A Sad Tale Of 2 Veterinary Practices

One of the perks of my job as editor of PetPro News, a newsletter for veterinarians and pet professionals, is being able to speak with practice owners and find out how things are faring in their area of the country.

A few days ago I had one such conversation with a vet who practices in a highly competitive market and what she told me was a perfect case study of what NOT to do during an economic downturn.

Here's her story:

This veterinary professional moved to her area about 2 years ago coming into an under-performing practice and being given the job of making the practice profitable.

After some hard work and an effective marketing campaign, the practice began to make some decent money, with good growth in numbers despite a worsening economy.

Things continued in this way until one day, out of the blue, the practice owner showed up and announced he was cutting everyone's hours and cutting back on all expenses including the practice's marketing budget.

Prior to this time he'd been living a practice owner's dream. His activities kept him away from the practice most of the time and included frequent golf dates, business lunches and time spent managing his other business investments. He rarely showed up at the practice because it was running very well without him.

When he abruptly returned, the vet told me she's guessing it was because his investment portfolio took a big hit and he panicked, grabbing onto the one thing that was continuing to make money.

With his return he began cutting back on everything including his staff, his supplies and his marketing.

The result? His business declined by a big percentage (and I'm pretty sure he'll blame the economy for his falling sales).

With less hours scheduled for his staff this vet was forced to take part-time work at another clinic nearby, working a few hours each day at each clinic.

As the economic news continued to get gloomier and gloomier, this 2nd practice owner repeated the actions of the first practice owner, letting go several of his staff, cutting back on marketing and supplies.

And his results?

Similar to the first, only worse.

We are obviously going to be going through this downturn for the foreseeable future. Here are some things you need to think about during this time.

*Is your marketing budget an expense or an investment?

If you view your marketing budget as an expense, then it's something to cut when budgets get reduced.

You should view your marketing budget as an investment and you should plan to invest it wisely. Wise investments will help you survive and even thrive during a struggling economy.

*Do you need to change how you advertise in a bad economy?

It depends on the type of advertising and the advertising message you are currently employing, but the answer is probably yes.

During tough economic times, pet owners become more focused on quality and value when choosing where and how to spend their money for their pet's health needs. Make sure the messages coming from your practice stress these values and how preventative care can save in future vet visits.

If your marketing message is not focused on these things, you may want to change the emphasis of your ads.

*What IS the effect of cutting back on marketing and advertising in a bad economy? (As if the opening story is not proof enough, here are two studies on the subject):

In an interesting study of U.S. recessions, McGraw-Hill Research analyzed 600 companies from 1980-1985. The results showed that companies that maintained or increased their advertising expenditures during the 1981-1982 recession averaged significantly higher sales growth, both during the recession and for the three years following, than those that cut or eliminated advertising.

By 1985, sales of companies that were aggressive recession advertisers had risen 256% over those that didn't keep up their advertising.

Additionally, a series of six studies conducted by the research firm of Meldrum & Fewsmith showed conclusively that advertising aggressively during recessions not only increases sales but increases profits.

This is a fact for all post-WWII recessions studied by The American Business Press starting in 1949.

*Are there ways to increase advertising reach without increasing the marketing budget?

Pet owners are turning in ever-increasing numbers to the internet and email as their means of researching information and consuming it too.

Implementing a well rounded marketing campaign that includes direct mail, print advertising as well as online marketing extends a practices ability to reach new customers and stay in contact with existing pet owners can be done without increasing the budget.

And there's an ironic twist to the ending to "The Sad Tale of 2 Veterinary Practices that chose to cut their marketing and staff". The veterinarian who was let go from the second practice is now in negotiations with the owner to purchase it, and for a song as compared to what it would have been worth had the owner simply marketed.

In conclusion, in a down economy, the wrong thing to do is to cut your marketing back. The right thing to do is to maintain or increase your marketing wisely and enjoy a competitive edge over those who don't.