Tools to Make Reliable Marketing Decisions II

Part 2 of 3

By Daniel A. Bobrow, MBA (University of Chicago) & MBA (K.U.L. Belgium)

In the last Issue, we began our presentation of the 7 keys to successfully implement your dentistry marketing strategy. We have already covered:

1. Identify Your Objectives
2. Determine Your Budget

In this Issue we tackle:

3. Performing and Evaluating Your Benefit/Cost Calculations
4. Selecting Your Target & Frequency
5. Choosing Design and Message

Start off on the right foot, and on a path of your own making

It is surprising how many dentists embark on a given marketing strategy without first “crunching a few numbers,” that is, determining what constitutes an acceptable response, and return.

In most instances, an attempt is made at calculating program cost. However, without a reliable indicator of the benefit, stated most often in terms of average patient value, the measure is incomplete. Remember: to perform a  benefit/cost calculation, you need to divide Benefit by Cost so, without knowing the benefit, you’ve only got half the story.


Calculate YOUR Average Patient Value

There is a simple and  reliable way to determine the average patient value for your practice (the one exception to this is if you are opening a new practice, in which case you may need to rely on profession -wide or (if available) area-specific averages until you build up a sufficient patient base to perform the calculation).

The method involves randomly selecting thirty patients who have been with the practice at least a year, adding their hygiene and non-hygiene production totaling these two production types across the entire sample, reducing by a certain factor to reflect costs associated with delivering service (labs fees, supplies, etc.), then adding the two production types and dividing by 30 to get your Average Annual Patient Contribution to Overhead aka AAPCO.

To receive a worksheet, which both clearly illustrates the process, and may be used to actually perform the exercise, click here.

Bear in mind: this is a very conservative measure of patient value, as it does not take into consideration referrals or re-care beyond one year.

Armed with this information, you can now proceed to other essential measures of strategy effectiveness such as Patient Acquisition Cost, Break Even Quantity and Percent and finally, Return on Investment (ROI). The above referenced worksheet can even perform these calculations for you automatically.

Target & Frequency (Scope)

Now that you have the requisite tools of analysis in hand, you now need to determine who to target and how frequently to reach them, also known as the scope of your strategy. This depends on any one (or possibly more than one) of the following: Expected Response Rate of the strategy in question, Excess Capacity, that is, how many more patients per month can your practice absorb, & Budget.

Expected Response Rate

There are several ways to arrive at what constitutes a realistic expectation for the response rate from a given marketing strategy. If, for instance, you’ve employed a direct mail strategy in the past, and do not plan on deviating too much from you did before (assuming no major changes in demographic makeup or competitiveness of your area), you should expect a similar result. However, if you are changing one or more variables, you may need to adjust your expectations accordingly. For instance, you may have relocated to an area whose “demographic”significantly differs from your former service area. Or, you may have targeted only new residents in the past, but now wish to broaden your efforts to include current residents as well. Still another example of why you may need to reassess your expectations is if you are using a channel you’ve not attempted before, in which case, you’ll want to rely on “industry standards,” ideally, adjusted to reflect characteristics of your Service Area. Finally, remember that, by employing more than one type of strategy simultaneously, e.g. radio and dental direct mail marketing, billboard and webpage, etc., you may expect to experience that welcome phenomenon called synergy, where the whole (response) is greater than the sum of its parts.

Let’s say your research has determined that a reasonable expected response rate for the strategy in question is .25%. Multiplying any given number of placements by that expected response will yield the expected number of new patient visits. Let’s say your direct mail strategy is intended to target 5,000 resident households. Employing the above statistics yields an expected number of new patients of 12.5 (5,000 exposures times .0025).

Armed with the above, the next consideration is how many additional patients your office can comfortably absorb. Let’s say you’d like an additional 10 patients per month. If the only strategy you plan to employ is direct mail, and you are comfortable with the .25% estimated response rate, you’ll want to mail to 4,000 households. Of course, there is a point at which the return may be expected to diminish. If you wanted to attract, say, 200 patients in one month, according to the above formula, you’d need to send 80,000, which is fine, unless to capture that many households, you’ll need to target way beyond the distance a typical patient would be willing to travel to experience a new dentist’s care.

The last step in the process involves determining your budget. Let’s say you’d like to attract 25 new patients, your expected response rate is .25% your per mailer cost is $.35, and your monthly budget is $2,000.

To attract 25 new patients you’ll need to invest 25/.0025*$.35 = $3,500. In this case, you’ll either need to revise your desired new patients downward, or your budget upward.


Extensive research can be performed to determine optimum frequency and interval but the most important thing to understand is this: frequency matters. Just ask yourself how many times you need to be exposed to the same television commercial before you a) know who they are b) know what they sell and c) know what they’re asking you to do. Consider this, and you’ll ‘get the picture.’

Suffice to say that it is a fundamental principle of marketing (and psychology) that people need to be exposed to a given message several times before taking action.

In terms of direct mail marketing for dentists, we’ve found that a minimum exposure of once quarterly for four consecutive quarters yields a positive return (once a month for twelve consecutive months, budget allowing, is even better).

Another principle to remember is message consistency. Do not make the mistake of thinking you need to vary the message to keep from boring your audience. Your objectives are more modest: a) get them to recognize you b) get them to trust you & c) get them to respond to you.  Before what we term  saturation and fatigue become cause for concern, your marketing program will need to be highly aggressive  so you need not worry about that.

Finally, realize that having more than one strategy in place simultaneously should, if executed in an integrated manner, result in that elusive, but desirable phenomenon called synergy, where the whole (response) is greater than the sum of its parts.

Design & Message

As with frequency and interval, a great deal of research (as well as trial and error) can be committed to determining optimum message and design elements. It is made even more challenging, because what was new, exciting, and appealing yesterday may be old, boring, and uninteresting today.

That said, there are certain design elements, which more or less transcend time, and fad, and have proven to be fundamental to, and essential for an acceptable response rate.

Depending on your objective, your design will be general or specific, passive or aggressive, bold or muted. For examples of these various design elements: click here (for currently tested, proven, and recommended designs, text, and offers, contact your marketing specialist).

Our next Issue will conclude this section by covering the two remaining topics of Scheduling and Implementing Program Tracking Systems.

Daniel A. ‘Danny’ Bobrow,

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