Let’s say that a medical practice has two promising initiatives. We’ll call them Investment A and Investment B. Of the two, Investment A costs significantly less. Furthermore, putting Investment A in place first will ensure that investment B pays off at a higher rate in the future. In this situation, which initiative should get priority?
From a purely financial perspective, one would expect Investment A to come first—not only to ensure that the larger Investment B is more profitable, but also to delay outbound cashflow.
For many practices, however, this isn’t the case. Owners often choose Investment B, hampering their long-term prospects and putting their business at a disadvantage.
Practices routinely make big investments impulsively—think of the conference vendor whose “introductory offer expires soon”—without considering how their newly acquired asset will generate income. The large Investment B may be a new laser, a significant new piece of software, a new wing/office, or even a new injector or doctor joining the practice. Investment B invoices come due immediately, but too often the financial upside lags by months or years.
Without creating additional patient demand, how can new assets generate sufficient new income to pay off the investment? Instead of generating revenue, they become an expense. However, by flipping the formula and putting strategy/planning in place first, Investment B will instead pay off at its maximum potential ROI. By strategy/planning, we mean successful marketing. And by successful marketing, we mean digital marketing (Investment A) because it funnels patients toward specific services without prior awareness of the practice (search). And digital marketing done correctly will provide more performance metrics for refinement and continuous improvement (more target patient inquiries).
So why do practices pull the trigger on big-ticket items early while only considering digital marketing as an afterthought? It’s a “you don’t know what you don’t know” situation. Too often with lower relative costs, marketing is under-estimated for lead-time and complexity. Practice professionals know when a new service will provide results and satisfy patients, so they take action and assume they’ll eventually figure out the marketing side.
Without marketing, however, few—if any—patients will know about the new service. Word of mouth can only do so much. So contracts get signed, deliveries are scheduled, and somewhere about the time when equipment training and facilities are addressed, it begins to dawn on everyone that actual patients are an important ingredient. By then, down payments and/or lease payments are already being incurred. One can’t expect equipment vendors, job applicants, or contractors to slow down this process to maximize a practice’s ROI. It’s simply not in their interest. Nor is it in their wheelhouse to explain or to execute the nuances of a productive marketing strategy to build sufficient demand ahead of time.
At its core, this is a project management problem. Imagine Thanksgiving dinner. The turkey is purchased, thawed, trussed, stuffed, and ultimately put into the oven well in advance of all other side dishes—which won’t even be started for several hours. The turkey is the most involved process, and it takes longer, but it’s vital to the success of the occasion. Side dishes could be started early, but then they would come out hot several hours before guests arrive, and that’s not Thanksgiving dinner. The big event is when the sides and the entire main course are all served up as guests are arriving and everyone has settled in. Guests socialize a bit, yummy smells escape from the kitchen building anticipation, and everyone ultimately sits down together to enjoy the occasion. Someone offers up a friendly toast, and a tasty hot meal is consumed and appreciated by all for maximum satisfaction.
Assuming a practice has expert support to know what to do, productive digital marketing takes more time. There’s time to determine the best suited channel/content. There may be time to pick a new vendor. Search engines require time (weeks and months) to index and eventually reward properly optimized content, and then there’s the sales cycle in the practice for patients to get informed, to schedule a consult, to make decisions, and to eventually schedule a procedure. Demand for new assets doesn’t really begin until the very patient’s have gotten most of the way through this cycle. Consider that for new website projects, those filled with original content, they will likely take 4 months or more to complete.
Large capital investments can be complex with vendor negotiations, facilities, preparation, and training, but when they’re done thoughtfully, they minimize cash outlay and they plan to build demand from digital marketing from the outset. Successful big-ticket initiatives will grow patient demand (Investment A) weeks and months before large capital investments receive their finishing touches and come online.
When practices underestimate market timing or they don’t know how to build patient demand for lack of trusted marketing guidance, they too often invest in new facilities, new people, and new technology before there’s a path in place for those new assets to pay off at maximum ROI.
Brent Cavender
Brent Cavender is a co-founder of MetaMed Marketing. He heads up business development and marketing for MetaMed where he is the organization's chief practice educator and primary point of contact.
