Many healthcare products and services providers tend to overlook the value of a proper marketing budget. Quite a lot of medical facilities, manufacturers, distributors, and professionals neglect to adopt a sound and consistent approach to allocate resources for their medical marketing projects. This attitude certainly has many dangers for such organizations. Medical marketing is an investment and therefore should be handled with extreme care. Here are some best practices ideas to help you avoid the mistake of improper budgeting.
There are certain budgeting practices in medical marketing that needs to be avoided no matter what. One such method is the “wild guess” approach wherein a marketer simply sets the campaign budget to an arbitrary amount. Another budgeting blunder is applying the “what you can afford” approach which is very similar to the wild guess method.
With the bad practices set aside, let’s now turn our attention to the advisable forms of budgeting in healthcare marketing.
- Benchmark Budgeting. The benchmark budgeting method fixes a budget estimate according to some criteria or objectives. For instance, a budget that includes generating health leads and appointment setting may be set to exceed what a direct competitor is spending on the same item or set to industry averages. The main disadvantage of this approach is that the underlying benchmark may not apply to the company’s situation.
- Percentage of Sales Budgeting. This is a traditional approach wherein the marketing budget amount is set as a percentage of sales. A healthcare manufacturer, for example, may set the budget for its medical lead generation campaign at 25% of sales. Here, the total budget increases or decreases directly with changes in the value of sales. However, this violates the sound principle that marketing efforts should be intensified when revenues are declining to revive sales growth.
- Capital Budgeting Methods. These methods include using financial metrics such as the ROI, NPV, IRR, payback period, and profitability index to evaluate which projects become part of the marketing budget and which ones go back to the drawing board. Capital budgeting methods are more systematic and reliable than the two above because they take into account the costs and benefits associated with a marketing project. Of course, this does not imply that capital budgeting methods are completely infallible.
So, there you have it, a list of some of the best practices in coming up with a sound marketing budget for healthcare companies. You can try any of these and see which one works best for your campaign. A good approach with be to start with capital budgeting then work off from there.