In the latest installment of our Industry Experts Series, we had the pleasure of hosting Terri Ross, Founder and Co-CEO of APX Platform and Terri Ross Consulting. In this webinar, Etna CEO Ryan Miller and Terri discuss common inquiries we receive from aesthetic clinic leaders including best practices for pricing strategy and how to maximize revenues within the practice.
Follow along to learn what you may be able to implement within your own clinic to take your revenue to the next level.
Ryan: Welcome everybody, my name is Ryan Miller. I’m the founder and the CEO of Etna Interactive, we are a full-service digital marketing agency. For those that haven’t met us before we specialize in patient attraction for the elective healthcare industry and I’ve had the great pleasure to know Terri now for, I think Terri, about 15 years.
Terri: I know I was like don’t age me now.
Ryan: I’m just super grateful that she can join us. A little bit of background for everybody that’s joining us today about the inspiration for today’s webinar, a couple weeks back one of our larger medical spa clients had posed some questions to me about preparing service bundles, value-added service bundles, and overall pricing strategy for their medical spa and I realized that that’s out of our wheelhouse, and we had a great opportunity to find an expert who can help with just those sorts of questions.
I immediately thought of you Terri, specifically because I know you’ve approached these issues really from three different angles that make you uniquely qualified to tackle it. I know you’ve had in your past the opportunity to serve as the managing director for really successful medical spa in Beverly Hills, you’ve run huge and successful sales teams on the medical device side, and now for years you’ve been serving as a consultant advisor for some of the leading aesthetic clinics around the country and so I just want to thank you so much for being here today to dive in in this conversation and take a closer look at pricing strategy and revenue maximization for medical spa so thanks for joining us.
Terri: Thank you, Ryan, so much again appreciate our friendship, always respected you in the industry as well and I’m honored to be here and to serve all of you guys so thank you so much for showing up and being here with us today.
Ryan: Well Terri let’s dive right in. I really think I want to start with the question that kind of teed all this up for me. In talking with the clinic they were looking at this idea of maximizing the value of both individual treatment transactions and patient lifetime value, and the conversation meandered through things like creating, you know, value-priced service bundles, signature services, and moved as well through kind of broader topics of treatment planning.
So when you are faced with these questions today about maximizing the non-surgical revenue opportunity how do you even start that conversation?
Terri: God it’s such a loaded question but something I’m extremely passionate about and what I do often see is that most practices, and I say this often when I speak, um which really and we’ll talk a little bit about APX later but there really is no MBA school of aesthetics. So whether you’re a provider or you’re a team member working within the practice there’s no real place to go to understand the true fundamentals of salesmanship. Right, like hardcore training um or how to like run your practice, what’s profitable, and then how to do proper consultations. So while there’s amazing providers, sometimes it’s often looked at as a very symptomatic approach right, there’s practices where it’s just they want high volume so the consultation is very short, or perhaps they do it a different way. So when we look at maximizing revenues in the transaction in my opinion, um and candidly again from being with Lasky for five years and working with some of the you know top practices across the country, it really is about education. It really is about putting significant value on that consultation process. Right, the value of charging, the value of adequate time, the value of building and establishing a treatment plan, and um I’d like to share a few slides if that would be okay, typically on this question because I think it’s very valuable.
When we talk about a treatment plan why is it important? Right, I think I really want to preface that for this conversation that we have an entire sales training curriculum and I think oftentimes, and I don’t know why this is in aesthetic medicine, but it’s often a mentality of ‘well that’s not what they came in here for, that’s not what they can afford, maybe you know, maybe I don’t want to share with them all of these treatments.’ But at the end of the day we have to really view this as it’s an obligation to educate our clients on the best possible outcome, and what does that mean.
If this specific question is, ‘how do I increase my revenue per transaction?’ the only way to do that, if I come in uh you know at whatever age I preface and I have a problem right, we want to be educating our clients on all of the different modalities right, that are going to get me get that patient to the best outcome. So if we just look at here we’re looking at long-term patient retention, we’re looking at the patient coming in getting multiple treatments, and really having an opportunity to be exposed to other things.
Why are treatment plans important? Again, I look at Paul Nassif and some of my surgical clients that I really go back to and I’ll show some slides on this. Why would we have somebody be getting a facelift but yet they don’t have a pre and post-treatment plan right, to protect that investment. So that is the best way to increase that revenue per hour, increase your overall revenue and profitability, but more importantly, the patient will get a better outcome.
