefore, are seldom cost-effective since they are attempting to contact (and you are paying for the attempt to reach) people beyond your Service Area.

Case Study: New Practice

Background

A doctor had chosen to open a new practice in an area north of Denver. As this gentleman just happened to have spent a summer as an intern for The American Dental Company, he was well equipped to preparefor a dentistry marketing who was one year out of dental school wanted to open a practice near Minneapolis. The doctor was primarily interested in attracting fee for service patients. As this was a new practice, his cash reserves and patient base were limited. Fortunately, he had grown up in the area, and so was able to draw upon personal connections e.g. friends and family, to open with an existing patient base.

Analysis

A marketing feasibility study revealed that, among other things, there was a significant volume of resident turnover.

Using data collected on a similar practice near his Service Area, it was determined that the average annual value per new patient in his area was $585. Because his was a new practice, it was important to employ this more conservative valuation measure.

Data from another practice was used because, being new, this practice had an insufficient patient base for this purpose. Approximately 300 individuals and families were moving into the doctor’s Service Area each month.

A good rule of thumb for young practices is to allocate a minimum of five percent of estimated first year fees to marketing. This practice’s first year fees were estimated to be $150,000. This meant an annual marketing budget of $7,500 and a monthly budget of $625.

Implementation

Being a new practice, a majority of the marketing budget was devoted to external marketing. Two thirds, or roughly $400 per month would be devoted to targeting new residents.

This meant that $1.33 (400 divided by 300) could be spent on each new resident. For that amount, each new resident could receive two mailings. These mailings would be sent two months apart.

A reasonable expected response rate to a mailing of this sort is one to two percent. Local demographic factors can affect the actual response rate. This would mean that, using the conservative expectation, the practice could expect three new patients from each mailing.

Results

The average monthly rate of program response proved to be 1.25%. Return on investment (ROI), therefore, was 548% (3.75 new patients per month worth an annual average patient value of $585, divided by the $400 cost to attract these patients).

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