What should I spend on marketing?

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Is the amount you spend to grow your practice based on the same amount of planning you put into your next vacation?  If you’re like most practices, probably not.

Marketing is an investment in the growth (and sometimes the survival) of your practice.  Let’s discuss how to decide what to invest.

There is no pat answer to the question “what should I spend on marketing?”.  Generally speaking, most businesses with under $10MM in revenue spend between 2 – 5% of revenue on marketing activities.  But that’s a big range, and there are many factors that affect the need for aggressive marketing:

  • new or established practice?
  • level of local competition
  • brand recognition (in practices, typically local reputation of physicians)
  • are you trying to retain patients or add new ones?
  • are you introducing new services?

The 2 – 5% of revenue measurement is valuable only as a very broad evaluation.  At King Medical, we believe the only way to create an effective marketing budget is to work backward from a goal.  If you don’t know where you’re going, it’s gonna be hard to get there.

Let’s look at an example:

  1. practice revenue is steady at about $1.2MM in collections over the past several years
  2. you have additional capacity without significantly increasing current overhead (facilities, providers, etc.)
  3. your goal is to increase revenue 20% (from $1.2MM to $1.44MM); $240,000 in growth
  4. based on conditions in your local market, you believe this to be attainable
  5. what should you spend on marketing to get there?


Different marketing mediums (internet search, advertising, direct mail) offer different levels of ROI, as well as the ability to accurately measure effectiveness.  Generally speaking, a healthy mix of marketing activities should provide an ROI in the range of 3:1 to 6:1.  If your marketing advisor believes that a 4:1 return is reasonable, your marketing budget is $60,000 (one-fourth of the increase).  If your goal is to achieve the $240,000 increase in two years, the $60,000 marketing investment translates into $2500 per month.

Although this example uses some broad brush strokes, I hope it effectively illustrates the idea of goals-based budgeting.  For more detailed ideas for your specific circumstances, give us a call.  We’d be happy to have a no-obligation discussion.

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