If there’s one subject that’s as daunting for many therapists as marketing, it’s money… specifically, the financial aspects of setting up, running, and growing a successful practice. What happens when we put the two together? Typically, a lot of crossed eyes and furrowed brows. But, more importantly, the creation of a marketing budget!
In previous articles, my mother, Bea Armstrong, has discussed at some length why money needn’t be a source of anxiety or stress. In fact, she’s explained in detail why those types of feelings about money may be what’s holding you back from achieving the abundant practice and lifestyle you desire. But those topics aren’t the point of this article.
What is? Well, I want to take a few minutes to talk about planning your marketing budget. But, before I do, I want to address a common question I often hear…
“Do I Need to Spend a Fortune on Marketing to Succeed?”
If you’ve been reading our articles, watching our videos, and attending our trainings, you already know that I think marketing is THE life’s blood of any business, including your psychotherapy practice.
If there’s one thing you should be spending your time, money, and energy on, it’s marketing.
Why? Because marketing is the one thing that can help you grow your practice and, if done effectively, return far more time and money to you than you invest in it.
So, while I don’t think you have to spend a “small fortune” to successfully market your practice, this does not mean I think you should be “cheap” about your marketing. Of course, a lot of money for one person may be nothing to the next.
The big caveat is that, when you’re just getting started with marketing your practice, the vast majority of any time and money you do invest should be spent on your education.
You need to learn the fundamentals of marketing. You need to learn how to choose the right markets, craft your message, and you need to learn about the different media options available. And you need to learn what choices make the most sense for your practice and you.
Successful marketing is not so much about how much money you spend but how you spend your money.
So, before you start spending a lot, or any, of your time and money on marketing, you need to be learning as much as possible, spending as much of your time and money on educating yourself about marketing, and then spending your knowledge and ingenuity on your actual marketing endeavors.
By regularly testing and evaluating your results – subjects we’ll continue to cover at length in other articles and trainings – you’ll discover what works and what doesn’t. You’ll begin to grow your practice. And with the extra income you make, you’ll be able to reinvest more money in your marketing endeavors while still keeping more of your income for you.
If you don’t start with a solid education in marketing, you won’t be able to create a marketing plan. And without a plan, you’re susceptible to whims, sales calls from marketing vendors, and good money chasing bad in an endless circle without any means of evaluating your efforts. You’ll be practicing “hope marketing” … Hoping something you do works. This is not the path to creating a successful practice.
So, to reiterate, get started by spending most of your time and money on educating yourself. Then spend the knowledge you’ve acquired and your ingenuity on your actual marketing. Test different marketing media and strategies and see what works. And as things work – and they will – then you’ll be able to spend less and less time and more money on your marketing and growing your practice. You’ll have more time to do the things you love by outsourcing the things you don’t enjoy, and thus be able to grow your business while having more time for you!
Now, back to your marketing budget…
Why Do You Need a Marketing Budget?
Why is it important to actually plan a marketing budget and put it in writing?
Well, as we’ve discussed before, consistency is critical to your success. Without a plan in place, it’s difficult to be consistent. “If you fail to plan, you plan to fail.”
All too often, I see therapists without a marketing budget spending $500 one month on their marketing, seeing some success as a result of their investment and deciding they don’t need to spend as much next month. So, they spend maybe $100 the next month or two. Their caseloads drop. They panic. And they spend another $500 the following month. It’s feast or famine. Perhaps you know the feeling?
The lack of consistency brought about by not having a marketing budget and a plan is what leads to these wild swings in many therapists’ practices. Worse, these feast or famine experiences cause anxiety and fear. And making business decisions based on fear is rarely, if ever, helpful.
When it comes to marketing, it takes some time to discover what works and what doesn’t.
I’ve run ads in publications for years on end, and I’m still (pleasantly) surprised when I get a phone call from someone who says, “I just saw your ad,” even though I know the ad has been running for years.
Now, I’m not suggesting you need to give a particular marketing media, campaign, or strategy years to determine whether or not it’s worth the investment. But, there have been numerous studies that indicate people need to see a message ten, twelve, even fifteen times before they actually internalize it and act on it. If this is the case – and my experience says it is – then running an ad only once or twice isn’t likely to be very successful.
