Marketing has become a more complicated endeavour for optometric practices. Not too long ago, offices would ensure their business listing was in the Yellow Pages and would maybe pay for an ad in a local publication. That was the extent of their marketing.
Today, marketing for optometric practices includes many more elements; building a website which needs to be refreshed every 3-5 years, spending money on Adwords and maintaining a presence on different Social Media platforms. The question we are always asked is how much do we spend?
In general, we recommend that our practices spend 5% of their average monthly gross revenue. We also need to understand what the clinic’s business goals are, which will impact this spend. If the clinic is rolling out a growth strategy – because they are bringing on a new associate, offering more office hours or even opening a second location – the spend is going to be greater.
If the goal is to ensure that the clinic keeps it’s new patient acquisition number close to their attrition rate, the spend may be a bit lower.
Once the clinic has determined how much they are budgeting for their spend, it is critical that the clinic then track some key metrics to ensure they are getting the expected ROI.
I am going to use an example in order to demonstrate how we evaluate an ROI for a practice’s marketing spend.
A clinic wants to increase its new patient numbers. It currently brings in $60 000 gross revenue on average per month. If we multiply $60,000 by 12 months we know that the clinic brings in approximately $720,000 in gross revenue every year.
The marketing budget should be 5% of $720,000 which is $36,000.
Further, this clinic’s revenue per patient is $300. Therefore, if the clinic spends $36 000/year or $3000/month, the breakeven point would be 120 new patients over the year or 10 new patients in each month month. The 121st patient represents the net gain. In order to claim a return, we would be looking for at least 11 new patients each month.
As well, in order to accurately credit this marketing spend to new patient acquisition, you will need to determine that it is NET of new patients from previous marketing efforts. If you have been averaging 20 new patients every month, then your break even on the marketing spend is 30 patients. Only at the 31st patient are you starting to see an ROI.
Every business needs to spend money to make money – and that includes Optometry. It is critical to invest in advertising dollars to ensure that your business is healthy and continues to grow. It isn’t enough, however, just to blindly invest dollars. It is critical that you also take time to evaluate the impact of the marketing efforts so you can pivot as necessary.
is the co-founder and managing partner of Simple Innovative Management Ideas (SIMI) Inc. and expert Practice Management contributor for Optik magazine. She can be reached at firstname.lastname@example.org