ALAN BERNSTEIN : The Professionals’ Salesman : His Pitch: Teaching Doctors and Lawyers Their Business
While doctors, lawyers and other professionals are highly educated, most are greenhorns when it comes to knowing how to promote their businesses.
There was once a time when professionals didn’t need to know the fine arts of marketing and advertising. State laws and the rules of professional associations prohibited many from selling themselves.
But that all changed in 1977 when the U.S. Supreme Court ruled that neither states nor professional associations may legally prevent professionals from advertising. A new, more competitive era had dawned, and Costa Mesa businessman Alan Bernstein stepped in to help.
In 1979 he left his position as director of marketing for the American Heart Assn. in Los Angeles to co-found the Practice Builder. With Paul Brosche, former vice president of marketing for Bekins, he launched a pioneering effort to teach marketing strategy to professionals.
Bernstein’s firm includes an advertising agency with a client list of 400 practices and a monthly newsletter with 10,000 subscribers, who also receive free marketing advice over a telephone hot line. The company, which employs 30 people, also conducts about 22 marketing workshops a year for professionals nationwide.
In a recent interview with Times Staff Writer Leslie Berkman, Bernstein said professionals should carefully choose where they open new practices and advised that they set goals for the growth of their practices and allocate marketing budgets sufficient to achieve them.
Q. How did you get into the business of teaching doctors, lawyers and other professionals how to sell their services?
A. While I was director of marketing for the American Heart Assn. in Los Angeles, a friend of mine who taught in the business school at Pepperdine came to me and said he had a Long Beach dentist in his management class who kept asking questions about marketing. He said perhaps I could sit down and talk with him. So I did and one thing led to another and I took him on as an after-hours client.
Q. What did you advise him to do?
A. I didn’t suggest that he do anything fancy. Just some basic things like asking patients to refer other people to him if they felt good about his treatment. And he started communicating regularly with his patients through direct mail to remind them about checkups and to tell them about new developments in dentistry. He also started advertising in the newspaper and using coupon advertising through the mail.
In 18 months we took his practice from a $250,000-a-year business to an $850,000-a-year business. This was easy and I thought if I could do it for one dentist, I could probably do it for 50. So I left the heart association and opened a consulting group in Newport Beach. And we must have been doing something right, because within six months we had over 100 clients.
Q. Is direct mail to clients and patients an important marketing tool for professionals?
A. Yes. We call it internal prospecting. We generally advise that four times a year professionals should send mailings to existing clients and patients to encourage repeat business.
Q. What is the content of the mailings?
A. In the case of a dentist, he could talk about new developments in cosmetic dentistry such as new whitening agents for teeth. You might want patients to know that you are introducing orthodontics into a practice, which is something that a lot of general dentists are doing. And there is a new emphasis on prevention of gum disease.
Q. Is the purpose to let patients know that their dentist is up to date?
A. That’s one of the very specific purposes. And secondly to tell people why he is doing these things. To convey the message that he is caring. Also, it gives the professional another opportunity to ask for more referrals.
We also have a strategy to prod patients who haven’t come in a long time for checkups. We use direct mail, followed 30 days later by a telephone call if there is no response. Some people don’t go to the dentist or optometrist regularly simply because nothing hurts. So we tell people the consequences. For instance, that if you are over 40 and don’t have an eye exam on a yearly basis you could develop glaucoma, which is asymptomatic and basically irreversible.
Q. Beyond the relaxing of restrictions on advertising, are there other reasons why today’s professionals need marketing skills more than they did 10 or 15 years ago?
A. Yes. The competitive pressures are greater today than ever before for a professional. More graduates are coming out of professional schools and practitioners are practicing longer. Basically, supply is out of kilter with demand.
Q. Is the competition greater in Southern California than elsewhere?
A. My dad who is a retired dentist likes to say that the plate upon which the continental United States sits has shifted and the East Coast rose and the West Coast dipped and all the professionals rolled to within a mile of the beach.
But recently the continental plate rose again on the West Coast and a bunch of professionals rolled back to the Midwest. So now you can go to the wheat fields of Kansas and find an overabundance of practitioners. Graduates of professional schools are beginning to spread out and so it is not uncommon now to find a lot of competition these days even in small towns.
We tell clients to look for markets that are less competitive because they can be more lucrative. For example, a young orthopedic surgeon decided that the Fresno market was too crowded so he went to practice among agricultural workers in the Central Valley. After three years, he has nine offices and grosses $3.3 million a year. I’d say he’s doing fairly well.
Q. Why do professionals continue to open practices where the competition is stiffest?
A. Oftentimes location decisions are not made with any kind of business analysis. When someone decides to open a practice, really what he should do is get a feel of the professional-to-population ratio for the area to see if it can support his practice.
Q. It seems that professionals usually want to open offices in wealthy places like Newport Beach and Beverly Hills.
A. They tend to go to wealthier areas because it reflects who they are. They tend to be upper middle class in their values and they tend to like to associate with other people who are upper middle class in values.
