In today's competitive healthcare landscape, securing and effectively utilizing marketing budgets is crucial for success. However, traditional budgeting methods may not be sufficient today as the industry shifts from sales-heavy to marketing-focused strategies, and a plethora of data and analytics become available to help measure goal attainment.
I recently spoke with Scott Alexander from Jairus Marketing about smart budgeting in today’s healthcare industry. We talked about how today’s budgets are complex, data-driven decision-making processes compared to the arbitrary and unscientific budget exercises of the past. Winning the budgeting game in healthcare requires understanding regulatory concerns, operational considerations, and clinical/hospital systems as critical pieces of the value analysis equation.
This blog will explore key strategies for healthcare marketers to secure, justify, and maximize their budgets in an increasingly challenging environment.
Businesses seek to grow rapidly in any industry by investing heavily in sales and marketing. However, there is often a limited time horizon to achieve a return-on-investment (ROI). Common question: What’s an easy way to attain rapid growth? Common answer: Reduce expenses. Unfortunately, that means marketing is often (however counterintuitively) on the chopping block for growth-stage healthcare companies.
But why marketing? Most healthcare firms make significant investments in marketing and sales. Unfortunately, that’s a double-edged sword when rapid growth is a goal because of the desire to cut expenses to the bone while growing the business as quickly as possible. In short, marketing is an easy target. But is it an appropriate one?
Consider the analogy of a college sports team. The University of Georgia Bulldogs are largely considered a top-tier football team in the SEC, if not the country. Why? Because, arguably, they recruit better than most of their competitors. It’s similar on the marketing budget side – some healthcare companies are loaded with money and talent. And at times, that, unfortunately, becomes ripe for cutbacks when cash is limited. To keep the sports metaphor going, cutting marketing and sales in favor of fast growth is akin to teams that are said to be “rebuilding.” They are rarely competitive in the short term.
Winning the budgeting game requires understanding and responding to changes in an often unpredictable healthcare landscape. This includes recognizing that healthcare decision-making involves value analysis committees, and multiple stakeholders (clinical, financial, and operational) are involved in purchasing decisions. Successful healthcare marketing budgets should account for these new realities and relationships while focusing on reaching and influencing a broader range of decision-makers through various marketing channels rather than relying solely on traditional sales approaches.
Because conventional budgeting methods don’t easily fit within these new organizational paradigms, the old approach of allocating a fixed percentage of revenue (e.g., 10% or 4%) to marketing is no longer practical in today's healthcare landscape. CFOs and marketers must move beyond these arbitrary figures and adapt to the current market realities.
Effective budgeting today requires a highly strategic, data-driven approach that demonstrates clear ROI and aligns marketing efforts with overall business goals.
In part two of this blog, we will explore key strategies for healthcare marketers to secure, justify, and maximize their budgets in an increasingly challenging environment.