The Snowball Strategy: Mastering Marketing Budget for Clinics

Dec 5, 2023

Clinic owners managing finances

Introduction: Uncovering the Top Marketing Secret of Leading Healthcare Clinics

Do you ever wonder – How do the top health clinics achieve such great success?

These are the therapy clinics with full waitlists.  The chiropractic clinics that are always hiring. The new clinic that quickly fills all its rooms with practitioners.

What sets these thriving practices apart from the rest? What is their secret?  It’s their marketing budget for clinics strategy.

Their marketing investments are usually what sets them apart.

These leading clinics don’t view marketing as another line item on the expense report.

Instead, they see it as a vital component in their formula for success.  They consider their marketing budget for clinics.

They know that by managing their cash flow and directing an outsized amount of that cash to marketing, they can grow faster than the rest.

This strategy creates a positive feedback loop: good marketing brings in more patients and generates more cash. This money can then be used to do even more and better marketing.

In this blog, we will look at why marketing in healthcare is a special investment, not just an expense. We will explore strategies that can make your clinic a market leader. This includes setting realistic marketing budgets and using the right marketing channels.

After reading this post, you will see that marketing is not just a cost, but a crucial investment.

This investment doesn’t just attract more patients and generate more revenue. It fuels further investments in practitioners, facilities, and equipment. These investments then further strengthen your marketing.

That’s why it’s called The Snowball Strategy. Once you get moving, you can continually grow and build momentum as you move forward.

Come join us as we discover the strategies that can make your clinic a market leader, like the industry’s top companies.

Why Marketing Is Different Than All Other Clinic Expenses

If you own a chiropractic or therapy clinic or any allied health practice for that matter, you’ve learned lots about expense management.

Generating profits has become difficult due to rising costs and changing patient preferences. This is different from even five years ago.

But not all expenses are the same, and it’s best if you don’t treat them equally.

Managing the largest expense items can impact profit margins significantly, but it can be challenging.  Office costs are tied to long-term commitments and are hard to change. 

Practitioner fee splits are based on industry conventions and have little wiggle room.

The biggest expense for many clinics is the cost of administrative teams. However, many owners are not ready, willing, or able to make changes in this area.

The focus then moves to the items that can change easily and quickly. Many cost cutting activities focus on things like supplies, utilities, and maintenance as a result. 

Marketing expenses are often managed the same way too.

Marketing is seen as another expense, like ink cartridges or rubber gloves. People try to minimize or avoid it.

This is where the issues begin.

Marketing is listed in the expense section of your financial statements, along with paper and coffee.  But it is very different.

Marketing is a way to directly grow your revenue.

Insights from a Marketing Legend: Clinic Marketing Learning from Dan Kennedy

The world is awash in marketing gurus.  Marketing is not a regulated profession, as healthcare services are.  This means that anyone can lay claim to marketing capabilities. Caveat emptor.  

However, true marketing geniuses do exist, and their insights are invaluable.

One pattern I’ve noticed with marketing experts. Many of them have been influenced by the work of Dan Kennedy.

I met Dan back in 2013 at his GKIC event in Chicago.  Dan has likely never won a Mr. Congeniality prize. But surliness hasn’t prevented him from becoming a true thought leader.

He has some counterintuitive ideas about marketing which you will want to hear. 

Target Market v Mass Market

Dan starts with a key distinction: target marketing versus mass marketing.

Mass marketing is when you try to hit everyone. If you have an unlimited budget, you can try to do it but it’s wasteful.

Target marketing is where you define – This is exactly who I’m going after. This is where they’re located and I’m going to craft a message that is specific to them and appeals to them.

When you target your market, everything is more effective, and you are not spending as much money.

Setting your Marketing “Budget”

Dan’s next insight is – When your marketing is targeted, you can afford to spend more money.

Most people try to figure out what is the least they can spend to acquire a customer.

Dan says you should reverse that to: “What is the maximum I can spend to acquire a customer and still be profitable?”

“What is the maximum I can spend to acquire a customer and still be profitable?”

That is a major shift.

With everything else being equal, the business owner who can afford to spend the most money to acquire a customer will win in the long term.

Setting Your Clinic Marketing Budget: Guidelines and Benchmarks

The U.S. Small Business Administration publishes budget guidelines for businesses with less than $5 million a year in sales. Many private healthcare practices fit into this category.

If so, the USBA says you should spend 7-8% of gross revenue on marketing.

Based on our observations, the minimum spend for marketing is 5% of revenue.  Suppose you wanted to maintain the current results in your small therapy practice.  Then, 5% of revenue should keep your current patients engaged and replace those who are leaving.

If you are looking to significantly improve your results, you will want to aim higher. For example, a chiropractic practice with empty rooms and underutilized practitioners. If this is the case, you will want to build your marketing budget up to as much as 10% of your revenue.

If you are looking to become a regional leader, and quickly roll out a network of new clinics, your marketing spending will likely need to be even higher.

Creating the Cash Flow for Your Clinic’s Marketing Budget

After setting your clinic’s marketing budget, the next step is coming up with cash to finance it.

This can be terrifying, the first time you do it.

