money_treeStrategic approaches to determining your marketing investment.

By Tina Rudisill

Many imaging-enterprise managers have experienced marketing-budget nightmare scenarios. Here are just a few examples:

“As you go” budgeting. Suppose your physicians find some community sponsorships that appeal to them. Even without a solid business case, you’re asked to fund hit-or-miss efforts in spite of your doubts about their contribution to the bottom line.

Underbudgeting. Underbudgeting delivers “underwhelming.” In marketing, the key to success is consistent, disciplined repetition of key strategic messages. That means that a single digital campaign and sporadic billboards are unlikely to move the needle. It also means that even the best physician liaisons will find it challenging to succeed if they’re not equipped with the right resources like a solid customer relationship management (CRM) tool.

“Marketing as a discretionary expense” budgeting. To be blunt, a senior leadership team that views marketing as an expense rather than an investment is already on the wrong track. This outlook doesn’t encourage the consistency successful marketing requires. When revenues drop, marketing budgets may get the axe when they’re needed most. Let’s face it: what other function of the organization can actually drive volume?

To avoid such missteps, a marketing budget should be a fundamental component of your overall business strategy, aligned with your goals and objectives and designed to fund activities that will help you achieve them.

But how should you determine an appropriate marketing budget?

There is no one right answer, no magic formula. The only universal principle is that a marketing budget must be sufficient to support consistent, strategically based efforts. Beyond that, approaches vary widely. Here are some of the most common ones:

Percentage of expected (or targeted) sales. Depending on factors like maturity of the organization and aggressiveness of sales targets, marketing budgets can range from 1% of collected revenue to 10% and more in challenging situations. Various thought leaders—John Deutsch, for example—point to budgets of 2% to 5% as typical.1 But extenuating circumstances like media costs in larger markets or aggressive goals could require substantially more.

Patient acquisition cost (PAC) budgeting. Another approach is to look at the number of new patients added last year and divide it into the marketing spend. The result is your PAC. Then determine how many new patients you need to meet projections (factoring in attrition) and multiply by your PAC. This can provide another budgeting guideline.

Goal-based budgeting. This approach starts with a list of what an organization wants to accomplish, followed by analysis of what strategies and tactics can attain those goals. From there, the marketing budget is based on the estimated cost of those strategies and tactics. If that amount exceeds what the organization can spend, some goals may need to be eliminated or scaled back, or their timelines deferred.

Sales-support budgeting. Your physician liaisons are a sales team responsible for shepherding new prospects through a pipeline and strengthening relationships with current customers. Marketing support for their efforts consists of such activities as (1) identifying new referral sources or opportunities for generating additional volume, (2) creating general demand by educating referring offices about services and key differentiators, and (3) providing resources and tools for the sales team ranging from a CRM tool to communications materials that support sales efforts. The budget in this scenario is based on the estimated cost of marketing strategies and tactics that support the sales team’s efforts.

Which approach should you use? There is no one right answer, but understanding all four will put you on the right track. A goal-based perspective helps you align your budget with what you need to accomplish. With a sales-support approach, you can evaluate what your physician liaisons need to succeed. Analyzing projected marketing costs as a percentage of revenue helps you gauge your budget’s alignment with your current situation. If you’re satisfied with your current revenue growth, a “typical” spend of 2% to 5% may suffice. But a more aggressive spend may be necessary if you’re experiencing challenges like declining volumes or reimbursements or intensifying competition.

Ultimately, your approach should be driven by the specifics of your business situation. That said, many imaging organizations today are faced with challenges such as consolidating competitors and self-referral within large healthcare systems or multispecialty groups. Frequently, the best response is a budget focused on building business through referral sales development and direct consumer outreach.

Don’t underestimate the value of a fresh perspective. An outside expert can help you sort through your current business challenges and identify an approach to budgeting that fits your needs.


Tina Rudisill

Tina Rudisill

TINA RUDISILL brings more than 25 years of experience to trg Marketing Works, the agency she leads in York, Pa. She has delivered presentations and published articles on healthcare marketing strategies and spearheaded strategic marketing programs for clients in healthcare, garnering awards for external marketing, advertising, and general brand awareness initiatives.



 Deutsch J. How Much Money Should a Medical Practice Spend on a Marketing Campaign? September 23, 2011. Medical Executive Post. Accessed February 11, 2015.