I thought this statistic was really important. If we look at the slide on the stats on the left, 86% of patients expect a physician or provider to give a pre-treatment plan, and 91% of patients expect a post-treatment plan. Sadly, less than 50% actually do that. So we know that there’s a significant opportunity specifically in the retail which is 100% markup so it’s not an ad hoc, if you want to buy this right, we know that patients will go somewhere else to buy things. So we really want to look at that combination therapy.
This is a concept of what a treatment plan should look like. Right, it’s designed by Tami Vileta with Pinpoint, I think we all work with her. But this is Roxbury Institute, one of our long-term clients, and the treatment plan should be a tangible piece of paper. Right, so if I’m seeing you as a patient and I’m discussing that you might need a HALO™, I really want to talk about some you know pre-care products, some post-care products, and what that looks like. This is the skincare regimen, so these are things the clients are actually taking home with them in addition to this beautiful branding.
I’d like to show this quick example of, and this was what a patient of ours that we had at Lasky, and when we’re talking about adding value the value becomes, this is looking at uh roughly two patients a day, so this is 50 patients a month. Somebody could just come in and get a Clear + Brilliant® right, and that would be at $500, $25,000. But look what happens when I do a pre-care retinol and antioxidants perhaps 10 days prior, they come back and they get a HydraFacial®, and we put them on an LED series, and then we also add an LED light and a mask.
Now what did I just do, I upped the price from $400 to $500. I’m giving added value with these two services, the LED and the mask, and the patient has an opportunity now to walk out with less inflammation, less redness, but we’ve developed a treatment plan that went from $25,000 to $51,250. So for everyone on this call where would you prefer to be right, and I think it’s really getting over again that hump, and I showed a couple of different scenarios. This is looking at a facelift, you know people charge again $25,000 to $50,000. I’m in the LA market, it’s very expensive. We want to protect that investment so I will and then we can go on with EMSCULPT, and we can get into lifetime value. But I think that again the best and most important way is to really look at combination therapy. You know we know that there’s now buy now pay later. Every patient has opportunities to afford these treatments.
Ryan: I think that’s such an important thing. I know when I entered the aesthetic industry 20 years ago the uh the idea of selling was considered distasteful and I think there’s still such a strong remnant of that, that if we suggest something that’s not brought up by the patient that we’re somehow introducing a complication inside that patient relationship, and that’s clearly not the case. I think the data is evident and I think we can reflect on our own experiences when we’ve made a big and complicated personal purchase and we want the person who’s supplying us to tell us how do I maximize the value of this purchase. How do I, how do I prepare for it? How do I take advantage of the maximum value after I’ve made the purchase? So the stats I think aren’t surprising at all. When we pull back though and we look at you know, especially if we so, we have to differentiate obviously, we have many people on the call right now who are medical spa owners, medical spa practitioners, we also have surgical practices with non-surgical components, what is the change that needs to happen in leadership mindset and how do you message this into the team.
Do we have prescribed packages that are handed down? Do we educate and trust our team to recommend what’s just right? How do you make the organizational shift if you are one of those clinics that’s not you know the 86% that are today not building the pre- and post-treatment recommendation and properly grouping services for maximum optimal outcomes? How do you begin to make that change?
Terri: I from my humble heart, because I’m so passionate about the work that we do and I’m honored to have had the opportunity and again thank you for everybody who’s with us today attending this call, I appreciate your investment in yourself, and your company, and your team, um and I think it really goes back to education. I really can’t preface that enough and I think that there is just a significant lack. It’s easy to say that we’re busy all day, we’re in the operating room and we’re seeing patients all day, but you’re not just a provider or an owner you are an entrepreneur and it is an obligation to really put on that leadership hat and train your team and how do you train your team. Right, that’s not what your typical skill set is and so it really allows us the opportunity to do what we do and I think it really goes back to salesmanship and there’s a couple of things that we really teach, and oh I learned this at Johnson&Johnson, one of my first sales positions out of college, but the listen, acknowledge, explore, respond, and I think that we have to uh educate our team. Again, what does sales mean you know what does sales really because at the end of the day sales for any successful business we’re selling every day. Right, we’re selling our kids to go to school, we’re selling right, we’re selling ourselves to get a job, we’re still we’re selling every single day even though we don’t know it and it’s the opportunity to um again educate our patients and for the practices that don’t have it, I think we have to go back and really hold our team accountable.
