3 Good Reasons to Diversify Your Treatment Marketing Channels (And 2 Bad Ones)

As I wrote earlier this year, the websites of the marketing agencies that serve the treatment industry are replete with admonitions to "be  diversified".

When I entered the industry, I was surprised, because I'd noticed the marketing thinking in other sectors had moved on, to something more like what Peter Thiel says:

Since [business owners] don’t know what works, and haven’t thought about it, they try some sales, BD, advertising, and viral marketing — everything but the kitchen sink.
That is a really bad idea. It is very likely that one channel is optimal. Most businesses actually get zero distribution channels to work. Poor distribution — not product — is the number one cause of failure. If you can get even a single distribution channel to work, you have great business. If you try for several but don’t nail one, you’re finished. So it’s worth thinking really hard about finding the single best distribution channel.

Here's the basis of the theory:

Systems like traffic channels (various places you could spend your marketing dollars - or time - to acquire leads) often follow a Power Law, or Pareto Distribution, which means that a small percentage of the channels - 20% or fewer - account for the vast majority of the results - 80% or more.

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Since your marketing dollars (and employee or agency hours) are finite, it makes sense to spend the most resources on those channels most likely to move the needle, since every dollar spent on a channel with a known lower return is one that could have been spent on the best channel.

Say you know your cost per acquisition is $2500 with Adwords, but it's higher with radio ads, to the degree you can even track it.

All other things being equal, it would make sense to stop spending money on radio ads.

That's why I was doubly astonished by the aplomb with which agencies serving the treatment industry tout their "holistic approach[es]" to marketing, or their "five essential [marketing] strategies".

But there are intelligent exceptions to the "double down on just one marketing channel" rule. And knowing when it's best to focus on a single "needle mover", and when to keep multiple channels up-and-running, even if some are "back burnered" could spell the difference between growth and stagnation for your treatment center.

Intelligent Reason to Diversify Number One: Your Total Addressable Market is Too Small

Sometimes, even when you're getting bargain-basement acquisition costs and super well-qualified leads, you can just...run out of market.

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My favorite example is referrals. They're often completely free (though nurturing the relationships and building a sterling reputation to foster them require years, and diligence). And the quality of leads can be stellar.

So why not just double-down on referrals, and divest all your other channels? If you're anything like most center-owners I speak to, the volume of referrals is just too low and too inconsistent to support growth, so you'd likely consider another channel where the addressable market was larger.

To take another example, say a business is acquiring clients reliably, and profitably from something like Facebook ads, but they've scaled enough that they can afford to reach every potential client on facebook, and it's still not enough to support their growth goals. Then they would do well to consider an alternate channel, like traditional media, or Adwords.

Note the key phrase "they've scaled enough". Most of best businesses will diversify their marketing channels consecutively - as their growth moves them beyond the reach of one and makes them a better fit for another - not concurrently.

And most treatment centers adopting the "kitchen sink" approach - at least those I've seen - are far from saturating most of their marketing channels.

Intelligent Reason to Diversify Number Two: Your Best Channel is A Risky One

What if your "needle moving" marketing channel was search engine optimization, and it was 2012.

If you were anything like my friends who built businesses around gaming Google's algorithm to rank at the top-of-the-page for lucrative search queries, the Panda and Penguin algorithm updates would have wiped you off the map.

There's an intelligent argument to be made that a "risky" marketing channel needs backups. Here's what business coach Tim Conley had to say about it when I pinged him on Facebook:

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Social media platforms like Facebook, Pinterest, and even LinkedIN, are still prone to platform changes that can force business owners to rewrite business plans on-the-fly. (A colleague was recently almost wiped out by an arcane rules-change on LinkedIN.)

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Keeping a "back-up", like SEO or Adwords, in reserve, can save you time and keep you afloat if your LikedIN or Pinterest traffic goes-the-way-of-the-dodo.

Should you take that as carte blanche to fire up marketing channels 2, 3, and 4, and start diverting precious budget away from your "winner" to fund them, as Forbes contributor Mike Templeman seems to recommend

Not-so-fast.

