Marketing Like an Engineer
By Steven L. Line, PT
Media advertising has always been an acceptable business marketing action.
The mistake I made with media advertising as my primary marketing strategy was not defining who my audience was, what they wanted to hear, and, most important, not knowing if that audience even wanted to hear from me in the first place! I should have gathered better data, known who was already responding to our physical therapy services, and then reverse engineered that data into call-to-action ads targeted at specific groups or audiences. However, I was emotionally blinded by desiring growth, so I dumped more and more money and time into large TV ad campaigns and multi-layered radio ad campaigns that netted zero results. Consequently, my frustrations grew.
I specifically recall a sticking point in my career within the first 10 years of clinic ownership where new patient volume wasn’t changing, yet our marketing budget was soaring. Somewhere between 1999 and 2008 we grew our marketing budget from around $10,000 per year to an eye-popping $250,000 per year, while our production grew from $100,000 to around $1 million in annual revenues. Our marketing budget grew from 10% of our gross income to 25% or greater of our gross income. New patient volume declined slightly from 2006-2008, yet our budgets kept rising and, ironically, we kept believing it was because we weren’t advertising enough.
By the end of 2008, more than 80% of our marketing budget was invested in large media advertising: newspaper, radio, and TV, which generated approximately 10% of our new patients. Half (50%) of our business is directly from former patient reactivations and 15% from former patients referring friends and family to us. So nearly 65% of our entire business centered around one of our four main buckets, our patients, which we spent less than 5-10% of our marketing budget on. It does not take a business mastermind to determine that we were doing the wrong things by investing more money in less results! We had some early success with starting an actual advertising campaign, which clouded our judgement quickly. Instead of seeing things practically, we believed that more and bigger was better. We ran more ads and more campaigns to the extent where we hit a saturation stage. If we averaged 30 ads per week on a radio station, we wanted to increase it to 45 per week. However, more messages and more ads would not create the inviting message to those who didn’t know us, like us, or trust us to seek us for relief of their back pain. We clearly overreacted to the initial success of a radio campaign that we ran from 2003-2006, by putting even more money into that strategy.
Figure 1. New patient bucket ratio
One of the issues we miscalculated was very simple. During the period of 2003-2006 while running radio, TV, and newspaper campaigns, we also developed a mailing program, a physician sales program, and a former patient reactivation program. Those various other programs created more momentum than the big media advertising in newspaper, radio, or TV ever did. We kept hearing from people around town and even from patients in the office that they were hearing our ads on radio all the time. We took those comments as positive compliments instead of actually analyzing the tracking data and marketing metric data. We were headed for some financial trouble that many owners experience. We weren’t following any pre-set budgetary amounts for marketing, which led to a “blank check” allocation of funds for marketing. We re-established some guidelines to follow as it pertained to our budgets so that we would have a formula to follow. Today we allot no more than 10% of our gross income to marketing. When the 10% no longer allows us a consistent growth, we know that the underlying bucket ratios are off and our efforts are not targeted correctly.
Private practice owners obviously get into the profession because of our love for patient care and our engagement with patients. We enjoy seeing patients respond positively to our treatments and enjoy building relationships that last a lifetime with these people in our communities. We feel that our treatments and our relationships become our “invitation” into our practices. Unfortunately, unlike automobiles, big-screen TVs, and many other consumer goods, our product doesn’t sell itself. We must learn the art and science of strategic marketing and how to utilize simple problem-solving tactics in order to grow viable practices.
I have never met a physical therapist who doesn’t believe they give the best quality care. However, those same clinic owners who believe they give the absolute best in quality care are also the same ones who struggle with growing their practices. How can that be? If they truly are the best at quality physical therapy care, then how are people not lined up out to the street waiting to get in?
Figure 2. Marketing-results-triangle
I totally understand the frustrations, as I have been there. I believe we all eventually try to determine what a patient needs and wants from our own therapist viewpoint. That is the first major flaw in the strategy. We understand the value physical therapy can have on a person’s life, but the consumer who has always chosen chiropractic care, massage therapy, or medications doesn’t understand that value. The consumer views physical therapy equivalent to “fast food” or another other consumable on which they spend their money. In order to connect the consumer to your practice or physical therapy, we must tailor communications that align with their level of understanding. We also must evolve with the various media choices available and understand ourselves how the different demographic groups—age, gender, occupation, and ethnicity—tend to use the various communication and social media.
We desire to have a very high return on investment (ROI) of our marketing budget, so we strictly adhere to matching the proper message to the proper market and the proper media. We have learned through trial and error how to track and measure our outcomes in business just like we measure our outcomes in physical therapy. Management guru Peter Drucker once said, “if you measure something, it has a greater chance of being managed.” In context, by measuring exactly why every patient chose our practice, we have the proof whether our marketing actions are effective.