However, if you talk to practitioners who are located in blue-collar areas, they tend to report greater levels of satisfaction with their practices. Patients and clients in blue-collar areas are easier to deal with. Receivables are less of a problem because you have more prompt payment and fewer bounced checks. Also, professionals are not challenged as much about what they prescribe in working-class communities. They are put up on a pedestal more.
Q. Do you ever suggest that professionals compete on the basis of price?
A. Not normally. The reason is if you are going to be a bare-bones operation with lower prices overall, you have to be an extremely good manager because you are dealing with high volume and very thin profit margins. Poor service to one patient or client can erode a profit margin on a dozen patients or clients. So it doesn’t make sense for most practitioners who have no background in good management to try to compete in that arena.
Q. Should professionals occasionally advertise discounts of their services?
A. What we have found is that if you simply promote a discount, you do yourself a disservice. Over time the only thing the public tends to know about you is you’re the deal guy. The allure of it is that it does produce immediate cash flow. But it harms your image in the long run.
It makes a lot more sense to promote the non-monetary reasons to come to a practitioner. To talk about whether he or she has extended hours or has special expertise in a particular kind of technique or caters more to families or business people or has in-house financing. But you can also give the reader or viewer of the advertising a low-risk way to try a bite-size piece of service.
Q. Do you mean a free evaluation or consultation for first-time patients or clients?
A. Yes. For instance, psychotherapists and marriage and child counselors often will not charge during the first visit, because you want to get to know each other to see if the chemistry is right. They don’t often promote this, although I’d say the vast majority offer this kind of option. All you have to do is ask for it.
Q. How much money should the average doctor spend on advertising and promotion?
A. They’ve got very poor rules of thumb, which are often set by their accountants. Accountants will tell them to spend anywhere from 2% to 4% of their gross collections on promotion.
But this is a very poor guideline. The amount spent on promotion should depend on the goal for growth that the doctor has set for his practice. Also we want to know what his current trend line is--”is business increasing or decreasing?” Then we tell him the budget needed to get to that goal. The people we are working with spend up to 20% of their gross on promotion.
Q. I guess that promotion is not as accepted by professionals as it is by the retail industry?
A. Not nearly. But the promotion budgets of the professionals we deal with have been growing quite dramatically over the years. The key is that we track everything we do so that our clients know what works and what doesn’t. Like any smart people, they want to go ahead and grow more. And they have developed trust in us, so their budgets increase.
It is a lot nicer and a lot safer in many respects for a professional to invest in his own business than to invest in something he can’t control, like the stock market for instance. They are plowing back profits into their businesses and borrowing, sometimes taking second mortgages on their houses, to promote their practices.
Q. If the public responds to an ad, what will assure repeat business? Doesn’t it depend a lot on how the professional treats his patients or clients?
A. We can’t teach them that. People are intrinsically nice or they’re not. They are intrinsically happy or not. There are all kinds of small personality variables which make people likeable or not.
Q. But isn’t personality important to the success of a professional?
A. It’s almost everything. People cannot differentiate the quality of a practitioner. They read the bedside or chair-side manner as quality. We can bring people into an office; we can’t keep them there.
Q. What is the toughest market for professionals to promote themselves?
A. The toughest market tends to be right in the middle of big cities. The reason is that if you are looking for greater expansion and you have to advertise externally there are really very few affordable media alternatives. Television and newspaper advertising is too expensive and covers too much territory. So you go to direct mail. But direct mail is oftentimes also a very expensive kind of medium. Generally you can’t do it for less than 40 cents a household.
By contrast, in Midland or Odessa, Tex., you could buy the whole radio market for less than one ad in the L.A. Times. We bought inexpensive television advertising there for a dental client and, bam, his practice went from zero to a million bucks in one year.
Q. Physicians complain that the reimbursements from Medi-Cal are insufficient. So do you have physicians coming to you to ask how they can attract more private paying patients to their practices?
A. Yes.
Q. What can you do for them?
A. If you want to change to a suit-and-tie clientele from a Medi-Cal type of practice, you are probably going to have to open up a whole new office.
Q. Do you mean that in some cases the doctors have actually had to close an office and open someplace else to change their image?
A. Well, usually what happens is they don’t close the office. They open a second one in a higher-rent district where they are able to draw a more affluent clientele.
Q. Can a doctor or dentist attract a better-heeled clientele by refurbishing his waiting room?
A. Sometimes. But you have to be careful. I know a dentist near Leisure World in Laguna Hills who put a lot of expensive-looking antiques in his waiting room. He thought his patients would enjoy it. But he found a lot of people started going to other dentists. They thought the place looked too expensive and that he must be charging too much.
Q. So what did he do? Take all the antiques out?
A. Yes. You really have to be in tune with your primary market. You have to think the way they think. You have to understand their feelings and the way they look at the world. If you do that, you will always be successful, at least from a marketing point of view.
