How We Develop Hospital, Medical and Dental Marketing Plans
A marketing plan is not a list of marketing ideas from which you randomly select different concepts to test or combine for trial-and-error experimentation. That is just random, episodic, spaghetti-on-the-wall marketing activity – which is almost always a high-risk prescription for disappointment, frustration and failure.
A marketing plan is a strategic document that is designed to facilitate the achievement of specific business goals and objectives over a specific time period.
Would you consider hiring contractors to build out your new hospital, office or clinic without first developing and approving the architectural blueprints? Well, that’s essentially what you are doing when you engage in random, reactionary marketing activities without first developing a well thought out marketing plan.
Most marketing plans are conceived to extend no longer than one year before the plan is reassessed for modifications, additions, subtractions or entire reinvention depending on constantly evolving business goals and circumstances. In fact, a properly implemented marketing plan is constantly being assessed by accurate and consistent tracking systems to evaluate the plan’s performance against expectations. This continual evaluation is performed so that ongoing adjustments can be made to improve the plan’s yield.
Benefits of a Marketing Plan
A good marketing plan allows you to anticipate, assess, prepare, build a road map to follow, cover-your-bases, construct necessary support systems, protect yourself and dramatically improve your chances for marketing success. A plan is an essential business tool for hospitals, medical groups or provider practices.
Critical Elements of a Marketing Plan
- Target Marketing – Establishing Target Customers
- Competition Analysis
- SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats)
- SMART Goals
- Strategies and Tactics
- Marketing Budgets
- Marketing System
Your marketing budget is going to be most effective when it reaches your selected target market. The benefit of target marketing is simple—efficiency. Solid target marketing is a method to more efficiently reach your customers*. Target marketing is a better use of your most valuable resources, i.e. time and money, to generate additional revenue.
(* In this website, we use the terms “patient” and “customer” interchangeably. We do this intentionally because it is vital that you and your staff think of and treat your patients AS customers and not simply as medical or dental charts and records. Apparently, this is easier said than done if you judge by the way most patients are often treated.)
Your goal is to get to know as much information as you can about your existing or prospective customers. The more you know about your customers, the better you will be able to make decisions that will enhance your ability to communicate and connect with them.
Who do you consider will benefit the most from your products and services? Think of the people and their most common characteristics and attributes. One of the best ways to identify your target market is to look at your existing customer base. Who are your ideal clients? What do they have in common? If you do not have an existing customer base, or if you are targeting a completely new audience, speculate on who they might be, based on their needs and the benefits they will receive. Investigate competitors or similar businesses in other markets to gain insight.
Four Ways to Identify Target Markets
- Geographics: The location, size of the area, density, and climate zone of your customers.
- Demographics: The age, gender, income, family composition and size, occupation, and education of your customers.
- Psychographics: The general personality, behavior, life-style, rate of use, repetition of need, benefits sought, and loyalty characteristics of your customers.
- Behaviors: The needs and wants your customers seek to fulfill, the level of knowledge, information sources, attitude, use or response to a product of your customers.
One of the marketing fundamentals is focusing on benefits. This perspective is critical to target marketing. Establishing an intimate understanding about the needs and wants of your desired target market is critical. How will your customer benefit from using your services or products?
What tangible or intangible benefits might customers realize, and is it possible to quantify these benefits? What is your customer really buying? This much is certain: No one wants to buy surgery! Or dentistry! Or physical therapy! Or invasive procedures!
People purchase services and products (including healthcare services) to realize one or more of the following life-improvement benefits:
- Pain relief
- Personal relationships
- Peace of mind
Basically, you all sell the same product – a happier life. At least, that is what your customer wants to buy.
The Target Market Profile
The target market process allows us to break down these groups of people so we can better understand how to reach them. One way to do this is to create a target market profile. Here is an example of a target market profile:
- Lives within the ZIP codes 97401, 97402 and 97405.
- Between the ages of 21-35.
- At least one child.
- Condominium or home owner.
- Education experiences beyond high school.
- Earning a combined annual family income of $50,000 or greater.
- Values time and considers it their single most limited resource.
- Excited about accepting and using innovative ideas and products.
- Consistent Web users. Prefer the Internet over magazines and newspapers for information they trust.
- Increasing resources invested into safety and security issues.
