Here's a crazy idea: Stop advertising so you can give away veterinary care

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(Editor's note: Fetch dvm360 speaker and dvm360.com contributor Bash Halow pitched us this somewhat imaginary interaction with a real-ish veterinary practice owner with some very real advice from a smart Canadian economist. We accepted it. Enjoy.)

Hi, dvm360! It's Bash. I hate to bother you, but I've gotten myself into a shouting match with a veterinarian, and I'm hoping you can get a fancy Canadian economist on the line to tell the doctor that I'm right and she's wrong.

Her name is Dr. Claudine Pickle (not really), and she owns Kaiserville Veterinary Clinic, a practice with annual gross revenue of $3.1 million.

Dr. Pickle spends $13,000 a year on advertising. When I ask her where all that money goes, she puts down her half-eaten PB&J sandwich on an exam table and makes some whirling gestures with her hand in the air: “Oh, I don't know,” she says wearily. “The high school hits me up to buy the back page cover of their sports program. I need to spend something on Yelp and on Google Ads. Don't ask me what it's for-I don't know. Can you let me eat in peace? You were cute in that conference lecture, but one on one, you're exhausting.”

Well, I went digging. The practice has been terrible in tracking how clients find them, and while the Google ad is showing some clicks, it turns out many of the calls that come from the ad are from existing clients inquiring about the practice's hours or address.

After Dr. Pickle swallows her last bite of sandwich, I hit her up before she can sneak away.

“Look, I've done some investigating,” I say. “I don't think your advertising dollars are working to bring in new clients, and I have an idea on how you can improve.”

“Wonderful,” she says, digging some bread out of her teeth. “Can't wait to hear it.”

Undeterred by her eye-rolling tone, I run my thoughts past her: “Since we're already budgeting $13,000 for advertising that doesn't appear to be working, what if we use it as credit for hard-up clients who are experiencing a pet emergency but who are low on funds instead? Not everyone will default-and actually when you think about it, the cost of the default to the practice is actually much less than the amount of credit you extend. Plus, the goodwill you buy from grateful clients who pay their bill in full, the reviews they'll put online, and the word-of-mouth your kindness will generate will make the investment worthwhile.”

Dr. Pickle pops two aspirin and polishes off what's left in her Diet Coke can. After a beat or two, she says flatly, “And you get paid for this kind of advice, huh?”

Hey, dvm360 team, please help me get an economist on the line and see if he'll tell her I'm right.

Darren Osborne, director of economic research for the Ontario Veterinary Medical Association, responds

In my experience, most advertising does not pay. Google ads work in the right place, but if you're up against corporate practices or anyone with any kind of internet savvy, you'll fail. According to my data, most new clients come from word-of-mouth referrals.

But let's assume the $13,000 is misspent, and we can allocate $13,000 to a program that will improve the practice.

The idea of offering credit is one option to grow the practice. By extending credit to clients who need it, you can grow the practice by doing procedures you otherwise would not be doing, and you'll get referrals from new clients who tell everyone their story.

Financially, I don't think you'll lose. In general practice, emergency work is “found” money, and most of the revenue goes to net. Let's consider this thought experiment:

• $1,000 fee charged to client for the procedure
• $230 production-based pay to the veterinarian
• $180 cost of drugs and supplies
• I won't consider other costs (salaries, heating, rent, equipment rental, etc.), which are already sunk.

That leaves $590 net.

So, let's start with that $13,000 cushion when there's a default. To be fair, we should top up the fund with all the “found money” from procedures where the clients pay a bill in full. If the client pays the $1,000 bill, put $590 back into the $13,000 fund or, to keep things simple, let's just put half of the bill in.

Even if every other client defaults, you'll still make money and the fund will grow.

But this is financial theory and probably a nonstarter for most veterinary practice owners. If you do get a lot of defaulters, most practice owners will freak out and pull the plug on the program. Management might also question how effective referrals are from pet owners who can't afford emergency care.

I know you didn't ask for alternatives, but what if you spend the $13,000 to improve your customer service instead? As I said at the outset, the No. 1 way that clients find out about veterinary hospitals is by positive word-of-mouth. If your whole team can improve the client experience, the clients on the receiving end of that care will surely share their service story with other pet owners they know and you'll draw more people into your place for care.

Bash Halow, LVT, CVPM, is a practice consultant and owner of Halow Consulting. (Editor's note: Yes, he comes up with this stuff off the top of his head.)