The question of marketing valuation often surfaces when the dentist is ready to transition. However, it can be a worthwhile exercise to measure the marketing efforts as an asset to the practice, even when an acquisition or merger is not on the table.
Here is a sample valuation letter to illustrate this point:
December 2, 2016
To whom it may concern:
[Practice Name] has been working with Big Buzz to strategically market the practice in order to consistently attract 50-70 new patients per month to the practice. In order to reach and sustain that goal, we have been running an online advertising campaign. The following is an overview of that service, as well as total valuation:
Overview: Online Marketing Services: Google AdWords
Big Buzz has been delivering online marketing services in the form of Google AdWords, designed to attract the ideal target patient and convert them to quality and lasting patients. In 2016, the practice website saw an average of 441 sessions per month, and 78% of website traffic was from new visitors.
Valuation: Monies invested in online marketing with Big Buzz over the past 12 months total $16,500. The campaign is designed to attract 50-70 new patients to the practice each month. The practice has seen an average of 93 new patients per month over the past 12 months. The average value of a patient is $2,000 per year. Therefore, net of marketing is valuated at $2,215,500, or $2,232,000 in returns less the $16,500 investment.
Articulating a valuation like this one is a great way to objectively measure marketing. Any marketing efforts that are expenses are simply not working. Successful marketing efforts always produce a healthy return on investment.
Are your efforts producing healthy returns?