- Beginning to plan for their future.
- They are leaders in product selection and respond to the opinions of the “industry experts” when making purchase decisions.
- This group will first look to the Internet to acquire this information.
- They defend these decisions under most any circumstance and will adamantly “sell” those that ask why they use the product or service and why they made the choice they did.
- This group can be a powerful, unpaid sales force resulting from the referral network they build and use.
Target marketing allows you to reach, create awareness in, and ultimately influence, that group of people most likely to select your products and services as a solution to their needs, while using fewer resources and generating greater returns.
The more detail you know about your “ideal” customers and clients, the better you will be able to make them aware of your products and services, and how to purchase them through you.
Target Audience Characteristics by Generation and Cohort
How much do you know about the characteristics and buying tendencies of specific groups that make up your target audience? One way that mass marketers evaluate their desired audiences is through the study of these generational groups.
A generational cohort has been defined as “the aggregation of individuals (within some population definition) who experience the same event within the same time interval” (Ryder, N., The cohort as a concept in the study of social change, presented at the 1959 annual meeting of the American Sociological Association). The notion of a group of people bound together by the sharing of the experience of common historical events was first introduced by Karl Mannheim in the early 1920s. Today the concept has found its way into popular culture through well known epitomes like “Baby Boomer” and “Gen-Xer”.
Today we use the following descriptors for these cohorts. Different sources will provide different ranges of years that comprise each cohort, but the following information represents a reasonable cross-section of this information.
- Depression cohort (born from 1912 to 1921) o Memorable events : The Great Depression, high levels of unemployment, poverty, lack of creature comforts, financial uncertainty o Key characteristics: strive for financial security, risk averse, waste not want not attitude, strive for comfort
- WWII cohort (born from 1922 to 1927) o Memorable events: men leaving to go to war and many not returning, the personal experience of the war, women working in factories, focus on defeating a common enemy o Key characteristics: the nobility of sacrifice for the common good, patriotism, team player
- Post-war cohort (born from 1928 to 1945) o Memorable events: sustained economic growth, social tranquility, The Cold War, McCarthyism o Key characteristics: conformity, conservatism, traditional family values
- Baby Boomer cohort #1 (born from 1946 to 1954) o Memorable events: assassination of JFK, Robert Kennedy, and Martin Luther King, political unrest, walk on the moon, Vietnam War, anti-war protests, social experimentation, sexual freedom, civil rights movement, environmental movement, women’s movement, protests and riots, experimentation with various intoxicating recreational substances o Key characteristics: experimental, individualism, free spirited, social cause oriented
- Baby Boomer cohort #2 (born from 1955 to 1964) (aka “Late Boomers” or “Generation Jones” or “Trailing Edge Boomers”) o Memorable events: Watergate, Nixon resigns, The Brady Bunch, Twister, defeat in Vietnam, the oil embargo, raging inflation, gasoline shortages o Key characteristics: practical, pragmatic, less optimistic, distrust of government, general cynicism
- Generation X cohort (born from 1965 to 1976) o Memorable events: Challenger explosion, Iran-Contra, social malaise, Reaganomics, AIDS, safe sex, fall of Berlin Wall, single parent families o Key characteristics: quest for emotional security, independent, informality, entrepreneurial
- Generation Y cohort (born from 1977 to 1994) (aka Echo Boomers, Echo Generation, Millenium Generation) o Memorable events: rise of the Internet, 9-11 terrorist attack, cultural diversity, 2 wars in Iraq o Key characteristics: quest for physical security and safety, patriotism, heightened fears, acceptance of change
Success is not achieved by ignoring your competitors but rather by anticipating competitive issues and influences so you can always have a proactive plan and strategy for staying ahead of your competition. There are many ways to compile good research on your competition. Here we will list the easiest and most effective processes.
- Internet Competitive Research
- Media Competitive research
- Ear-to-the-ground Competitive Research
- Analyzing Your Data
In today’s Internet society, access to information has never been better or easier.
For the primary competitors you have already identified, you can conduct a simple Google search with the name of the health system, hospital facility, business, practice or the name of the owner(s) and that will usually lead you to their website. In many cases, their website will feature how they are attempting to position and differentiate themselves, as well as listing the scope of programs, services and/or products they offer.
