As a healthcare practitioner you may have thought about running a sales promotion in your office. Whether you are a massage therapist who is offering 20% off couples massages on Valentine’s Day, or a chiropractor who offers a discount when you refer a friend, you have probably toyed with the idea of reducing your profit to increase your promotion. Promotions might seem smart in theory, but in the long run; promotions only hurt your brand. The trend we have seen with dental practices is that promotions are not a sustainable way of generating revenue. Here are some ways promotions could be hurting your business:
1. Increased Promotion/Reduced Profit – You will not be the only one running a promotion. Your competitors will be running promotions as well. As you and your competitors vie for control of a small pool of patients, you will have to resort to more extreme promotions in order to outdo your competition. Extreme promotions will return a smaller and smaller margin until you find yourself operating promotions at a loss in hopes of gaining future business from the patient. The automotive industry is a prime example of this. We see companies operating at a loss in efforts to regain market share. Operating based on promotions leads to short-term gains but long-term loss.
2. Promotional Expectations – As margins from promotions fall, you will find yourself trying to pull back promotions. This is easier said than done, however. Patients begin expecting promotions; some will not be treated unless someone is offering it at a discounted price. Considering the competitive nature of the market, they are sure to find someone offering a better price. This is especially true for procedures like Invisalign®. Dentists often tell me that their patients are unwilling to get Invisalign® unless it’s on sale.
3. Lack of Brand Loyalty – As the margins on your promotions fall, you may want to take solace in the fact that at least the patients who entered your doors will come back. Unfortunately, this is not the case with promotional customers. As you’ve made the competition about price, rather than brand connection, the patients will not show loyalty and will leave as soon as someone offers a better price. When consumers have no brand connection to a person, product, or service, the purchasing decision is based on two factors: price and convenience. When automotive companies sell at a loss they never see that wasted money come back in the form of repeat business, since they sold based on price and not brand. Promotions lead to transactions, not loyalty.
4. Cheapening Your Brand – By constantly concentrating on sales and discounts you cheapen your brand image. As Francis J. Kelly from Arnold Worldwide said, “Cheapening the brand with a short-term price cutting strategy could very well demean it.” When margins from promotions shrink, you rarely want to be the brand that’s known as the “cheap” or “sale” brand. You want to be the brand that has earned loyalty from customers by creating a brand image that resonates with the patient.As you can see, at the end of the day the most important thing for a dental, medical, or healthcare practice is a good reputation or brand image and strong loyalty. With a good brand image, your patients will not look anywhere else for their dental treatments. A strong brand is especially important for multi-specialty practices, where each new procedure a patient needs is profit you stand to gain or lose. A strong brand is even more important in states with a high density of dentists per patient where the competition is especially fierce, such as Massachusetts, New Jersey, or California.See our other posts to learn how to build a better brand and earn strong loyalty from patients.