For starters, not all marketing channels are equally risky. "Mature" traffic channels, like Adwords, or like SEO today (as opposed to in 2012), are well-past their "arbitrage" stage. Now, you've got to be good to break in. But so does your competition. And cost-per-click in Adwords, and good content in SEO, are relatively stable.

What's more, keeping a "back-up" does not mean you need 4 other marketing channels, and it also doesn't mean you can't shift most of your resources to the winner, as long as it's working.

Intelligent Reason to Diversify Number Three: You're Not Sure Yet* What's Working

"Sometimes you've gotta throw a lot against the wall and see what sticks", goes a popular adage.

That's no less true in treatment marketing.

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To determine a statistically significant acquisition cost for a marketing channel - controlling for things like seasonal effects, and depending on the amplitude of the difference - can take a lot of data.

And humans are legendarily bad at predicting marketing success. (Anybody remember New Coke? Or Bud Dry?)

Will Adwords be the needle-mover for you? Or maybe radio?

If you're still experimenting, and have the mechanisms in place to determine acquisition cost, but just don't have enough data, that's a good reason to try a few marketing channels in unison.

Here are two very bad reasons...

Dumb Reason to Diversify Number One: You Don't Know Your Acquisition Cost

If a traffic channel has a high acquisition cost relative to other ways you could spend your marketing dollars, that's a good reason to abandon it, and if it's risky, that's a good reason to "diversify".

But when I speak to many treatment providers, and ask if any one channel is working for them, the answer is often "I don't know."

One center was sinking high-four-figures-a-month into Adwords, but continuing to pay a lead broker, and continuing to pay for radio and TV.

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Was this because any of those channels was "risky", or because they'd "saturated the market", and needed to find the next channel to support growth? Nope. They simply didn't know what they were paying for a client from each channel.

Adwords might have been a winner, or it might have been loosing them thousands-a-month that they could have deployed somewhere else.

Here are the basics you need to know:

  1. How much do you have to spend on each channel in order to get a phone call, or a web form submission? That's your "cost per lead".
  2. What percentage of the leads from a particular channel convert into admits? That's your lead conversion rate. Divide the first by the second, and that's your "cost per admit".

Attribution is easy with some channels - like any paid online ad service - and more difficult in others, like traditional media or SEO.

Bottom line: don't pay for a marketing channel if you don't have a system to determine acquisition cost. Know in advance how long it typically takes to get good data - in Adwords, that's around 3 months for the treatment industry, don't jump in unless you have the budget and discipline to "hang fire" until that time has elapsed, and once you're in, don't quit until that time is up and you'e calculated an acquisition cost.

The worst strategic time to quit a marketing channel is exactly when every instinct will be screaming at you to quit: after you've already spent money, but before you've had long enough to determine if it's working.

Dumb Reason to Diversify Number Two: Just Because Somebody Tells You To

If you're still reading, you'll probably treat-with-increased-skepticism any future claims by this-or-that marketing agency that "you need a diversified marketing strategy", let alone that any predetermined "five essential marketing channels" just-so-happen to be the specific channels right for your center, with your budget, in your market.

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Other marketers have philosophies different from mine, and many genuinely believe that "diversified is best" (though I've made it something of a quest to ferret-out intelligent diversification rationales, that apply to the treatment industry*, that aren't captured by my 3 good reasons, and I've yet to find any).

What's more, you probably can't go wrong with a well-built, SEO-optimized website, some kind of content strategy, and some kind of paid traffic strategy. And most of the agencies I've spoken to in the space are good at what they do.

There are a few other incentives you should know about, however:

  • The more marketing channels a marketing agency can manage for you, the more they can charge you.
  • It's much easier to build a scalable marketing agency around a fixed package of marketing channels than by determining the best fit for every individual client.

That's why we at Admit Scout decided to specialize in just one: PPC, or pay-per-click.

Bottom line, don't take any marketing agency's word for it. Have an idea of the risk of every channel, know what it will take to determine an acquisition cost, and decide accordingly.

Ready to see if your center might be a good fit for what we do? To get a complimentary evaluation and strategy, just click here.