Either seek out experts, put them through a sales training course, uh do some role play, have accountability metrics built-in, and we’ll talk a little bit again about APX later, but having them understand the features and the benefits of the products that they offer. I don’t necessarily know Ryan if building bundles, I mean certainly practices can do that right, if they have certain things that go with certain things. Right, for example, you know and I use I’ll talk Paul Nassif’s been one of my client and a very good friend since 2012, and we really when he built his medspa we had to close the gap on you charge a very significant amount of money for a facelift, or a rhinoplasty, or a bleph or whatever it is, but your job also is that if you see that somebody has poor skin quality right, or some things that you have, how can we, what are the things that we can do to combine so that that patient has a better outcome. And I think you know whether it’s you know creating packages or things together that you have great, I also think that it’s the intention of the provider. That if you don’t have a bundled package already together, that you have to believe that it’s the protocol and sometimes it’s just the language. The protocol to move forward with Dr. Ryan is we’re going to start on ABC and XYZ. Why Ryan you’re going to benefit from this outcome because of this and we have to get good at teaching our team the vernacular and the method of how to how to educate in that way so I never feel sold to.
Ryan: Yeah and I think maybe Terri there’s something in there that that everybody’s in the audience they can really grab onto which is if we step back and instead of having this be an exercise about bundling, this is an exercise about defining the protocol for optimal outcome, and if we ask ourselves before the patient presents for treatment what would we like them to do to ensure that on the day that they’re treated we’re really going to be in the best position to ensure the success of helping them meet their goals. And then what would we like them to do for follow-up you know and I think from, you know you used the example of Dr. Nassif’s facelift down to you know today as we look at injection therapies, you know it’s not at all uncommon to see um topical uh post-care regimens that are enhancing outcomes overall and so that question like how do I define this protocol I think is going to make that, especially the clinician owner, the staff that is administering and consulting on these treatments, much more comfortable having those conversations while simultaneously meeting the objective of increasing not only the value of that that treatment moment. But it sounds like as well you would make the case that this is going to enhance outcomes and enhance patient loyalty.
Terri: Absolutely, and if I can add one thing I did a uh a webinar training for a very large practice on the East Coast yesterday. They had the entire team 25 people, and we were doing some role-plays about this specific topic and what I’d again really like to impress upon is that it’s your ability as a provider again to, I can’t stress enough the importance of questioning skills, and being able to ask the right questions because in order for me to want to buy into to the treatment plan or the protocol that a practice is recommending it is really about you know the 80/20. It’s 80% listening and in that layer model, people tend to talk and then just respond with the solution.
I’d ask if you guys could take a pause and some of the questions might really be you know Ryan again thank you so much for coming in I see that you’re here today to talk about you know your fine lines and your wrinkles and then you also checked off these other couple of things. Right, and then you know asking the right questions. How long have you been thinking about this? What are you looking for when you choose an aesthetic practice? Um, what is your commitment level? Right, we talked about this, and in order for me and my obligation what you can expect from me today Ryan as the provider, I’m going to be with you for the next 30 to 45 minutes, we really take a comprehensive approach. And so now what you’re doing you’re setting that expectation for me already in the beginning. You’re credentialing yourself, you’re setting the expectation that you’re going to build this treatment plan for me, so if we’re able to ask those couple of questions in the beginning, I’ve told you how long I’ve been looking, I told you what I’m looking for in aesthetic practice, I’m answering if I’m committed I’m right, so my your questioning skills my practices ability to ask the right questions the client will give you the narrative.
I will answer, the patient will literally answer if right, if you get that good, my responses can direct you to where to go and I’ve, we’ve perfected this. I mean I’ve just I’ve been doing this for almost 15 years working with practices and there’s enough case studies to show that the people that commit to learning this process have exponential growth and then long-term retention because I pulled some stats. Retention right now is about 66% um and in a medspa the average patient visit is around $460 so we know we have lots of opportunity to grow and to do things differently.
Ryan: Yeah and you definitely bring me back to a theme I you know I talk a lot about the idea that I think patient loyalty is a bit of a myth, and I’ll often ask when we’re speaking on that topic I’ll ask our audience to reflect on, you know think about the person who cuts your hair, and I would make the case that for most of us we would think of that as one of the most personal and potentially a place where we might define loyal relationships in our life and ask the question how many times does that person get to miss your appointment or mess up your do before you’re out the door, and you know if we are focused on optimizing outcomes that’s the way that we that we breed and engender loyalty.
