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Anatomy of a Successful Dental Marketing Mailer

Seven Steps to Success

There are seven steps, which must be completed correctly for any dentistry marketing strategy to be a success.  Due to space constraints, we illustrate this with one example: a direct mail campaign.  These principles are equally applicable to other strategies.

The first step is to identify your objectives.  There are two general objectives that are appropriate for the dental office. The first is to increase the volume of new patients. For example, if your office generates an average of 40 new patients per month and, based on your available capacity and other considerations, you could comfortably absorb an additional 50 percent per month your objective might be written:  “Increase the number of new patients by an average of 20 per month.”  We use “average” to emphasize that the actual increase will probably vary from month to month. It is the average increase over time that should be the relevant measure.

The second objective is a change in the composition of your patient base. For instance, you may want to change the patient mix from 60 percent fee-for-service and 40 percent insurance-based to 30 percent and 70 percent respectively. Or you may want to attract more patients desiring a specific procedure, e.g. cosmetic or implants. 

Whichever objective you choose, you’ll want to make it as specific as possible, and commit it to writing because, when you do not know where you are going, any road will take you there. 

Once you have agreed on your objective, you’ll want to determine your budget: 

 a)      Calculate cost per mailer (data, printing, letter shop, and postage)

 b)      Calculate quantity of mailers necessary to achieve your objective

 c)      Multiply a) by b)

Adding any one-time set-up costs, e.g. mailer design, to the result is your total program budget.

To calculate cost per mailer, you’ll need to factor the cost of your mailing list, design, printing, fulfillment (letter shop), and postage. Depending on what and how you mail, your cost can range anywhere from twenty five cents to over a dollar. Let’s assume it is fifty cents: Your monthly budget, then, is $2,000 (4,000 mailers @ $.50).

Let’s say you want to add 10 new patients per month to your practice. A reasonable expected response rate to a mailing for new patients is about one quarter to one half percent. Therefore, (choosing a conservative response rate) the number of mailers per month you will need to send is 10/.0025 or 4,000.

Armed with your budget, you can next perform your benefit/cost calculations.   This is perhaps the most often overlooked step, which is unfortunate because this exercise can show you what you may reasonably expect by way of return on investment from any strategy under consideration.

Briefly, the exercise involves determining the value to your practice of a typical patient.  One conservative measure of the value of a patient is the Average Annual Patient Contribution to Overhead (AAPCO).  Your management consultant may have an equally valid measure.

The following is an abridged screenshot of a program that may be downloaded from:

 

http://www.AmericanDentalCo.com/AWFUP/STS/AAPCO.zip

 

 

 

 

 

Track It!

Analysis Program

 

 

 

 

 

Follow the steps below to Track the effectiveness of your marketing program.

 

 

 

 

 

Step 1:

Calculate your Average Annual Patient Contribution to Overhead (AAPCO).

 

This will calculate your average annual value of a patient for your particular

 

 practice. In other words, what a patient is worth to you on a yearly basis.

 

 

 

 

 

 

Randomly select 30 patients who have been with the practice for at least one year.

 

List separately by patient the total Hygiene and Non-Hygiene Revenue generated in

 

the most recent 12 month period (must fill in patient name field).

 

 

 

 

 

 

 

Patient

Hygiene

Non-Hygiene

 

 

Name

Production

Production

 

1

Patient One

$275.00

$675.00

 

2

Patient Two

$0.00

$0.00

 

*

*

*

*

 

*

*

*

*

 

*

*

*

*

 

29

Patient Twenty Nine

$123.00

$8,755.00

 

30

Patient Thirty

$0.00

$1,333.00

 

 

Total:

$5,227.00

$22,134.00

 

*Truncated Table

 

 

 

 

 

 

 

 

 

*.89 and .79 are average adjustment factors.

0.89

0.79

 

Adjusted Hygiene Production = $5,227 x .89 / 30 = $155.07

 

Adjusted Non-Hygiene Production = $22,134 x .79 / 30 = $582.86

 

Total AAPCO…………………………………

$155.07 + $582.86 = $737.93

 

 

 

 

 

 

 

Step 2:

Calculate the Lifetime Value of a Patient

 

 

 

 

          Lifetime Value of a Patient (AAPCO x 8 yearst) =

AAPCO x 8

 

 

t National Average is 8 years. 

 

 

 

 

 

 

 

Step 3:

Calculate Your Break Even Quantity

 

 

 

 

Enter total cost of your marketing program:

$12,000.00

 

 

 

Number of Contacts:

35,000

 

 

 

 

 

 

 

 

Your Break Even QUANTITY is:

16.26 i.e. 16 patients

 

 

[Cost of Marketing Program/AAPCO]

 

 

Your Break Even Percent is:

0.04%

 

 

 

[Break Even Quantity/Number of Contacts]

 

 

 

 

 

Step 4:

Calculate Ratios

 

 

 

 

Used for sensitivity or "what if" analysis to

 

 

 

help you select a given marketing strategy.

