Managing a dental office is very hectic and there are constant fires that you need to put out. Usually the last thing on your mind is the marketing. Yet marketing and the need to bring in new patients is the most important element in the future of your clinic.

You are bombarded with constant offers and social media and search engine technology, how do you decide what to use and what not to use? The biggest mistake you can make is spending money on the wrong marketing and missing out on the right marketing. Making the right decisions can and should be easy even without thinking. This is achieve with if you have the right framework in mind.

The 2 most important concept for any consumer business is the lifetime value of a customer and the cost of acquisition (CPA). The lifetime value of a customer is the average value of a patient over the lifetime they are with you. This will be all their cleaning and other services as well as referrals they bring in. The cost of acquisition is the cost to acquire a new patient. Each media will have different cost. The most important thing to consider is what the value for each media and choose the lowest first. For example if you spend $10,000 on flyers and get 10 new patients then your cost of acquisition for flyers is $1000 per patient.

Lifetime value of a patient – There are many methods for calculating the lifetime value of a patient, we calculate by taking the average spend of a patient which is $1200 ($300 x 4 cleaning) x the average time a person stays  in one location which is 5 years. This equals to $6,000. We understand that we are not taking many factors into the calculation such at the referrals the patient will bring; maybe they move or change dentist within the last year; and the might have more expensive procedures. We are keeping everything simple. The best way is to use your actual numbers from your practice management system.

The obvious approach is that since lifetime value is $6,000 then you should spend up to $5,999 to get a new patient. But in reality that doesn’t work because you have fix cost and we have to calculate in the marginal cost, and then there is the concern about cash flow, if you spend $5,999, you get $6,000 back in 5 years so it will end up costing you a lot more than $6,000 to get that patient. The rule of thumb for many dentist is to spend up to the value of the first year. If the first year value is $1,200 and 5 year value is $6,000, would you invest $1,200 today so you get a return of $12,000 minus variable cost over the next 5 years? Sounds like a good deal to me.

Once you have figure out the target of what you are willing to spend then what you want to do is to compare all your marketing to see which has the lowest rate per acquisition. Let’s say CPA is $1,200  for flyers, $1,000 for magazine, and $1,500 for Google Adwords. What you would so is spend on magazine till your CPA goes to over $1,200 then you would start spending on flyers until both of your cost goes pass $1,500 then you would combine Google Adwords into the mix.