In addition to a competitor’s website, you may also find other interesting information about the provider(s) or the facility. This information might include articles they have authored, media interviews, legal actions that are public information, etc.
For a more comprehensive list of your competitors, you can do an Internet search by your profession or specialty and your area, just like a prospective patient might do. For example, if you type “plastic surgeons Los Angeles” you will draw up a search result that includes:
- sites that list plastic surgeons throughout the Los Angeles area
- “find a doctor” sites
- Yellow Pages online directory sites
- individual sites of some of your more sophisticated and aggressive Internet competitors who have managed to get a high search engine ranking for their website through effective search optimization.
In many cases, the compilation list sites include links to the individual websites.
Media Competitive research
There are many ways you can study your local media to get additional competitive information.
For example, even though Yellow Pages advertising has been impacted somewhat by increasing Internet marketing, you will still find the most aggressive marketing competitors through their large space display ads in your local Yellow Pages directories.
As with your competitive website research, you will learn from these Yellow Pages ads how your more ambitious competitors try to position and differentiate themselves, as well as the programs, services and products that they offer, their hours of operation, special features and benefits, emergency access, etc.
You can also scan and collect competitive advertising from local newspaper ads, direct mail, TV commercials, radio commercials, billboards or other media. When you pay more attention, you will also begin to notice any articles, publicity or other public relations exposure that your competitors may achieve in the media.
If you don’t live in the area where you work, you can enlist the help of others who do live in the area. This group may include employees, friends, relatives or even your patients (assuming they are unquestionably loyal to you).
Ear-to-the-ground Competitive Research
Often, this type of “in the field” sleuthing is the most effective way to gain competitive intelligence, especially from those competitors whose marketing is not advertising-based or visible in the media. You can – and should enlist a virtually army of “special agents” who are conditioned to have their ears to the ground for anything they hear or learn about your competitors.
This group includes pharmaceutical detail reps, vendors, loyal patients, hospital staff, your employees, friends and relatives. You may be surprised at how much information is available to you if you know how to uncover it.
Analyzing Your Data
When you ferret out valuable competitive research, you need to take advantage of what you learn. Success in business is about anticipation, planning and action. Business is not designed to be fair and 80% of the business will go to 20% of the players (The 80-20 Rule). The winners in that 20% group are able to anticipate, plan and take decisive action before their competitors even know what hit them.
Analyze your competitive research and put together your own decisive plan of action that is designed to put you (or keep you) at the top of the food chain.
SWOT Analysis (Strengths, Weaknesses, Opportunities and Threats)
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. A periodic evaluation of your internal and external environment is an important part of the strategic planning process. Because SWOTS are inherently subjective, it is always good to get an external SWOT analysis from a well-informed but objective third party that can be compared to your own SWOT.
Strengths and Weaknesses are the internal evaluation components of the SWOT. Opportunities and Threats comprise the external evaluation.
One of the more interesting definitions of marketing is that “Marketing is the process by which resources are brought to bear against opportunities and threats.” In order to determine which resources you can bring to bear against opportunities and threats, you have to understand your strengths and weaknesses.
Strengths are your capabilities and resources that can be used as the basis for developing a competitive advantage.
Strengths could include:
- your special expertise and/or experience
- a new, innovative product or service
- location of your business
- quality processes and procedures
- any other aspect of your business that adds value to your product or service. Weaknesses include areas you need to improve and/or avoid. Weaknesses can sometimes be considered as the absence of certain strengths. In some cases, a weakness may actually be the flip side of one of your strengths.
Weaknesses could include: – lack of marketing expertise, plan or system (or all three) – undifferentiated products or services (i.e. in relation to your competitors) – location of your business – poor quality goods or services – damaged reputation In addition to new or significant trends or other opportunities you may already know, additional opportunities can spring up based on your external environment analysis. Opportunities could include:
- a developing market (such as the Internet)
- a new technology, service or procedure you can offer
- mergers, joint ventures or strategic alliances
- moving into new market segments that offer improved profits
- a market vacated by an ineffective competitor
- changes in population profile, social patterns, lifestyle changes, etc.
A threat could be anything that stands in the way of your success; miss or ignore these threats, often at great cost.
