The three main areas of any business are finance, marketing and operations. They either work together synergistically for success and profitability – or they do not! After working with thousands of elective medical practices, as well as owning and operating my own medspa, I have identified five key initiatives for building a successful medspa in today’s environment.
Clear and Measurable and Revenue Goals
If you feel uncomfortable with the financial analysis side of your business, you are not alone. But knowledge is power and creating clear sales goals while measuring performance will build collaboration among your team members and within your practice.
The goal is to set revenue projections based on assessing a profitable mix and volume of services.
First, identify and list your profit centers. Take time to review industry statistics. Societies such as the American Society of Plastic Surgeons (ASPS) offer trend reports that can help you select a winning combination of services and treatment options. In short, do your research. Review Real Self Worth It ratings, study findings and try products or devices before you buy.
Organize services within each profit center by the category, service name or condition. For example, labels, such as neurotoxins, fillers, IPL, laser hair removal, face surgical, body surgical, and retail. The narrower your categories, the easier it is to make actionable decisions to analyze performance, correct profitability and negotiate vendor terms and pricing.
Next determine your average price per appointment type by preparing a full pricing matrix for all services, treatments and packages you will offer. After setting monthly sales goals, calculate how may appointments by type you need to do per month and per week to achieve the financial sales goals you are setting. Then assess your calculations. Do they seem reasonable based upon your marketing budget and your staffing or facility capacity constraints?
For now, let us assume you need ten appointments per week for the first month. The suggested growth per month will depend on your marketing budget, other Key Performance Indicators (KPIs) and industry benchmarks.
Annual Marketing Plan Focused on Net Profitability
Of all the systems and processes that can help your practice grow to the next level, the most impactful strategy to market and grow your business is to implement an annual marketing plan (AMP). A solid AMP helps you increase revenue, decrease impulsive marketing spending, direct patients into new services, maintain your bottom line, smooth out cash flow, and create high surges of revenue through quarterly sales events. Without the AMP in place, the result is often stagnation, confusion and the need to discount.
The four essential elements of an AMP are:
- Monthly cross-promotions
- Social media editorial calendar, contests and consistent posting
- E-mail marketing
- Quarterly sales events
Your AMP should be tied to your revenue goals. Your financial analysis identifies profitable areas, and your AMP should focus on driving those categories. By strategically narrowing your marketing focus and strengthening the cohesion and layering of your overall message, you will reach new clients and increase conversion and closing ratios of existing and new patients thereby increasing profitability and organization.
The foundation for your medspa marketing includes your website, social platforms, emailing regularly, referral systems, loyalty or rewards programs, upselling strategies and online lead generation systems. Your website’s job is to attract clients, inform current patients about existing promotions and create incoming new patient leads.
Leads can come via e-mail, opt-in on an advertisement, incoming calls, website chat, newsletter opt-ins, gift certificate contests and online bookings. Regardless of where they original from, the goal remains the same: Sales.
Your website is often your first impression, so strive to create a user-friendly professional look that’s responsive. Websites have all but replaced traditional methods of marketing in the elective medical industry, so ensure that your website is designed for conversion as its top priority.
Your AMP is the planning element or “glue” that holds all of this together. By planning out the year, or at the very least a quarter of the year, you will be more effective at selling and promoting the selected services to drive business growth.
On-Going Staff Sales & Customer Service Training
“Although your customers won’t love you if you give bad service, your competitors will.”
This quote from Kate Zabriskie, founder of Business Training Works, is especially accurate for elective medical practices. In our industry, the receptionist’s performance can account for up to 25% of the practice revenue, and, “70% of the customer’s [buying] journey is dictated by how the customer feels they are being treated.”1 Notably, “78% of consumers have bailed on a purchase that they intended to make because of poor customer service.”1
Your entire business relies on converting leads or inquiries, providing a high closing consultation and inspiring patients to try new services. If you lack suitable receptionist protocols and staffing, you risk losing thousands of dollars in valuable leads every single day.
Establish a consultation format and script that allows at least 45 minutes for new patients. Set up quarterly continuing education sales and consultation training for staff. Set clear goals and measure results monthly. Tie performance to team bonus or incentive structures that occur monthly if possible. And remember, sales and customer service training is a recurring exercise.
Creating a Positive and Motivating Company Culture
Company culture and leadership can impact your numbers more than anything else. Payroll is one of your most significant expenses. Meanwhile, your staffing directly impacts revenue from marketing, lead conversion, customer service, treatment satisfaction, facility condition, client retention rate, staff turnover and your mental health. Create clarity and leadership for your team by defining a corporate vision and mission, job descriptions and compensation plans with reward systems.
Forming your dream team begins with choosing the right people. Getting it wrong can cause extensive damage to your company culture, impacting morale and productivity. Keep in mind that in this industry you do not have to hire full-time and full-benefit staff members for all positions.
Offer a bonus to any staff member who refers a candidate who is hired by you and makes it past the 90-day trial period. The leadership of your team begins right at the start of the hiring process. You can demonstrate leadership by providing a clear structure for the journey and making it somewhat challenging to join your team.
Right from day one, move quickly and keep the pace fast. You cannot speed things up later if you start slow. Performance meetings and coaching sessions should be short and structured.
Employee turnover is costly and impacts overall morale. Companies without a standardized interviewing process in place are five times more likely to make a bad hire. Aim to hire slow and fire fast. Create a climate of open communication, so problems are immediately solved. One bad apple can spoil the batch.
Tracking Key Indicators and Taking Action to Fix Them
I suggest setting monthly goals, but measuring progress weekly, thus giving you and the team time to be proactive and catch up if necessary, rather than waiting to review progress until the profit and loss are ready when the month is already over.
Review expenses and margins monthly. It takes longer to see the improvements on the expense side compared to improvements in sales, so plan to review results of corrections to expenses and margins quarterly.
Necessary expenses to track include marketing, payroll, cost of goods (injectables, retail, disposables), owner draw and net income percentages. Just as you can bonus for sales, you can also incentivize your manager to lower margins and tie a bonus structure to that explicitly.
Other Key Performance Indicators to track monthly are: Number of leads, total consults done, closing ratio, average sales per client, number of appointments, cost per lead and ROI per marketing vendor or budget.
Once you have 90 days of data, you can begin making modifications as needed to correct your course. Break down the desired number of leads per month necessary to make sales goals, and conversion or closing ratios required to maintain your revenue goals as well.
Defining, tracking and correcting performance by the numbers is the most often missed piece of the puzzle. And tracked numbers typically improve.
Reference
1. 7 Ways Consumer Support Affects Your Bottom Line. Talkdesk.com
About the author
Kelly Smith
Ms. Smith has over 20 years of experience as an entrepreneur, day spa owner, medical spa CFO, business consultant and national speaker. She is currently the founder and CFO of Projected Growth Consulting, a team of industry professionals who understand every challenge facing medspas and plastic surgery practices.