Dental Marketing: $151,200 with Google Offers and Groupon

This is the final article in our dental marketing series on Internet dental coupon marketing.  Today we boil it all down to just how profitable this new dental marketing vector can be.

First, let’s start with a quick review of the offer and the results:

1. The basic offer — $59 for a $421 dental package.
2. That’s an 85% savings to consumers who buy within the allotted time.
3. The purchase window was 23 hours.
4. The number of offers (dental packages) available was 300.
5. The number of packages sold was 51 — or 17% of the available offers.
6. Total dollars grossed in the test was $3,009, which was split evenly — $1,504 each for Mt. Tabor Dental and Google.

(Click here to view the full ad)

What’s important to note in the results above are that 51 packages were sold for a gross income to Mt. Tabor Dental of $1,504. On the surface, this tells us that the practice now has about $29.50 available to service each of 51 new patients.

However, what most people don’t realize is the concept of “Breakage.

Not all the coupons will be redeemed with the allotted time period. The reality is that people forget to use their coupons, and breakage can run from 30% to 50%. Meanwhile the practice is using the cash immediately. (This is the same game that American Express has been playing with Traveler’s Checks for the last 60 years.)

I think we can safely assume a 30% breakage rate. This turns our 51 packages purchased to just 36, giving $41.77 to cover the service cost of each patient. Now most of you are now trying to calculate how much money you are going to lose on each of these new patients when you only have $41.77 to deliver an exam, X-rays and a bite-and-boil home tooth whitening kit.

Don’t bother!

The reality is that Mt. Tabor Dental has now identified 51 potential new patients who are willing to pay $59 each.

The average new patient in the US is worth about $975 in gross production in the first nine months of treatment. Take out delivery cost of 10%, 4% collections loss and 9% universal expenses (cotton balls) and your net marginal profit is about $750. Knock off another $50 to cover any additional initial delivery costs and you end up with $700 per patient in your pocket.

Assuming a 30% breakage loss on coupon utilization, you net 36 new patients at $700 net each for a total of $25,200. For those real pessimists in the crowd who will say that half of those bottom-feeding coupon patients won’t accept your treatment plan and stay for at least nine months, well ok, you just made $12,600.

Now do you see any good reason why you wouldn’t run this or a similar Internet coupon ad with Google or Groupon every month for the next year?

Think about a possible $151,200 net to your bottom line over the next 21 months…

Could You Run Your Family or Dental Practice This Way?

Could You Run Your Family or Dental Practice This Way?

The following was passed on to me by one of our readers . . .

Interesting Perspective on the American Debt

If you’ve been watching the world news lately, here’s some math to consider…

  • U.S. income: $2,170,000,000,000
  • New debt: $ 1,650,000,000,000
  • Federal budget: $3,820,000,000,000
  • National debt: $14,271,000,000,000
  • Budget cut: $ 2, 100,000,000,000 ( CBO estimated )/ Annualized over 10 years (210,000,000,000)

It helps to think about these numbers in terms that we can relate to. Let’s remove eight zeros from these numbers and pretend this is the family budget for the fictitious Smith family.

  • Total annual income for the Smith family: $21,700
  • Amount of money the Smith family spent: $38,200
  • Amount of new debt added to the credit card: $16,500
  • Outstanding balance on the credit card: $142,710
  • Amount cut from the budget: $210

So in effect last month Congress, or in this example the SMITH family, sat down at the kitchen table and agreed to cut $210 from its annual budget.

What family would cut $210 of spending in order to solve $16,500 in deficit spending?

Now I believe that this does not take into consideration the interest on that credit card!

It is an obvious expression of the frustration almost all of us have with the current political process and the resulting economic mayhem that we are being forced to endure.

At this point the market collapse has seen over one trillion dollars of American investors’ capital investment and dentists’ retirement funding vanish in the last two weeks.

Dentist Treatment Options: Patient Quotas

Last year, we discussed how New York state was opposed to patient quotas for dentists in the article, Dentist Treatment Options: NY Opposes Patient Quotas for Dentists.

Dentists and dental associations were outraged when Invisalign announced that dentists would only be able to offer the orthodontic treatment if they began at least 10 cases per year.