Results-based marketing in healthcare focuses on cash flow, not expenses.

This is because marketing can generate a return on your investment that far exceeds the initial spend.  And this result can begin to show up within a month or two.

The theory is easy to understand. However, it is important to have a plan to move to your ideal marketing investment amount over time.

Getting the Initial Cash: Finding the Starting Point for your Practice Marketing Budget

You will need to start with an initial investment.  Defining where the cash will come from will remove some of the stress from the practice.  Some ideas for you are:

  •     Generate expense savings elsewhere in the clinic
  •     Optimize bookings for your core team of practitioners
  •     Decide to invest prior clinic earnings into your marketing-powered growth
  •     Commit to lowering your owner’s earnings temporarily, to get your marketing plan started
  •     Secure a credit line or other financing vehicle to help with cash flow while investing.

The Snowball Effect: The Compounding Power from Return Patient Visits

One of the most powerful aspects of successful marketing is the compounding effect of return patient visits. When patients have a positive experience, they are likely to return and refer others.

At this point, your snowball effect can begin.  However, it requires you to reinvest some of your newfound cash back into marketing.

You keep doing this again and again, until you have reached your desired marketing budget. You can begin with a small marketing budget, like 5% of revenue. Then, gradually increase it to reach your target of 10% over time.

Categories of Marketing Spend: Making the Right Choice for Your Clinic

There are so many options available for your healthcare clinic marketing dollars.

Digital advertising like Google Ads. Social media campaigns. Traditional media like newspapers and radio.

Community events and local sponsorships can boost your clinic’s visibility.

How should you choose your clinic marketing investments?

Paul Graham, the founder of YCombinator, said, “What gets measured, improves.”

“What gets measured, improves.”

This is especially true when it comes to marketing.

It also lines up with the advice from Dan Kennedy.

Prefer target marketing over mass marketing.

Prefer investments where ROI can be measured. 

It’s a digital world today. Typically, the most effective marketing strategies for chiropractors and therapists are found online.

Traditional media and community engagement still have their place. Yet, digital channels shine for tracking Return on Investment (ROI) and targeting audiences.

Here are some of the foundational digital marketing channels changer for your clinic.

SEO and Content Marketing: The Foundation of Your Clinic Digital Presence

Search Engine Optimization (SEO) and content marketing are cornerstones of digital marketing.

SEO’s job is to increase your clinic’s prominence in search results. This is crucial in an era where most people start their healthcare journey online.

When a prospective patient searches for ‘Naturopath Chicago’ – they are ready to buy.

If someone searches ‘Dietician Vancouver’ – this is not an idle search. They are likely to book the first clinic that looks trustworthy.

Content marketing is about sharing valuable content to engage your audience. You can create blog posts or videos to educate patients and stay top of mind.

Content marketing is also one of the most effective ways to continually grow your SEO.

Digital Advertising: Targeted and Trackable

You can use digital advertising like Google or Bing Ads to target specific audiences and locations. With social media ads, you can even select demographics and interests.

The effectiveness of each ad can be precisely measured, in dollars and cents (if you have an online booking system that has the right capability).

This lets you stop things that don’t work, and double down on the winners, quickly and confidently.

Social Media: Supporting Brand Building and Community Engagement

Social media doesn’t always provide the same return on investment as other digital channels. But it is valuable for building a brand and engaging with the community.

Social media is like a long game, while Digital Ads give instant gratification.

You can use platforms like Facebook, Instagram, and TikTok to show your clinic’s culture. Share patient success stories and connect with your community in a relaxed and personal way.

Measuring Success: Key Performance Indicators

Digital marketing generates a lot of data. These available dashboards and reports can be cryptic and overwhelming.

These detailed tools are important for your marketing team and providers. But you need a simpler view as a business owner.  You need a Marketing KPI Dashboard.

Here are some key metrics we suggest to our customers:

Patient Lifetime Value (PLTV): This is the value of a new patient to you. It is calculated by multiplying your average fee by the average number of patient visits.

Patient Acquisition Cost (PAC): The average cost to book a new patient. This is calculated by dividing total marketing expenses by the number of new patients.

PLTV to PAC ratio: This metric is a bit cryptic, but it’s a key ratio to decide if your marketing is working. If this ratio is more than 10, your investments are working. If it approaches 20, you should consider investing significantly more in your marketing.

Organic Traffic Replacement Value: This is the dollar value of your organic traffic. It is calculated from the equivalent advertising cost for the same traffic. This is a great way to measure ROI for your SEO activities, after an initial 6-12 month period.

Return On Ad Spend: This is the ROI on your advertising. It’s calculated as the number of new patients multiplied by the PLTV. This number is then divided by the advertising spend.

Conclusion: Integrating Marketing into Your Clinic’s Growth Strategy

Marketing for healthcare providers such as chiropractors and therapists is not just an extra expense.

It’s a strategic investment in the growth and longevity of your clinic.

Clinic owners can help more patients and generate better results by setting an ambitious marketing budget. This will lower the stress of clinic operations and reduce the number of surprises. Long term, this allows clinic owners to spend more time doing what they love.

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