Threats could include:
- a new competitor in your home market
- price wars with competitors
- a competitor has a new, innovative product or service
- competitors have superior access to channels of distribution
- economic slowdown
- change in governmental policies and/or regulations
- changing insurance plans and/or contracts for major area employers Simple rules for successful SWOT analysis
- be realistic about the strengths and weaknesses of your facility, service line or practice
- analysis should distinguish between where your organization is today, and where it could be in the future
- be specific. Avoid gray areas.
- always analyze in relation to your competition i.e. better than or worse than your competition
- keep your SWOT short and simple. Avoid complexity and over analysis Once key issues have been identified, they feed into marketing goals. You can also apply SWOT analysis to your competitors. This may produce some interesting insights!
You are probably familiar with popular quotations like “You can’t hit a target if you haven’t even decided where to aim” or “You don’t have to be great to get started, but you have to get started to be great.”
Well, it may be familiar but it also happens to be true.
So many businesses fail to thrive because they have never really established SMART goals. SMART is used as an acronym in goal-setting discussions.
S=specific, significant, systematic, synergistic
M=measurable, meaningful, motivational
A=achievable, agreed-upon, action-based, accountable
R=relevant, realistic, responsible, results-oriented, rewarding
T=tangible, time-based, thoughtful
Long-term vs. Short-term goals
Most businesses that consider goals seriously establish both short-term and long-term goals. Marketing plans are generally real-time exercises in goal-achievement, so most marketing plans emphasize short-term goals (achievable within one year or less). Remember that marketing plans are organic, dynamic and constantly evolving, so they are well-suited to short-term goals.
If you are just establishing or reinventing your marketing system, you may also establish long-term goals in your initial marketing plan because you will need to include long-term system infrastructure in your initial marketing plan. However, with ongoing, year-to-year marketing plans, short-terms goals will typically be the primary focus.
Marketing Strategies and Tactics
After you have identified your goals, you need to evaluate, prioritize and organize the combination of specific marketing strategies and tactics that will be best suited for you to use in pursuing your goals.
A well constructed marketing plan is a perfect illustration of a whole that is greater than the sum of its parts. The selected strategies and tactics work synergistically to complement one another for exponential positive results.
Goals vs. Strategies vs. Tactics
Goals are specific, measurable, achievable, relevant and tangible business objectives. (SMART, remember?)
Strategies are the ideas and approaches that are developed to achieve the goals.
Tactics are the specific actions, details and activities that must occur in order for the strategy to succeed.
Here’s one good example of the relationship between goals, strategies and tactics. This example represents only a few of the possible strategies and tactics for the sample goal.
Goal: Increase new patient volume by 20% in the next year
Strategy: Improve patient experience to inspire more word-of-mouth referrals
Institute quarterly customer service training sessions for staff and owners
Create incentive program for staff based on increased referral volume
Devote one staff meeting per month to new ideas for improving patient
experience – Create and display framed posters in reception areas defining your unwavering patient satisfaction commitment
Strategy: Leverage relationships with established patients and improved patient experience for more word-of-mouth referrals
- Develop and institute new patient satisfaction survey. Leave space on survey for happy patients to refer others.
- Ask patients for referrals at opportune times (as appropriate)
- Staff supports owner(s) with additional encouragement to patients to refer when the opportunity presents itself
- Post “Thank You For Referring” bulletin board in reception area with names of patients who have referred others
Strategy: Develop and test targeted external advertising campaign
- Test new print ad series in local newspaper
- Test direct mail program to new residents using oversized postcard
In an optimally implemented marketing plan, all strategies and tactics are implemented comprehensively. At the very least, each strategy in your plan should be implemented in the same comprehensive and synergistic manner that it was conceived.
For a more detailed list of common strategies and tactics, review Marketing Strategies and Marketing Tactics.
Healthcare businesses establish budgets for various categories of operational expenses but rarely for marketing. Even those who frequently engage in marketing activities and expenditures will often have no pre-established budget for marketing.
Unless they develop and take advantage of the many benefits of an annual marketing plan, they determine their marketing expenditures on a case-by-case basis, a process consistent with random marketing activities.
Unfortunately, random financial decisions made out of context of a real strategic plan frequently yield disappointing results.
