Wasting Money on Marketing Incentives

My boss gives away a LOT of free incentives to people we KNOW will not become clients. Help!

Signed:  Office manager for a mid-sized professional office. (Code: CAoffice)

Our Response:

Your boss may not know how much his/her largesse is costing.  And on the other hand you may not know what he/she is thinking about marketing.

The purpose of free incentives is to build good-will to attract new clients and retain existing ones.  It is often possible to build good-will in a community to attract clients indirectly through word of mouth from people who are not clients themselves.  If you are paying for the incentives, be careful with the budget.  If the Dr. is giving away services there may be no out of pocket cost so the incentive is essentially free (if there are no material and supply costs). This would be true if your office has set hours and you have available appointment time to give away.  If you have too much unused time that might indicate a need for more effective marketing and/or fewer office hours to manage costs.

You didn't say if the free incentives were promotional items that you buy or if they are services.  The answer is a bit different for bought items and services.

In either case, incentives should be clearly described as a part of a well defined and written marketing plan.  Such a plan would identify target markets and target customers while describing the services to be sold to each.  The promotional part of that plan would include advertising (radio, TV, yellow pages, print, etc.), print handouts, and free incentives (promotional materials and services).  Every line item should have a budget and a target for business development.  Identify where every new client came from to calculate the cost effectiveness of your marketing plan.

Plan your sales and marketing incentives with this simple five step process:

1. Identify your sales goal with as much specificity as possible including demographics

2. Create a flow diagram of the sales process that you want to influence

3. Select a target client at a specific step in the sales process and match several potential incentives that link the two

4. Test several incentives and measure the impact

5. Measure the return on investment over time - and make adjustments

The pharmaceutical industry has been following a process similar to this for many years and have found that a $1 pen often outperforms an incentive that costs far more.  They found that doctors and nurses were far more likely to use the inexpensive pen in the normal course of business and were therefore reminded of the product.  Really expensive pen sets ended up someplace safe and out of site and mind.

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