The market tanked in the last month, to put it mildly, down 40% in the U.S., and a lot of doctors are pulling in their horns and crying the R word.
It's hard to be objective when your retirement portfolio is decimated. And it's not like it's been terrific since 2000. Real returns are on financial investments have overall been dreadful.
Richard Geller has advised thousands of dentists on practice marketing and case acceptance, and has written a book on the same topic. He helped launch the first popular intraoral video camera.
Fortunately, dentistry continues to do well. So how can you deal with the recession, increase production, and lower expenses?
The natural thing to do is to cut back on marketing and advertising. I mean, if advertising expenditures aren't producing a return, then they should be cut right to the bone.
Of course, any business expense that is not a required part of overhead, and is not producing a return, should be cut.
But let's examine advertising. If it is working, it should increase production. It should bring in new patients. And it can. Let's say the ad costs $200, and the patient gives you $400. That's two times the return on your advertising.
Granted, advertising that directly makes money that way is rarer and rarer today but it is possible. So let's move across the spectrum, from ads that make money to ads that only break even. For example, $200 in advertising would bring in $200 in production. Or, if your gross margin is, say, 50%, then it would bring in $400 in production, and pay for the $200 advertising cost and therefore cost you nothing to get a new patient.
But what if it costs more to advertise for a patient than you can bill that patient on the first visit? Many marketers will advertise even if they lose money in the short term because they're looking at the long term. Smart dentists know that a patient is worth X dollars in first-year production, or lifetime value. And they know they can spend $100 to get a patient who will bring them in $1,000 average in the first year.
So if you spend $100 to get a patient who will eventually bring you in $1,000 in first-year revenue, you might want to put the pedal to the metal and advertise as MUCH as you can afford.
A multimillionaire marketer who taught me a lot puts it this way: You find a magic machine when you put in a quarter and out comes a dollar. Would you want to say, "I will put in a few quarters and make a few dollars"?
Or would you say, "I'm gonna get me a truck full of quarters and pay people to dump them into the machine"?
In sum, a good advertising strategy for this recession can actually lose money initially, and make far more money for you on the back end.
Does that mean you have to keep advertising forever? Not necessarily. Go to Cases4Dentists.com for my insider's special report on a specific advertising strategy that actually pays you to lose money, so that 18 months from now, you have all the patients you ever will need and can quit advertising.
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Copyright © 2008 DrBicuspid.com