But um really quickly Terri we’ve got a question coming in, I’ll remind everybody who’s with us today, you can use the Q&A panel anytime and I’m about to pivot topics but before I do um Natasha says, ‘Our med spa has over 50 separate service lines, what you’re describing sounds complicated and time-consuming. Advice on where to start?’ It’s a great question, like you know optimizing and developing protocols for every one of those services um is certainly going to be a task, how does someone cut their teeth in this, where would you say that they focus first?
Terri: So number one I would say believability right, I can share, I can tell you what I believe, I think you have to believe it as a company and as a and as a provider that to Ryan, to your point that your goal and obligation is to get the patient to the best outcome. I don’t think it has to be complicated for example, whatever services you have whether it’s body contouring there are skincare products that can coincide with that. If you’re doing EMSCULPT but somebody has laxity you’re going to do EMTONE. If you’re doing a HALO or resurfacing everybody must be on a retinol, an antioxidant. Perhaps you get a mask, you get a HydraFacial, you come back in seven days.
If you’re having surgery there are things you can tie into the surgical plan that’s adding value and then post-surgery you do some v-beams. So don’t think about this big task of these massive amounts of services. Really sit down with your team and say what are the things we offer, what are the things that can complement these services that we do the most, and then start small and I gave those couple examples and I’m happy to share my slides and we can talk about you know all this information is in our sales training course as well, um but start small and agree as a corporation as a business we believe in these protocols and here’s why. And then if you believe that when you share that with the client I promise you I do promise you that it becomes, ‘wow nobody ever told me that, wow I was going down the street getting that same IPL nobody ever educated me’.
And I want to just say this last thing and I know we need to move on topics but heaven forbid somebody had cancer right we have a team approach. I don’t get half my chemotherapy right, I don’t get to maybe come back for my radiation. If I want to live I think that we have to believe that this is aesthetic medicine while it’s cash medicine and people have choices people want to look and feel their best. We know that this industry is growing rapidly and so you have an opportunity to be different, to create that value proposition, and to believe that your differentiating factor is that you take a comprehensive approach, and you stick with that. And that’s really how, truly you guys, being in Beverly Hills scaling Lasky quickly we did it that way.
Ryan: Nice, well let’s pivot and we’ll have kind of a from the headlines moment here Terri, you know we’re hearing all of the stories about the uh the shipping containers that are stuck in port, the fact that there’s supply chain issues that are plaguing the holiday season. Never a better time to promote service delivery as a gift because I guarantee you that uh your you know that BOTOX treatment isn’t stuck somewhere on a on a truck. So um what is your advice to clinics in this really bizarre holiday season about maximizing this opportunity because I think there are probably lots of clinics who have really never made much of the idea of gift certificates, and uh you know taking advantage of seasonal promotions. But what are you telling your accounts right now about you know this Black Friday, this Cyber Monday, this you know December season?
Terri: Gosh good question, um look I’m sure a lot of people on this call have done some type of promotion and bundling, and specials so I don’t know that there’s a lot of rocket science here. I think that what I have found is that there’s so much competition. This industry can be a commodity. What’s not the commodity is you as an individual, you as a practice, and so I took some notes here. I really think it’s about creating a offer that is about value and outcomes, less about a deal or saving money.
I know that everybody might want a deal of course we do, but if I think and believe that you’re giving me a better outcome or I actually need that package or bundle I think that’s most important. Your positioning and your marketing of whatever that is. I think that people use the word ‘free’ a lot. I would say ‘complementary’ you know ‘complimentary gift with package’ and again really going back down to what we were just talking about. Creating some things that people can purchase that are of value whether I’m going to get a Morpheus or a HALO, I get a product for free, you add on a mask, an LED light, something that you can put together.
I think stocking stuffers are amazing having things ready, pre-packaged, and available almost at that checkout counter so it’s a no-brainer. I mean why do you think that in grocery stores or department stores you know they put specific things right at that checkout counter. I think again gift cards and really leveraging some of the terms like thanks for giving us your business, um you know we appreciate everyone deserves a gift. I think shopping days at the office or something really I have found to be unique nobody does that. Shut your practice down for a half a day, put some great packages together, and let your patients come in and shop for a day.