 

 

 

 

 

 

 

 

 

Enter the Number of Patients who responded to your marketing program:

                 175

 

 

 

Enter the # of appointments scheduled:

                 150

 

 

 

Enter the # of appointments kept:

                 115

 

 

 

Your Conversion Ratio Is:

 

85.70%

 

[# of appointments scheduled/# of patients who responded]

 

 

 

Your Quality Ratio Is:

76.67%

 

           

 

 

 

Step 5:

Calculate your ANNUAL* Return on Investment

 

 

 

PERCENT Return On Investment:

 

 

 

(AAPCO) * (# of appointments kept) = $84,861.95 /

 

 

                             Total cost of marketing program = $12,000

700%

 

DOLLAR Return On Investment:

 

 

 

(AAPCO) * (# appointments kept) -

 

 

                             Total cost of marketing program

$72,861.95

 

*Conservative measure as does not factor referral or recare.

 

Dividing your program cost by your patient value yields your break-even quantity, i.e. the number of patients the program needs to generate for you to be indifferent (cost = benefit) about the program. There are a number of other effectiveness calculations that can and should be performed, but these are beyond the scope of this chapter. 

Now that you have a clear picture of your objectives and budget, and have chosen, based on your benefit/cost analysis, to proceed with the program, it's time to choose who should receive your mailing and how often.  That is, select your mailing target and frequency.

Our company performs this task by first conferring with our client to confirm the preceding three steps. We then search for individuals and households that, based on our experience, are most likely to respond to the invitation we’ll be making on behalf of the client.  We use this to arrive at our mailing target.  A sample (and simplified) demo-graphic report of the proposed target, which includes zip codes sub-divided by mail carrier routes, and a map of the same area showing mail carrier route boundaries, are reproduced on the following pages. 

 Sample Report of Proposed Target

Analysis Level: Carrier Route (duplicates not allowed)

Center Point for Analysis - 4700 E XYZ LN, Brighton, CO, 80601

Proposed Target Area: 3.4 Miles

 

 

House

 

Dist.

(INDEX)

 

Carrier

City

hold

Cumulative

To

Demand

06 Median

Route 

 

Count

Household

Site

For

Household

 

 

 

Count

Miles

Dental

Income

80601R014

BRIGHTON

654

654

1.09

108

$69,432

80601C011

BRIGHTON

447

1,101

0.28

117

$69,340

80601C004

BRIGHTON

445

1,546

0.5

114

$66,231

80601C009

BRIGHTON

304

1,850

0.61

99

$52,414

80601C013

BRIGHTON

513

2,363

0.66

126

$82,750

80601C003

BRIGHTON

444

2,807

0.86

88

$47,576

80601C008

BRIGHTON

563

3,370

0.92

91

$45,192

80601C015

BRIGHTON

372

4,311

1

118

$78,125

80601C012

BRIGHTON

360

4,671

1.02

89

$47,353

80601C001

BRIGHTON

364

5,035

1.08

86

$48,106

80601C005

BRIGHTON

400

5,435

1.17

90

$47,250

80601C007

BRIGHTON

736

6,171

1.2

94

$38,844

80601C014

BRIGHTON

488

6,659

1.42

101

$58,403

80601C006

BRIGHTON

675

7,334

1.44

61

$39,716

80601C010

BRIGHTON

471

7,805

1.67

86

$46,400

80601C002

BRIGHTON

269

8,074

1.76

72

$39,231

80601R013

BRIGHTON

687

8,761

1.78

90

$56,977

80601R024

BRIGHTON

450

9,211

2.29

117

$77,679

80601R003

BRIGHTON

348

9,559

3.06

122

$62,969

80601R010

BRIGHTON

649

10,208

3.08

117

$77,560

80601R020

BRIGHTON

634

10,842

3.4

117

$77,778

 

Households In Radius:

10,842

Median

100

$58,539

 

 

Map of target Zip Code 80601

 

 

 

The approach of selecting a mailing target by using mail carrier routes as targets rather than blindly selecting entire zip codes is superior because it allows delivery to specific areas within a zip code that might be a highly desirable market for your practice, while eliminating those areas of the zip code that are not as attractive.

The next step in the process of implementing a successful direct mail strategy is to select mailer design and content.  This is probably the most important step because what you send will determine more than anything else, the response to your mailer. A number of factors need to be considered, including use of color, images and photographs, degree of personalization, mailer type (envelope, post card, brochure, other), offer(s), and of course, cost.

Once you’ve chosen your design, the next step is to have your mailers printed.  Be sure that whoever performs your design and print functions is familiar with postal regulations. More than one dentist has experienced the nightmare scenario of having thousands of mailers produced, only to learn that some aspect of their mailer violates one or more postal regulations, rendering the entire stock of mailings worthless!  As a general rule, you should require that all vendors share references of clients (ideally, dentists) for whom they’ve performed a similar service.

The final step in the process of implementing a winning direct mail campaign is effective and ongoing program tracking and evaluation. The only way to know how well a given tactic is performing is to track the response.  Simple and cost-effective tools such as tracking telephone numbers and dedicated URLs (website landing pages) make it possible to include this vital component.

Success with any dental marketing tactic requires that each 'link' in the chain be strong and connected.

Once the chain has been forged, close adherence to general marketing principles ensures a handsome return on dental marketing investment.

About the Author

Daniel A. 'Danny' Bobrow, MBA is President of American Dental Marketing, a dental marketing consultancy based in Chicago, and has over twenty years serving the dental profession. He is also Executive Director of Dentists' Climb for a Cause, and Founder of 888-Now-Smile (www.888NowSmile.com).

Daniel is also a Certified mediator and arbitrator, Member of the Speaking and Consulting Network (SCN) and the Academy of Dental Management Consultants (ADMC).

Contact: DBobrow@AmericanDentalCo.com or 1-800-723-6523.