Management Review |
How to Handicap Your Marketing OddsGary Gerber, O.D.In some ways, investing in practice marketing or promotion is like betting on a horse. Although both require skill, you never know how much return you’ll cash out at the end of the day—if any. The key is not to lose your shirt and, hopefully, to come out on top. The smart gambler (if there is such a thing) is like the smart doctor; he or she evaluates the odds and spends accordingly. Here’s how you can too. The Rules When it comes to handicapping your practice-building options, you might try a method known as “underage vs. overage.” This will help you determine how much is too much to spend—and how much is not enough. Underage results when you don’t invest enough to maximize your potential returns. Conversely, overage occurs when you invest more than you’ll gain. Here’s the catch: Underage vs. overage refers to your actual return as well as your potential return. Your actual numbers can show you’re in the black, but if you’ve passed up affordable opportunities, you could find yourself in the red according to the underage vs. overage method. Say you’re thinking about an advertising campaign. The cost of this three-month project is $6,000. If you decide not to move forward, you might consider yourself to be ahead $6,000. But what if those ads would generate an extra $25,000 in professional and material fees? And what if one of every five new patients would refer another patient to your practice? Certainly, you wouldn’t be ahead by any measure. In fact, one might argue that you would be deep in the minus column—to the tune of $19,000. That’s underage. Now, let’s assume that you go ahead with the campaign, and it has absolutely no effect on your practice. In this case, you are indeed in the minus column by exactly $6,000. That’s the most you can lose. That’s overage. Playing the Odds If you don’t spend enough promoting your practice, you’ll lose all potential long-term gains. If you spend too much, the worst thing that can happen is that you’ll lose exactly what you spent. So, over the long term, it’s usually more costly to spend too little on promoting your practice than to spend too much. Plus, you have a unique advantage over a gambler: Your risk level isn’t dictated solely by chance. Research and analysis can provide safeguards. For example, if you were about to embark on a new marketing campaign, you might calculate how many new patients it would have to draw to make it pay off. Consider the ads I mentioned earlier. You could run lower-cost test ads with patients, or talk to colleagues who’ve used similar ads to gauge your chances of a payoff. Only after you research and analyze your odds should you decide whether a new venture is too expensive for your practice. While it’s frightening to think of investing in terms of gambling, the comparison can teach us a valuable lesson about how to make wise business decisions. Every decision involves risk. You are taking a risk whether you choose to pursue an option or walk away from one. So the next time you think about marketing, consider your odds, and remember this: You can only lose what you throw down. u Dr. Gerber is a consultant and private practitioner based in Hawthorne, N.J. His e-mail is DrGerber@PowerPractice.com. |
| © Review of Optometry OnLine October 15, 2000 |
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