You need to be doing things over and over again in order to give them time to work. You need to be consistent in your efforts, as that consistency is key to both your visibility and your believability. And, again, you need to be testing your results to see what works and what doesn’t, so you can refine your process.
If you run and ad once or twice and don’t get much response, try changing the headline, the body of the ad, any images you’re using, and your call to action. See if your response rate is any better. Try running the ad in other publications. Don’t give up, get better!
You should expect to give different marketing strategies and campaigns at least a few months to see whether or not you can make them work. If you’re tracking your results and testing different components, it shouldn’t take more than six months or so to determine whether or not you can make a specific strategy or campaign work. And, if something’s not working, you need to reallocate your resources accordingly.
Given the time involved, it should be obvious that an ongoing commitment is required. You need to be certain you can devote resources to a given marketing strategy or campaign, month-in and month-out. You need to be consistent. Consistency requires a marketing plan. And a marketing plan requires a marketing budget.
What Your Marketing Budget Must Do
There are so many different media and marketing methods available to choose from, you can’t possible use them all. At least, not effectively. Especially when you’re just getting started and funds are limited.
While I’m a big believer and practitioner of abundance, our resources are limited. This is particularly true when it comes to our time. You can devote only so much time and energy, let alone money, to any specific marketing endeavor.
Therefore, when creating your marketing budget you need to do two things:
- Determine the overall amount of time and money you’re going to invest in marketing and the growth of your business (either on a monthly or annualized basis).
- Decide how much of that overall “pie” you’re going to allocate to particular marketing media and strategies.
For example, say you decide to invest $500 per month in marketing and growing your practice. You might decide to devote $150 monthly to search engine optimization, $150 per month to pay-per-click advertising, $100 a month to networking events, and $100 per month on your ongoing marketing education.
Over the course of time, by testing and tracking your results, you can determine which of these endeavors is providing a greater return on investment and reallocate the resources for those that aren’t to a different strategy, media, or campaign.
Having that $500-per-month “overall” marketing budget in place allows you to know how much you have available to invest in specific marketing activities. And knowing how much you’re investing each month in specific marketing endeavors is what allows you to track your investments month-in, month-out, determine the return on investment for each, and reallocate accordingly.
Without knowing these figures, you’re still practicing “hope marketing.” Jumping from one marketing media or strategy to the next, hoping something works, but not knowing what it is and when.
It really is vital to determine a marketing budget and write it down, both for the sake of tracking your results as well as your own accountability.
Determining Your Marketing Budget
So, how do you go about deciding how much you’re going to invest in marketing and the growth of your practice?
Fortunately, the process of determining a marketing budget need not involve a slide rule or quantum physics. While there’s probably any number of ways you can go about this, there are a couple of very easy methods of setting your marketing budget, neither of which involve picking some arbitrary number out of a hat.
If you’ve already completed the “What’s the Lifetime Value of a Client?” exercise, you have a pretty solid idea of what a new client is worth to your practice. One of the easiest ways to budget how much you’re willing to spend on acquiring a new client is to spend exactly what a new client will spend on you.
For example, if you determine that a new client is worth, on average, $3,000 to your practice’s lifetime bottom line and you want to acquire at least one new client every other month, then you’d spend $3,000 every two months on acquiring a new client ($1,500 per month). That may seem like a lot, but it’s an easy way to decide how much you should be willing to spend on acquiring a new client.
Of course, a new client is likely worth much more than this because they’re likely to return for additional sessions in the future as well as refer other clients to your practice.
It also needs to be said that, if you’re wisely investing $1,500 per month to acquire that client – testing, tracking the results of your efforts, and reallocating resources accordingly – you’re going to get a lot more new clients than just one every other month. Chances are you’re going to acquire two clients, or five clients, or ten clients for that same amount of money.
While a $1,500-per-month marketing budget may seem exorbitant, you need to focus on the return of your investment, not just the cost.
Don’t get me wrong, cost matters. I’m not suggesting you budget more than you can afford on a consistent basis. Your marketing budget shouldn’t be a source of anxiety or stress. Just the opposite. But, if you focus only on what your marketing costs, it’s more than likely you’re either throwing money away on ineffective strategies or missing out on much larger opportunities.
Is it helpful to spend only $50 or $100 per month on marketing and not get any new clients?