In a marketing plan, a pre-established and committed budget is essential to assuring the plan’s viability. Remember, in establishing SMART goals, the “A” stands for “achievable” and the “R” stands for “realistic” (among other attributes). How can you know that you are developing an achievable and realistic plan if you don’t know what budget resources you can or will commit?
Cost Centers vs. Revenue Centers
Most practice owners and hospital administrators put most of their focus on budgeting for operational cost centers. A cost center is an accounting term used to refer to a department in a business that incurs expenses but does not generate revenue directly.
Basically, your cost centers cover the expenses that are required to service and operate your business.
A revenue center, on the other hand, refers to departments and/or activities engaged in by the business that generate revenues directly into the business.
In other words, money in your business flows out of your cost centers and money flows in to your revenue centers (or should). Another way of understanding the relationship is that without sufficient revenue coming into the business, you will not be able to afford to fund your cost centers without operating in the red, which eventually leads you into the blackhole of bankruptcy.
Revenue centers also incur expenses for the specific purpose of stimulating and generating revenue into the business – unlike cost centers, which are required to operate the business but do not generate revenue directly.
Revenue Center Profit Influences vs. Cost Center Profit Influences
Because cost centers service the revenue generated by the business but don’t contribute directly to that revenue, the key to increased profitability in cost center management is based on efficiency. The more efficiently the business functions to keep operating costs as low as possible without compromising quality, the more profit that is left at the end of the process.
Since most of the focus of owners, administrators and management is on cost centers, it is common for owners and managers to assume that keeping costs under control is the key to all profitability for the business.
To operate the business with this mentality is often a critical mistake because the cost center profitability model does not work for revenue centers. In fact, the exact opposite model applies to revenue center profitability.
Revenue centers require “fuel” in the form of investment capital in order to stimulate and generate the desired revenue. (The old axiom that “it takes money to make money” definitely applies here.) If you don’t put enough fuel in your engine, you’re going to run out of gas!
Marketing is a Revenue Center – NOT a Cost Center
Because marketing is primarily concerned with generating and protecting sources of revenue, a marketing budget belongs in a revenue center, not a cost center. Marketing budgets should be evaluated in the context of supporting your SMART goals.
If you don’t have the financial resources or the willingness to commit them to this category of investment in the growth and/or protection of you, you may need to rethink your goals and possibly establish less ambitious objectives.
Marketing Budgets Based on Month-to-Month Cash Flow are NOT Budgets
Effective marketing is a consistent, ongoing process based on solid systems, good planning and excellent implementation. If you attempt to fund your marketing budget based on a month-to-month assessment of positive cash flow, you will find that you cannot maintain consistency in your marketing plan and your results will be seriously compromised – sometimes disastrously.
A marketing budget must be taken seriously as a financial commitment to your business success or your efforts will almost certainly be doomed to disappointment and failure.
Does this mean that you have to have your entire annual marketing budget secured in some separate account before you begin your implementation program? Not necessarily.
You may not have all of your necessary budget funding set aside when you start, but you have to know with confidence that you will have access to those funds as you need to utilize them without having to rely on the hope that your cash flow will be continuously positive enough to support your budget without compromise or interruption.
There are many different budgetary models you can consider. Here we list the most common, in order from the most highly recommended the decision makers who are serious about their goals to those models that are not recommended but do exist.
Objective and Task Budgets
This method is probably the “purest” budgeting method for a marketing plan. Here the budgeter must specify exactly what goals and outcomes are expected. Budgets are then based on this expected outcome. (For example, the primary objective could be to increase overall revenues by 20% over a 12-month period.)
The following steps are followed in developing an Objective and Task Budget:
a. Specify the marketing objective(s) to be achieved. Ideally, these goals must be quantifiable and measurable.
b. Specify the marketing strategies and tactics necessary to achieve the stated objectives (i.e., brand development or enhancement, advertising, public relations, networking, internal marketing, training, etc.) including quantity and frequency of activity and associated costs.
c. Evaluate profitability of marketing plan if goals are achieved at the expected costs.
c. Assuming profitability level is acceptable, assign budget based on anticipated costs associated with strategies and tactics necessary to achieve the goal.
d. Launch plan, monitoring and tracking closely to adjust strategies and tactics as necessary to achieve, maintain or exceed anticipated profit levels.
In this model, the marketing budget is established based on a ratio of anticipated return-on-investment for the budget and its associated marketing activities. The challenge in ROI-based budgets comes in identifying a reasonable expectation for return.