Though Invisalign ultimately withdrew this controversial “provider requirement” (read about Invisalign dropping dentist requirements), the backlash kept on coming.

Many were horrified by the idea that a manufacturer could prevent a dental practitioner from offering a treatment modality to their patients.

New York was so disturbed by this precedent that Governor David A. Paterson signed into law, Chapter 504 of the Laws of 2010, a bill that “prohibits corporations and manufacturers from setting quotas on dentists who use the corporation’s product or service.”

The bill essentially states that a manufacturer may not set quotas on dentists who wish to use the manufacturer’s product. Here’s the text of the New York state legislature bill:

“The commissioner shall promulgate regulations to require that a manufacturer or other entity selling, leasing, or otherwise providing any drug, device, or health care service shall not, directly or indirectly, establish as a condition for the use by a dentist of such drug, device, or health care service that the dentist meet any quota for the number of patients on whom the dentist uses the drug, device, or health care service and that a dentist shall not, directly or indirectly, request or receive from any manufacturer or other entity a drug, device, or health care service having a condition that the dentist meet any quota for the number of patients on whom the dentist uses the drug, device, or health care service.”

The bill, A.10943/S.7614, was sponsored by Richard Gottfried, chair of the Assembly Health Committee, and Carl Kruger, chair of the Senate Finance Committee.

The bill was passed and signed into law even though there was strong lobbying against it.

I want to hear your thoughts. Do you feel that other states should take the same action as NY? Are you dealing with any companies who have established a proficiency quota?

Dental Insurance and Obama Care: Who’s Right?

Dental Insurance and Obama CareThe National Journal is reporting that the National Association of Dental Plans is spending more than $1 million on a campaign to change a provision in the health care law that they feel will require some people to buy duplicate dental insurance coverage.

Let me repeat…The dental benefits trade organization is spending $1,000,0000 to hire a lobbying firm to convince the Obama administration to fix the provision by the end of 2011.

Is this a good thing? Click here for a 92-page white paper “Road Map” with Delta Dental as a co-sponsor.

The NADP is concerned that, starting in 2014, the almost 44 million people who receive pediatric dental coverage through small business employers will also have to buy coverage through the new health insurance exchanges. It is asking regulators to clarify that their existing coverage meets the law’s requirements.

“Truthfully, this is the No. 1 issue for our industry,” said NADP executive director Evelyn Ireland. “It is the most crucial thing for us to get done.”

NADP wants to ensure that people will be allowed to keep their existing dental insurance coverage under the new health care, a promise President Obama repeatedly made during the heath insurance reform debate.

For a multitude of reasons I have never been a big fan of Delta Dental. However, after reviewing the 92-page white paper I think there may be some merit to this $1,000,000 argument.

Before, I make up my mind, I would like some pro or con feedback from our readers.

Please post your comments below.

Who Else Wants Dentists Targeted for Tooth Tax?

tooth taxDo you think dental services should be taxed?

Apparently Vermont’s Governor Peter Shumlin believes so.

A $24 million new tax package was recently approved by the Vermont House Ways and Means Committee. They voted 7-1 on a package intended to help make up a $176 million projected shortfall in their state.

Fortunately for dentists and patients residing in Vermont, the package did not include Gov. Peter Shumlin’s plan to expand the provider tax to include dental services.

His “tooth tax” initiative would have imposed a 3% tax on the gross receipts of dental services.

Dentists in Vermont were outraged, and more than 4,500 people signed a petition with the VSDS opposing the 3% tax.

The Vermont State Dental Society vehemently opposed the tax, stating, “We believe it makes much more sense to tax items that hinder oral health like candy, soda and tobacco. Taxing health care to pay for health care is a math problem that just doesn’t add up.” The group called for dentists and patients alike to sign the petition through the VSDS website.

The controversial expansion of the provider tax to include dentists that would have raised another $3 million in revenue for the state.

Even though the increased tax would have increased Medicaid payments, dentists still believe a tax on dental services is the wrong way for the state to raise funds.

Should dental services be taxed? If you were in Vermont, would you have signed the petition?

For more on this story, see the Bennington Banner.

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