How high should your dental marketing budget be?
Typically, it is recommended for an established dental practice to invest between 7%-12% of annual revenue into its marketing activities.
A dental startup should be ready to invest at least 35,000€ / year to build brand awareness and create an initial patient base.
Let’s look at an example dental practice generating 500,000€ in revenue per year.
The marketing budget based on the recommended percentages should therefore be:
7% of annual revenue = 35,000€ / year
8% of annual revenue = 40,000€ / year
9% of annual revenue = 45,000€ / year
10% of annual revenue = 50,000€ / year
11% of annual revenue = 55,000€ / year
12% of annual revenue = 60,000€ / year
Based on your current growth stage and your local level of competition your dental practice may require to only invest 7% or up to 12% of your annual revenue.
This number should only serve as an indicator of what you should expect as a dental practice owner or manager based on industry averages.
If you manage to hit all your marketing goals for let’s say 40,000€ / year there is of course no need to spend an additional £20,000 just because someone told you you need to spend 12% of your revenue on marketing.
A deep understanding of current and future trends in dentistry and digital marketing will allow you to stay at the top in your area and secure a steady flow of new patients.
5 Tips To Setup a Digital Marketing Budget
Knowing how to allocate your financial resources to create an effective digital marketing budget is of paramount importance to surviving in today’s competitive digital landscape.
The digital marketing budget should estimate the costs to meet your marketing goals within a particular time frame.
A well-planned marketing budget for your dental practice is one of the best ways to make sure that your marketing funds are being spent wisely and appropriately.
Establish your marketing goals
The initial step in setting up a comprehensive digital marketing budget is to pick a clear direction and set your marketing goals and priorities.
What is the status quo?
Where do you want to be?
How many new patients to do you want to generate?
What type of new patients do you want to generate?
Every business is unique, which is why it is essential to always set your marketing goals and strategy before you set your budget.
Your goals are expected to vary along the process but the initial step in establishing your marketing budget is to get specific about your marketing goals and priorities.
Know your sales funnel and operational costs
Creating an effective budget for digital marketing requires an in-depth understanding of both your sales funnel and operational costs to know exactly how much to allocate to each channel.
Knowing your sales funnel will allow you to effectively engage customers and prospects at every stage of the funnel. Through this, you will be able to track results from prospect to customer throughout the revenue cycle.
Since there are limited resources available to achieve your marketing goals, a deep dive into your operational costs will let you gain an understanding of your potential costs. This will help you optimize your digital marketing budget across multiple channels.
For example you may have experience from the past that indicates that a new patient has cost you about £150 in marketing activities. If you wish to generate 10 patients, your minimum budget based on past experience should therefore be £1,500.
Set your marketing budget based on business goals
You don’t want to waste your time throwing money at things that won’t contribute to your business goals. Instead, your marketing budget should be aimed at areas that will help to produce actual results.
Once you have established your business goals and know your sales funnel and operational costs, the next thing is to start setting your marketing budget based on your business goals.
Your budget allocations vary depending on your marketing goals, as it should be self explanatory that you will need a different budget if you want to generate 10 or 50 new patients each month.
Allocate funds based on success
Once your goals are very clear, then you need to identity exactly where your funds should be allocated. You can start by breaking down your digital marketing budget based on your marketing priority and past successes.
The best practice here is to allocate money to different strategies based on their success, not their actual cost. Allocating more money to the marketing channels that are working well for you will help maximize your returns on campaigns and ad spend.
Once your dental practice reaches a stable financial situation, a small part of the budget, usually 10%-15% should be used to experiment with new marketing activities.
Consider your Growth Stage
When setting a digital marketing budget is is important to consider the current growth stage of your dental practice.
Are you a new start up that needs to build a patient base from scratch?
Are you an existing dental practice that is experiencing a steady decrease of your patient base?
Are you neither growing nor shrinking?
Are you an existing dental practice that is stable but wishes to expand to reach the next level?
Depending on the stage that your dental practice currently finds itself in, you need to allocate more or less budget in order to realize your vision and marketing goals.