We further break down our measurements into four main subcategories or buckets; (1) former patients, (2) patient referrals, (3) physician referrals, and (4) general public. Those four categories are in ratio to one another and broken down into multiple smaller categories; specifically, our campaigns or marketing programs that feed those buckets, such as mailings program, phone call program, media program, social media program, email automation, events, and others. This is how we construct and reverse engineer our company.
As often in life, our greatest problems can result in being our greatest opportunity. The previously mentioned challenge where we began spending more in advertising was corrected when we started really looking closer at the data and making better informed decisions from that data. We eventually dropped the TV advertising and drastically cut down our radio advertising. Our new patient trends did not change at all and we immediately began saving thousands of dollars on unnecessary actions. We now use those more expensive media forms for creating a specific call-to-action campaign such as promoting an open house, a free workshop, or a free consult day. We now use the most appropriate media to reach the correct audience.
Another measurement of our marketing that we use is following tried-and-true formula ratios of our new patient buckets. We have learned that in order to be successful in any of our clinics and when we start up a new clinic, at least 50% of our new patient volume each week must come from former patients being reactivated. When the number of former patients falls well below the 40-50% range, we know that some system is broken. Either we are not delivering “The Feel Good Experience” (our brand of physical therapy delivery and customer service) or we are not executing the internal marketing plan we have always used, which includes regular mailings, personalized phone calls, and friendly letters. Nearly all of the time, we can investigate and find that we overlooked or dropped something.
Former patients are people who already know, like, and trust us, so simply keeping a monthly newsletter in front of them as well as a regular follow-up phone check-in seems to keep our former patient ratios at 50% within each of our clinics. These are the former patients who have already been clients in the past. Former patients are the low-hanging fruit; they are the easiest to reactivate as new patients for a plan of care.
The next branch up on the marketing tree is patient referrals. Building strong relationships with patients allows you to invite them to recruit friends or family who may need services. Physicians are best reached by a multitude of mediums: phone calls, direct contact meetings of a pertinent and specific nature, and mailings on outcomes seem to be our most effective approaches at inviting them to engage with our practice. Physicians are best targeted by results and relationship. Finally, the general public can be one of the most difficult demographics in which to build interest in your practice. Former patients and current referring physicians are warm marketing leads, then general public would be cold leads. These are people who don’t know, like, or trust you. Where we previously relied primarily on radio and TV to get our name out in the community, we now use an automated system of Facebook video feeds targeting specific diagnoses such as Low back pain, shoulder pain, neck pain, balance, dizziness, and knee pain workshops. We use the offer of something free, such as free information via a booklet, brochure, or a digital product.
Offering free information creates a more significant opportunity for leads to connect with our clinic. We offer a no obligation, free seminar where we provide free wellness advice and free exercise techniques for self-management. Our workshops are the final step of our marketing process during which our therapists offer a free consultation with a physical therapist.
Figure 3. CPT yearly new patient treadline
In 22 years, we have shown very good growth of our new patient base and our overall production. However, I have also learned that there are very few absolutes in marketing. Convincing a patient to engage and connect with us still remains a clear and present challenge. What worked five years ago doesn’t work as effectively now. Continuous improvement in our business skills is necessary, just as it is in our clinical skills. Marketing skills—linking the correct message via the correct media to reach the correct market—is the critical first step. The second step is ensuring that you budget a set percentage of your revenue for marketing; in our case, we use 10% consistently. The third step is ensuring that an uptrending growth of new patients is occurring year to year. The fourth and final step is ensuring that your underlying subcategories or buckets reflect consistent and stable ratios that support your practice growth. Abiding by these set data principles should create freedom and stable expansion.
References:
1Kennedy D. No B.S. Direct Marketing: The Ultimate No Holds Barred Kick Butt Take No Prisoners Direct Marketing for Non-Direct Marketing Businesses, 2nd Edition. New York, NY: Entrepreneur Press; 2013.
2Madden C. Killer Marketing Secrets for Private Practice PTs: How to Thrive in the New Healthcare Economy. Seattle, WA: Amazon.com Publishing; 2016.
3Drucker P. The Practice of Management. New York, NY: Harper-Collins Publishing; 1954.
4Line S. The Feel Good Experience. Line; 2006
5New Patient Annual Growth. MBS; 2020
6Line S. PR and Marketing Dashboard Report. Line; 2020.
Steven L. Line, PT, is the president of Columbus Physical Therapy, P.C. He can be reached at cptsl@columbusphysicaltherapy.com or (402) 564-5456.