You have to spend money on a marketing media mix to make money. It is true to build clinical volumes just like it is true for the world’s greatest businessman.
Every year business people, investors and journalists wait for the annual publishing of Warren Buffet’s letter to shareholders. It is chock-full of practical business advice from the man commonly called the Oracle of Omaha. Read Warren Buffet’s shareholder letter and you will find that he believes that you spend money to make money – and surprise – especially money spent on marketing.
And this man is legendarily frugal. So why does he recomend spending money on marketing? Because if you do it right it is directly tied to results. So what is the right way to spend?
#1 Don’t Spend Marketing Money in Stupid Ways
What is “stupid”? Something without a clear direction to get the patient into an access point into the system- stupid. The really cool TV branding ads without a clear call to action: stupid. Don’t spend money where there is not clear metric for success: that is stupid spending.
#2 Spend More Than Your Competition
The Frugal Mr. Buffet’s auto insurance company GEICO spends over $800 million a year in ads- twice the spend of the nearest competitor and GEICO is just #3 in the market in size (but #1 in profitability). He praises GEICO management for their stewardship and wisdom for the big marketing spend. Why? Because it drives results.
The average hospital system spends about .95% of gross revenue on the media mix. Quick math: that is $950,000 if the system does $100 million gross revenue. Or $9 .5 million if it does a billion in revenue. And that is to be average. You want to be better than average.
We need to be smart business people and great stewards of our precious marketing resources. Like the rest of the business world, we in healthcare can learn from the wisdom and example of Warren Buffet. We’d be wise to listen and act.