If you spend $100 per month on marketing and get one new client every three months, and a new client is worth, on average, $3,000 to your practice, then your return on your $1,200 annual investment is $10,800. Not bad.
But, let’s say you spend $1,000 per month on marketing and get two new clients each and every month. Your $12,000 annual investment then returns $60,000.
While the percentage return may be greater when spending less, the gross return in the second example far outweighs the first ($60,000 – $10,800 = $49,200). I don’t know about you, but I’d much rather invest an extra $11,000 per year to get an extra $49,000 in return!
But using the lifetime value of a client is just one method for determining your marketing budget…
Another easy to way to go about this, and remove any arbitrary guesswork, is to simply reinvest 10% of your gross income in marketing and the growth of your practice.
For example, if you make $120,000 a year, 10 percent is $12,000 annually, which works out to a marketing budget of $1,000 per month. If you’re spending $1,000 a month on various marketing media and messages, you know your target market, and you’ve crafted your messages half-decently well, I’d find it nigh impossible to believe you wouldn’t get at least one new client a month out of that effort.
Again, if a new client is, on average, worth $3,000 to your practice’s bottom line and you get ONLY ONE new client each month, you’re adding $24,000 to your practice’s bottom line that year. Could you use an extra $24,000? And, as I said before, I think you’ll attract a lot more new clients than just one per month if you’re investing this kind of money at all judiciously.
I know, I know. I’ve heard the silence on the other end of the phone. I’ve seen the stunned looks. I know many therapists think I’m crazy for suggesting $1,000-per-month marketing budgets. At least, until I run these kinds of numbers…
I’m not saying you need to be spending this much per month. Even half of this figure would be more and better than most. And I’m not saying your success is solely based on how much you spend. Otherwise, I wouldn’t be suggesting you initially spend most of your time, money, and energy on your marketing education. You need to be investing your money wisely to generate the best possible returns.
However, marketing is the only means you have of growing your practice. If you want your practice to be a success, it doesn’t pay to be cheap!
You also need to realize that your time is money and figure it into your equations accordingly. If you calculate your time to be worth $100 per hour, and you decide to budget $1,500 per month on marketing, investing $500 and 10 hours of your time each month works out to that $1,500 per month. Feel better?
I’m also not suggesting you do anything I don’t do myself. I invest AT LEAST 10% of my gross income on marketing my businesses.
Why 10 percent?
I admit this figure is somewhat arbitrary and is one reason I prefer the lifetime value of a client method described previously. However, 10 percent is the baseline figure I use and I derived it from personal finance classics such as George S. Clason’s The Richest Man In Babylon. Most financial experts suggest you save at least 10 percent of your income. I wholeheartedly agree. Many also suggest you reserve the same amount of your income (10%) for charitable giving.
Since marketing is fundamental to the growth of any business – just as savings are fundamental to one’s wealth and well-being and helping others is fundamental to our human spirit – it seems logical to me to reinvest at least 10 percent of one’s income on growing that income.
Do you have to use the same figure? No. You don’t HAVE to do anything. And you could just as easily reinvest 7 percent or 5 percent of your gross income in marketing. But, I’d ask you… How important is growing your practice?
I know many therapists who spend close to 10 percent of their income on office rent each month. This means they’re spending 10 percent of their monthly income helping someone else’s business. Isn’t your own business worth at least as much to you as someone else’s?!?
Unfortunately, we don’t have the time and space here to get into the specifics of allocating your monthly or annual marketing budget amongst the various media options available. However, we will be covering this topic in greater detail in April’s STAR Training.
The main point, the main takeaway, is that you need a systematized way of determining your marketing budget that allows you to follow a marketing plan consistently, month-in and month-out.
Creating and following a marketing budget will play a vital role in your success. But you don’t need to fret about it. And you don’t need to make it some complicated, over-involved process requiring innumerable spreadsheets and a professional accountant.
You simply need to be consistent in your marketing efforts, track your results, and reallocate your investments according to facts, not guesses.
Start simple. Start with what feels comfortable. Just get started. Create a budget and start tracking your results. You’ll sleep better at night and feel more confident during the day with a solid marketing budget in place.
And be sure to leave your questions and comments below and we’ll do our best to answer them all as quickly as possible. Better yet, let us know what method you use to determine a marketing budget. We’d love to hear your suggestions and share them with others!