Learn digital marketing budget allocation rules of thumb such as marketing budget vs. gross revenue and patient acquisition cost vs. average case value
If you want to operate and continue to have a successful chiropractic office, marketing needs to be a part of it. Especially today, digital marketing is something you definitely need, and part of that is a digital marketing budget allocation.
But how can you determine your budget?
Bryan Joseph, DC, has been CEO/president of The Wellness Connection in O’Fallon, Mo., for the past 15 years. In addition to having launched multimillion-dollar health clinics, he says that he has used his “marketing and business expertise to expand and grow over a dozen other successful businesses.”
He took time to answer questions about how to best determine your digital marketing budget.
What is involved in digital marketing?
The first thing to understand is that not all marketing is created equal. The word “marketing” is about as general as the word “food,” and it’s not until we dig deeper and understand what we are looking for and what we want from it that we will know how to find it and/or how to utilize it.
In basic terms, digital marketing can mean so many things, but overall, it’s essentially any type of marketing that is online. This can include everything from content on your website to your social media posts, all the way to the emails you send out to your patients.
There are free forms of digital marketing as well as paid forms. There are branding tools, public relations tools, and direct response marketing tools. All of these require a different strategy and your strategy will always follow your goals. You can consider writing blogs, sending emails, paying for banner ads, using landing pages, posting or paying for social media ads, Google ads, video content strategies, podcasts, and much more.
Why do DCs need to establish a specific digital marketing budget allocation?
I tend to see may DCs struggle with their marketing efforts for two reasons.
First, they don’t establish any consistent budget toward their marketing efforts and therefore have a hard time consistently producing new patients. Second, they don’t pay close attention to the results or returns on their marketing. This usually leads to doctors stopping a marketing effort that is actually working — when they believe it’s not — or prevents them from increasing their digital marketing budget allocation with confidence to grow their efforts and reach.
What kind of data should chiropractors look at when allocating a budget?
A general rule of thumb I like to suggest is that your marketing budget be equal to roughly 10% of your gross revenue. This number will change over time as you grow, so remember it’s a dynamic rather than static, fixed number that will allow your reach to expand.
A few critical numbers within your business that you should always be aware of would be your:
- new patient acquisition costs
- retention rate
- average case value
These numbers allow you to have better control over your actions rather than throwing money to the wind and not tracking or measuring the results. The lower your new patient acquisition costs are, the better off your marketing dollars usually are. As long as your acquisition costs remain lower than your average case value, you usually can consider that digital marketing budget allocation strategy to be successful.
Every time you run a new marketing campaign, you should have clear data to track so you know your return on investment (ROI). This is critical if you ever want to get away from guessing whether or not your marketing is working.
If you don’t know how to calculate your acquisition costs, just take the total dollar amount you spent on your marketing campaign and divide it by the number of new patients you acquired.
For example, if you spend $1,000 on ads and scheduled 10 new patients, then it would be $1,000/10 = $100 in acquisition costs. Imagine that your average case fee was $1,500, so the question you need to ask yourself is, “Am I willing to invest $100 to acquire a new patient to generate an average of $1,500?” I hope you know your answer!