File Cabinet Millionaires

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Posted by Rich Harshaw on February 21, 2014.

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Post Category: Outside The Lines.

Topics: Sales.

There Is A Ton Of Cash Sitting In You File Cabinet Just Waiting To Be Liberated.

There Is A Ton Of Cash Sitting In Your File Cabinet Just Waiting To Be Liberated.

Dentists Are Notoriously Lousy Salespeople.
If A Patient Doesn’t Come Back For Additional Treatment,
They Don’t Do Anything. Unfortunately, You Don’t Either.

Written by Rich Harshaw

Note: This article is part of Monopolize Your Marketplace’s ongoing “Outside The Box” series, which feature ideas, strategies, and case studies from OUTSIDE the remodeling industry, with suggestions of how to implement those ideas into your business and contractor marketing.

Dentists are notoriously lousy marketers, which probably explains why we get so many of them calling us looking for help. Understandably, they’re always anxious to find as many new patients as possible. After all, the more new butts in the proverbial seat means more teeth to fix and more money to make.

But new patient generation isn’t where the real money is in dental marketing—it’s in their file cabinets.

I asked a good friend of mine who owns six dental practices in Dallas—he’s NOT a lousy marketer—how many dollars in “unfinished treatment plans” they had on their books. Unfinished treatment plans are simply patients who have been told they need a crown, for instance, but haven’t bothered to come back in to actually get the work done. He told me he knew the dollar figure was significant, but he wasn’t prepared for what he found when he researched the actual amount: $1,700,000.

ONE POINT STINKING SEVEN MILLION DOLLARS! And that was just ONE of his SIX practices!

So let’s break down the numbers: Assume that 20% of the outstanding treatment plans will be completed over time just due to people finally coming in to get it done. Also assume that 30% of the patients will never complete their treatment plans because, well, they just won’t. That leaves 50% that we might have a shot at IF we employ the right marketing strategy. That’s still $850,000 in business just waiting to be liberated.

So Mr. Dentist, Sir… here’s the magic question: How much money are you willing to spend on marketing to get that $850,000? Most dentists won’t and don’t spend any (unless you count the flimsy, semi-occasional phone calling done by Linda in hope that people will come back) and accrue a massive book of unsold business. I dub these dentists File Cabinet Millionaires.

I asked my friend how many patients the $1.7 million represented. At an average of $1,600 per unfinished treatment plans, there were right around 1,050 patients in that file cabinet. My proposal? Send each of them an oversized 6” x 11” postcard, ONCE A WEEK FOR THE REST OF FOREVER until they finally came in. At roughly 50 cents per delivered postcard, we’re talking about $525 a week, $2,100 a month, and approximately $50,000 for a year—remember, to send to 1,050 patients.

A few of the postcards we came up with (a total of 16) are shown below. Notice how they focus on the reasons people DON’T come back in, and notice how they appeal chiefly to women—who make most dental decisions.

Is it worth $50,000 to gain $850,000 in sales? Uh, yea.

What about your business? Let’s say you sell replacement windows, and your sales team’s closing ratio is 30%, and the average sale is $6,000. If you generate 100 home improvement leads a month, that means you close 30 sales… but more importantly you DON’T CLOSE 70% of your sales!

Before you dismiss the 70% of non-closed business as broke losers, consider that the number one reason people don’t buy at the first sales meeting is that you’re asking them for a lot more money than they were expecting to pay! They can afford it, but your higher-than-expected (but worth it) price caught them off guard, and they stall while they think about it or save up their money.

So your job is then to continue to pummel them with marketing messages, just like the dentist. You can send email—and I recommend it—but don’t neglect to send plain old-fashioned snail mail postcards, too.

Now run the numbers:

70 unclosed contractor leads x 12 months = 840 unclosed contractor leads per year.
Assume 10% of them will close with the proper follow-up system in place. That’s 84 customers.
84 customers x $6,000 in sales = $504,000.
Spend 10% of the anticipated revenue on marketing = $50,400.
Let’s spread that budget out over 2 years, instead of one = $2,100 per month marketing budget.
$2,100 a month buys you 4,200 postcards a month at 50 cents each.
With 850 prospects, that’s 5 postcards a MONTH FOR TWO YEARS you can afford to spend.

Continue to run this system year after year and before you know it, you’ll be a REAL millionaire, not just a file cabinet millionaire.

Is it just that simple?

Yes.