Boosting your practice’s value does not have to be a costly effortFeatured Products Promotional Features
Posted by: The Probe 9th October 2020
Even if you are not planning to sell your dental practice just yet, you might be hoping to build up its value, prior to putting it on the market.
For practice owners, the clinical side of the business is often the overriding focus, leaving you with little time – or energy – to think about much else. And when a practice has a reputation for exceptional patient care, surely growth and increased value is a natural consequence of success?
The “M” word
“Marketing” is one of those words that gets various responses. If you’ve got a well-established patient list and a full schedule, you may wonder why you’d even considering spending money on it. Or, perhaps you advertise online, but have no real idea what the return on this investment is or how many “valuable” new patients found you this way.
A new point of view
Every practice is unique. Even in the same small town, you will find points of difference in terms of how each business is run, largely based on the aspirations of the owner. But regardless of your ambitions, you can market your practice to ramp up revenue and its valuation, for when it’s time to sell. You can also manage an existing marketing budget more effectively too, to see a better return on your investment, and boost your income.
With every marketing strategy, it is crucial to know how you will measure its success. Digital advertising can be a great option, because of how analytics work. Specialised digital agencies can gather valuable data about conversion ratios, s like how many clicks on your website convert to an enquiry, or how many people who submit an online form become a paying patient and how much they typically spend. Analytic experts will keep on monitoring this data too, so you can adjust your strategy and spend over time. Of course, you may have a good enough understanding of analytics yourself, or there may be someone on the dental team who can manage this aspect, so you might not need to employ an external individual or agency.
Another benefit of digital advertising is that you can be specific, honing in on a particular treatment option. For example, even if your patient list is healthy, you may want to promote adult orthodontics, which has a low uptake. You might decide to invest in a Google Ads Campaign for a targeted push, so any prospective patients researching this kind of treatment online will be directed to you.
For example, you spend £1,000 a month on Google Ads and generate 500 clicks, which turns into 50 enquiries through the website. This creates a cost of £20 per conversion as you need to spend £20 to get one enquiry.
Among the 50 website enquiries, let’s say you have conversations with 25 people by phone or email and 12 of them go on to book a new patient appointment. The cost per new patient appointment is then £83.33. If you charge £90 for the appointment, you will be operating at a loss. However, if the appointment is to discuss adult orthodontics and of the 12 people you see, 8 accept treatment, then the cost per conversion to treatment is £125.
It is important at this point to decide whether the initial investment is worth it. We’ll assume an average orthodontic treatment plan value of £2,500. Of that £2,500, you might spend 20% on materials and lab fees, and pay your associate 45% with them covering half the material/lab fees. This leaves £1,125. Take away the £125 procurement cost and you’re left with £1,000. Aside from some additional expenses like dental nurse time and other overheads, most of the remaining amount will be Earnings Before Interest Taxes Depreciation and Amortisation (EBITDA). If you can follow this formula every year and you plan to sell your practice for 7x EBITDA, then the above crude calculation adds approximately £7,000 in value for each patient that takes up orthodontic treatment.
The fine art of content marketing
Another approach you could adopt is content marketing. This is when patients supply their details in exchange for information. If they’re considering implants, for example, but aren’t yet committed, you could offer a full guide to implants that talks them in detail through the process, which access by first submitting their details. These details would then be added to your mailing lists.
As a practice owner, you will be understandably wary about throwing money at things that may or may not increase your business’s value. Specialist consultancy Dental Elite offers a practice health check free to its clients. More than just a valuation report, it advises on the changes you could implement to get boost the value of the business prior to selling and how to optimise revenue too.
Exploring ways to grow your income means your practice will be worth more. But don’t think that there has to be a compromise between your clinical focus – delivering excellent treatment efficiently, in a safe environment – and spending time and money on marketing your practice to build value. With you use the right methods, marketing to build a better, more valuable practice can be easily integrated into your workflow.
Luke Moore is one of the Founders and Directors of Dental Elite and has overseen well in excess of 750 practice sales and valuations. With over 11 years working in the dental industry, Luke has extensive knowledge in both dental practice transfers and recruitment and understands the complexities of NHS and Private practices.