Building and Sustaining a Referral Network
The recent recession has significantly affected dentistry. As a result of the economic downturn, what the author calls eight “permanent game changers” are creating a new level of competition in the dental profession. These game changers are:
The Great Recession and uninspiring recovery
1. Changes in consumer purchasing habits
2. Opening of new dental schools
3. Decrease in insurance reimbursements
4. Expansion of dental service organizations
5. Higher dental school student loan debt
6. Fewer associateship opportunities for new dentists
7. Dentists practicing 8 to 10 years longer
These game changers have made practice ownership extremely challenging for dentists, many of whom have never received training in business management, leadership, or marketing. Although most practices performed quite well until recent years, it is important to acknowledge that the primary factor for practice success was not necessarily the dentist’s business expertise but simple supply and demand. There were enough new and returning patients for practices to generate sufficient growth, enabling doctor owners to enjoy a comfortable lifestyle. This has changed since the onset of the recent recession, along with the other game changers. According to the Levin Group Data Center™ (which houses proprietary data collected annually from thousands of dental practices, including clients and other dentists worldwide), 75% of all dental practices have experienced declines since the beginning of the recession.
A New Dental Economy
There exist two separate economies: the overall US economy and the dental economy. The US economy is slowly bouncing back from a devastating real estate recession, which historically is a 10-year process. With the so-called Great Recession starting in 2007, a full recovery may still be at least another 4 years away. Unfortunately, a growing, healthy US economy alone will not automatically reverse the production plateaus and declines experienced by a vast majority of dental and specialty practices. The dental economy is undergoing seismic changes, which have resulted in an era of increased competition.
To increase production in today’s economy, both general and specialty practices need to implement a structured marketing program that generates more referrals from current referral sources and expands the number of referrers. Offsetting declines caused by the recession and other game changers requires practices to increase the number of new patients. A structured marketing program is an ideal way to achieve this goal.
For general practices, the marketing program must focus on motivating 40% to 60% of patients to refer one new patient every year. For specialty practices, marketing must concentrate on motivating general dentists and other doctors to refer patients for specialty treatment. It should be noted that the marketing programs of some specialists, such as orthodontists, would include both approaches.
Whether a referral network consists of patients, parents of patients, and/or other doctors, the key is to establish, maintain, and strengthen relationships with current referrers and potential referral sources.
Relationship Marketing
The ability to develop strong, long-term referral relationships is the hallmark of an outstanding practice. At a time when three out of four practices are grappling with decreased production, a practice with a solid referral network has the resources to continue growing, even in the midst of a weak economy. The following seven factors enable practices to build an effective referral network:
1. It Starts with Patient Satisfaction
Only by providing a great experience for customers—patients, doctors and their teams, and the community—will these individuals reciprocate by recommending a practice. If the customer service is mediocre, patients are not likely to refer friends and family. And referring doctors will probably think twice before sending patients to such a practice. By training the team to exceed expectations during interactions with patients and referring doctors, practices put themselves in the best position to maintain and strengthen referral relationships.
2. Exceptional Clinical Care Is a Must
The vast majority of dentists and specialists are excellent clinicians. That said, in today’s connected world, one unhappy patient can amplify his or her dissatisfaction throughout the social media landscape. If a problem occurs or a patient perceives that a problem occurred, the practice must work to resolve the situation immediately. There should be systems in place to follow-up with patients after treatment has been performed. The doctor should call patients the evening after treatment to see how they are doing. Patients greatly appreciate this kind of follow-up. If there is a complication at this point, the doctor is then aware of it and can respond appropriately.
3. Make Your Practice Invaluable
Referral sources—whether patients or doctors—must perceive value in the relationship. If the value is perceived as minimal, referrals will slow down or stop altogether. Value is created by providing exceptional clinical care and customer service, communicating on a regular basis, and always looking for ways to enhance the relationship.
4. Stay in Contact
Referral relationships are not built and maintained in a vacuum. They require frequent, relevant communication to grow and develop. A monthly practice e-newsletter is one way to effectively communicate with patients. In addition, Facebook and other social media, when used consistently and appropriately, are excellent tools for staying in touch with patients between appointments. Specialists should meet with referring doctors at least once a quarter. Face-to-face communication, even if it’s a short meeting, fosters a sense of teamwork and collaboration.
5. Make It Personal
Practices should try to learn as much as possible about referrers and potential referrers, whether they are patients, doctors, or both. Doctors should identify points of commonalty, such as similar hobbies or interests. By broadening the conversation, clinicians can move the relationship from merely professional into the realm of personal and professional. They can ask patients about children, jobs, interests, and community involvement.
6. Thank Referrers
Referral sources that have recommended the practice should be thanked. This can be done by phone, a handwritten note, or in person, but it is important to always remember to thank referrers for their support. When referrers feel appreciated, they will continue to refer.
7. Expand the Circle
Over the course of a career, dentists will naturally lose referral sources to forces beyond their control, such as retirement or relocation. It’s always a good idea for practitioners to reach out to potential referring doctors by letting them know about their practice, inviting them to an educational seminar, or offering to collaborate on a difficult case. Practices that depend on referrals from patients should always be looking for ways to motivate other patients to refer friends and family. Offices that focus on growing their referral network are in the best position to succeed now and in the future.
Conclusion
Every practice depends on referrals. By building and sustaining a strong and vibrant referral network, general and specialty practices can neutralize the eight “permanent game changers” and thrive in the new dental economy.
ABOUT THE AUTHOR
Roger P. Levin, DDS
Chief Executive Officer, Levin Group, Owings Mills, Maryland
To learn how to run a more profitable, efficient, and satisfying practice, visit the Levin Group Resource Center at www.levingroup.com—a free online resource with tips, videos, and other valuable information. You can also connect with Levin Group on Facebook and Twitter (@Levin_Group) to learn strategies and share ideas.