Ryan: Yeah, I think that’s actually a really interesting idea you know this idea of having pre-packaged gifts that are ready to go that address the idea, right now everybody’s you know they’re busy, they’re dealing with new kinds of working challenges, especially for those of us with skincare sales as an option or opportunity. Value bundles that are going to look great on the stocking that you know that we know are available that we can reassure people that hey we’ve got your gift-giving solved um I think that’s going to be a that’s a brilliant idea Terri, I really appreciate that.
There’s the other side of this right now you know as we move forward and we kind of look at what’s happening in the aesthetic space, in general, um you know what we’re hearing from our clients all across North America is that they’re busier than they’ve ever been, they’re dealing with new challenges like space constraints. Certainly, we’ve heard that and some turnovers been an issue where there’s not enough providers to fulfill demand and the risk that we face in these moments, well you talked about it, you talked about the fact that only 2 out of 3 aesthetic patients are being retained by clinics, is that we lose them in the moment and we lose them forever, or that the patient perceives a service degradation that sort of downgrades how they see your you know our clients brands in that moment. How do you advise your clients right now when we’re so busy to keep delivering exceptional service, exceptional communication, what are the different things they need to be focused on?
Terri: Kind of just as it relates to overall customer satisfaction, or scheduling issues, or a compilation of both?
Ryan: Let’s do both, let’s talk about the, first the existing patient relationship. So I’ve got a patient who wants to get in and you know now I’m, you know how do I take the what could be a really negative conversation that, hey I can’t see you for three months or two months and turn that into something that’s a positive.
Terri: So I’m going to answer this in a couple different ways and I’m first going to preface that it’s really critical so I love what you just said; practices are busier than ever. I’m in a challenge that you perhaps could be but are you profitable? Okay, because busy doesn’t mean being profitable.
So again we’re very passionate about while we are in the business to make people look and feel good it is still a business so we really do have to make sure that we are understanding our capacity, our revenue per hour, per room, per service and as an organization because the busy-ness is great and we do want to appease people but are you busy with follow-ups all day? Are you busy because those rooms are being used for numbing which is non-revenue generating time? Are you busy with lower-paying procedures? And so it really is important and I really have to stress that it’s important to look at both, and then I would say on the customer satisfaction look communicate, communicate, communicate with empathy. Again really using this communication method to acknowledge frustration and really work the waitlist. Right, have a waitlist right, have a cancellation policy and lastly, if you really need to we have to look at capacity. So if a provider is around 70% capacity that means you need to hire another team member.
Ryan: So I left here at the moment that you actually you turned the question on me and said maybe you aren’t as busy as you think or you aren’t busy in the right way. I know that they could reach out to you, that you offer, you consult in this area to do that kind of analysis. For the clinic that’s going to try to do it on their own, are there, do you have like the top three, or top two ways that clinics are wasting their valuable time and space that they should maybe take a peek at to create capacity right now?
Terri: I’m going to give you a well a very simple equation. So most people challenge and they don’t know, I promise you 90% if I ask what is your provider’s revenue per hour most don’t know. So do me a favor right run for simple math I mean we don’t want to get granular on this call we can later but I want you to look you know pull a revenue by service, a service revenue by service category report your practice management software and I want you to take the hours that they work in the month divided by their revenue. DM me, Instagram Terri Ross Consulting right, tell me what it is right. So you’re going to get a baseline of what their revenue per hour is as it is today. For a medical spa, it should be between $600 and over $1,000 an hour. If you’re below that you already have a problem, okay, and then for an esthetician, it’s around $250 to $350. So that’s where I would say Ryan, to your question what can they do now to figure that out. I’d look at your capacity what is the percent of time your rooms are actually booked and then of that booking time if you’re saying that it’s patient satisfaction, we can’t get anybody in, how much time is that of non-productive time.
So when I often see in practice management software if they book an appointment let’s just use filler. People will just book the whole filler for that specific right time um right, and the numbing time is included in there. I’m going to ask you guys to back it out okay, so your numbing should be its own appointment meaning Terri’s going to numb for 30 minutes right, that’s non-revenue generating time and then I’m going to get my filler for 30 minutes, don’t clump it in for 60. It pulls the revenue down.
So the follow-ups, those are things that people really if they, I can’t you know data doesn’t lie data tells a story, so if you need help we can help you with that but really I encourage you to go pull again these revenue by service category reports. Break it down, what is compromising or what is comprised of that revenue, and then look how much of it is non-productive.
