“How much should I be spending on marketing?”

If I had a penny for every time I heard that question from a practice owner, I would have more than enough to cover your marketing budget. 🙂

Many practice owners lack clarity on what their marketing spend should look like. To make matters worse, they also lack a clear strategy for reaching their practice revenue goals. Most owners resort to haphazard planning and shaking their fists at the sky whenever they don’t get enough monthly referrals.

Fortunately, PracticeVital makes it simple to make data-informed decisions surrounding your marketing budget and strategy. In this article, I’ll show you how to use PracticeVital to grow your practice through data-informed marketing.

Two Types of Budgets

You could set two marketing budgets for your practice: a maintenance budget and a growth budget.

A maintenance budget is exactly what it sounds like–a budget to maintain your current results. I suggest most practice owners earmark between 7-15% of their annual revenue towards marketing. 

So if you make $1M in a year, you should at least spend $70,000 in a calendar year on marketing. That comes out to around $5,833/month on marketing.

But most practice owners do not want to just stay at their current level. They want to seize opportunities when they come. This is where a growth budget comes in.

A growth budget is when you allot more marketing dollars to reach your desired goals. Many practice owners stumble setting this number, mainly because there isn’t enough data to make an informed decision. That is, until now.

How to Set Your Growth Budget

Start by having your PracticeVital dashboard handy. You’ll need it to pull some key data points.

Now, let’s go through this calculation together.

Step One: What’s Your Desired Revenue Goal?

Start by calculating how much more you want to be making every month. 

If you currently make $25k/month, but you want to get up to $50k/month in the next 6 months, then your desired increase is $25k.

Step Two: Calculate How Many More Sessions You Need

Inside PracticeVital, find your Average Revenue per Session report under Metric Reports.

You should be able to see how much the Practice Average is on the bar graph. 

Take the Desired Increase number and divide it by the Practice Average per session to arrive at how many sessions you need.

Sessions = Desired Increase/Practice Average Per Session

$25,000/$130 = 192 Sessions Needed

Step Three: Calculate How Many More Clients You Need

Next, determine how many sessions the average client schedules in a month. For our example, let’s assume the average client schedules 4 sessions in a month (1 per week).

Take our Sessions Needed number and divide it by the average number of client sessions in a month.

Sessions Needed/Average Sessions in Month = New Clients Needed

192/4 = 48 Clients Needed

Step Four: Account for Churn

Here’s the tricky part: you need to account for churn in this number. After all, your practice will have clients ending services as you’re bringing on new clients.

It’s difficult to find the churn rate for your practice–unless you have PracticeVital. Simply find the number front and center on your Practice Dashboard.

For our example, let’s assume your churn rate is 10%. Follow this calculation:

Clients Needed/(1 - .10) = Actual Clients Needed

48/(1 - .10) = 53 Actual Clients Needed

Step Five: Determine How Many Leads You Need

Our next step is to determine how many leads you need to generate to end up with 53 more clients. Here’s how to calculate this number.

First off, find the average conversion rate of your intake team. A good industry average for a cash-pay practice is around 30% and higher for insurance-based practices.

Let’s assume your conversion rate is 30%. Take the client number and divide it by the conversion rate.

Actual Clients Needed/Conversion Rate = Leads Required

53/.30 = 177 Leads Required

Now, let’s say you want to get to $50k/month in 5 months. You would divide 177 by 5 to see how many more leads you need per month to achieve your desired number.

177/5 = 35 More Leads Per Month

Step Six: Calculate Your Growth Marketing Budget

To do this final step, you need to know how much your Cost Per Lead (CPL) or Cost Per Conversion (CPC) is.

If you are running Google Ads, and you know from your data that your CPL is $20, you can use that to determine how much more you need to be spending per month.

CPL x Leads Needed = Your Growth Marketing Spend

$20 x 35 = $700 More Per Month

You would simply add $700 on top of what you’re spending now.

(Note: If you use a mix of marketing platforms to generate leads, you need to calculate what your average Cost per Lead is across all those platforms.)  

Building the Right Marketing Strategy for More Leads

Once you do all these calculations, the big question arises: what could you do to generate 35 more leads per month?

There are three buckets to your marketing strategy:

• Paid: Google Ads, Facebook Ads, Paid Listing Sites
• Organic: SEO, Social Media, Community Referrals
• Promotions: Events, Workshops, Offers

If you are a cash-pay practice, you’ll want to have your hands in all three of these buckets to get the most amount of leads. On top of this, you need to ensure you have a solid conversion process that takes an inquiry to a scheduled first session. This requires being on top of your numbers each week.

If you are an insurance-based practice, you could afford to go deep on one of these buckets and touch the rest (however, if you want to scale your practice to the next level, consider doing all three).

You could easily set up a system to run your paid and organic marketing campaigns (or contact us at Entrecare to run these for you), and then build an ongoing strategy for promotions each quarter. 

Regarding promotions, I would look at your PracticeVital dashboard and find the clinicians with the lowest utilization rates. I would partner with them to do more community marketing and workshops to boost their numbers. 

The point is, growing your practice requires intentionality and design. We do not stumble into a scalable practice–we design it with careful strategy.

With Entrecare, we act as a fractional CMO (Chief Marketing Officer) for your practice and build a strategy that incorporates all three buckets, while also providing done-for-you services to take some of the growth burden off your plate, so you can focus on clinical care. 

Another piece of what we do includes consulting to systemize your practice so it can scale sustainably. The last thing we want is to inject growth into a practice that would end up taking over your life. We will help you utilize tools like PracticeVital to coach your clinicians to success and build a practice you’re proud of.

It starts with knowing your numbers and designing a budget and strategy that works. And because you’re here, you’re already well on your way to a successful, scalable practice.

Neal Samudre is the founder of Entrecare, a platform dedicated to empowering helpers and change-makers. He partners with growing practices as a fractional CMO to help them scale with done-for-you SEO, systems, and strategy. You can learn more about him and his partner services on his website, or connect with him on Facebook.