Most ROI-based budgets work from a source of quantified data on performance of similar marketing plans or activities in similar situations and circumstances to those of the budgeter. The difficulties in this model are a) limitations on availability of statistically meaningful comparative data; and b) there is no guarantee that the performance of the new budgeter’s marketing plan will mirror those whose data was used for the ROI modeling.
There are many variables that affect the performance of a marketing plan which are difficult or impossible to measure and compare. These include personal initiative, attitude, sales skills, focus, etc.
Still, ROI-based budgets are employed in certain situations – assuming the data is available – where a marketer wants some level of reassurance, however unscientific, that the odds of success are in their favor.
In using this method, the budgeter simply allots a predetermined percentage amount for marketing. That percentage might be a percentage of profits, a percentage of revenues, a percentage of sales, etc.
Although this method is easy to administer, there are some problems associated with it.
For example, how do you determine what percentage to assign for marketing? Is 5% too much? Is 2% too little? The assignment of a percentage is typically subjective or even arbitrary, based on advice of financial advisers, experience, “gut feel” or other factors.
Also, with this method, the marketing budget increases as profits, revenues or sales go up or are expected to go up. What happens to a new product with few sales? Also if there is a recessionary period, sales generally go down. If sales go down, advertising dollars also decline. In this situation, it may be wiser to increase marketing budget to generate additional market share and sales rather than letting the marketing budget have less financial support.
The percentage method of budgeting does not necessarily correspond to goal achievement, even if it worked successfully during a previous period.
A zero-based budget is one where you start with no predetermined or authorized funds. In a zero-based budget, each activity to be funded must be justified – or re-justified – each time a new budget is evaluated.
The problem with zero-based marketing budgets is that the basic concept of the model compromises consistency, which is essential for long-term success in marketing. For most small business owners, zero-based budgeting means that each marketing expenditure, even though previously assigned to the plan and marketing budget, is constantly being re-evaluated and re-justified as the money needs to be committed.
Most small business owners find it difficult or impossible to avoid second-guessing their previous commitments due to fear or financial strain of the moment or uncertain circumstances or any combination of these factors, most of which are constantly present in a small business environment.
Often, therefore, previously committed marketing activities and associated funding is withdrawn or reallocated. This interrupts or even destroys the consistency of the marketing effort and the chances for success of the plan as originally conceived.
SWAG is defined variously as everything from “super wild ass guess” to “sophisticated wild ass guess” to “scientific wild ass guess” to “silly wild ass guess.” Regardless of your preferred definition, please note the common words in all the variations.
SWAG budgets are anything BUT scientific. Usually, these budgets are based more of emotional beliefs, perceptions, misperceptions and comfort levels. Rarely and only accidentally do SWAG budgets have any relationship to success in achieving one’s goals.
In this method, the budgeter looks at the funds that remain after all other budgets have been developed. Whatever is left over is spent on marketing.
This is usually a model for disappointment and failure of the marketing plan because marketing has already been determined to be of relatively low importance and priority to the business.
This is the most common method for assigning marketing costs in most small businesses – particularly in healthcare. It is also the most consistently unsuccessful.
On-the-fly budgets are not really budgets at all. Marketing expenditures are determined on a case-by-case basis as a marketing opportunity is identified. There is no real plan, no strategy – just reactive, spontaneous behavior. It is not difficult to understand why the margin for error is so high and the odds of success so low with this method.
The quality of implementation of a marketing plan is certainly as critical as the quality of the plan itself to the chances for a successful outcome.
While the success formula here may not exactly correspond to the Thomas Edison quote that “Genius is 1% inspiration and 99% perspiration,” it is clear that effective implementation of a well conceived marketing plan is at least half the battle. Dramatic differences in the outcome of similar or identical marketing strategies and plans, executed in similar or identical situations, reinforces this reality.
Like so many other business processes, marketing implementation is far more successful with a solid marketing plan with the support of a structured system. We have the experience to create a highly effective strategic marketing plan. Call us today at 800-656-0907, or connect with us here.
For additional reading: What is a Marketing SYSTEM? for extensive details on how to structure and manage a successful, ongoing implementation system to support your marketing plan and get the most yield from your efforts.
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