Ryan: So Terri you dropped the benchmark there, $600 to $1,000 per hour on your injector staff. We got a question in from the audience here that wondering is that just service revenue or does that include the value?
Terri: Just service revenue and that’s any medical spa room doing whatever.
Ryan: So let’s and I think in that scenario if you’re dealing with a past patient who’s trying to maintain the relationship with your clinic it occurs to me there’s probably as well an opportunity to help the staff script. I don’t know when I think you probably have listened to as many calls as I have Terri, and I know that these are moments that um leadership will think ‘hey it’s super easy to navigate this moment and keep the person on the other end of the line happy’. You and I know I think from listening to calls that people don’t intuitively arrive at eloquence in many cases and they may need some help practicing really basic ideas like you know, ‘this is such a wonderful time of the year we’re blessed to be incredibly busy I have an opportunity to get you in at the two-month mark and I think what we should do is pre-book your next appointment now since you’re one of our preferred VIP clients’. Right, so we take what is a negative, we turn it into a positive, and we open that next opportunity at the same time.
I think there’s a chance for clinics to perhaps up their game on phone skills and you can do that with an existing patient. It’s much harder to do when you’re when we’re faced with opportunity and that is coming from a newer prospective patient who’s never worked with us. Any advice for clinics about how do I how do I triage opportunity when I’m just slammed right now and not you know be a year in the future, maybe the economy is a little bit different, and just kicking myself for having you know essentially neglected people who were interested in seeing us this year?
Terri: Yeah, so again I’m going to say, back to business fundamentals and again this is where the industry just sort of lacks unfortunately as a whole. I, really again, encourage you that it’s really vital for you then to again look at that capacity, look at what percent capacity of time because that ultimately means you need to hire more people. But in short, to serve and solve the problem I would say, and we did this at Lasky too, there’s only a couple different ways to make more money right, you either have to increase your revenue per hour or you have to increase your hours of working time. So perhaps you start at seven o’clock in the morning, perhaps you stay open later at seven at night, perhaps you’re working on the weekends. I think those are critical and really important things we all realize even if we’re you know, people are still working from home, people are now mostly back to work so really appealing to an opportunity for people to come in at perhaps off times.
Ryan: So um, we’re going to pivot again and before I kind of move into the last vignette just a reminder to the audience, I’d see a bunch of you are already using the Q&A box we’ve been able to get those interjected here, if you have a question for Terri you can hit the Q&A link at the bottom of the screen it’s going to open up a panel for you where you can type in those questions and I can moderate those for you.
So Terri I think one of the natural conversations that has to follow any, you know any discussion of being oversaturated and unable to fulfill demand is um you know uh that imbalance between supply and demand is the perfect opportunity, an excuse to see price increases. We find with a lot of our clients that that new year moment becomes um just kind of a natural you know line that you can draw in the sand and say this is, this is the time when we’re going to increase our pricing. For clinics that are contemplating that there’s a bunch of questions that get baked in, how do I establish my new pricing? How do I communicate about it, and how do I avoid the potential for you know negative, you know feedback among our existing patient base?
So the first question for you is um you know, what do we, what do we do to establish new pricing if we’re going if we’re going start looking at that price conversation right now?
Terri: Great question, they’re all great questions I love this. I’m going to always go back to business fundamentals. It’s really critical that you have your chart of accounts and your P & L set up accurately so that you can look in 30 minutes and see, like where’s your cost of goods, what is your overhead, what is your equipment, what is your warranties, what’s your payroll. There are very specific benchmarks you need to fall within to be profitable. So I’m going to say that we know companies are raising prices of their products every year, um and I made some notes here, that the things you as a company and as a business owner have to pay for is again the cost of your equipment, your leases, your warranties. What is the cost of your time in your space and that goes back to your providers, your revenue per hour, and what are those treatments yielding per hour? Your staff time, your overhead, um you know we just did a webinar or a podcast um and you know the average profit margins for a medical spa should be 20%. Most are below that and then obviously for a surgical practice runs higher around 60 to 70% and it really goes back to understanding your metrics because once you understand the metrics you can make informed decisions to increase the price. And then have a very valid reason to do that and not feel bad about that because we do want to you know again maintain the quality, and so while we want to avoid churn, we really are trying to maintain the quality of care.
Ryan: Yeah and you know it’s funny your mention of margin makes me realize like you can as a clinic owner you can do that marginal analysis to look at the combination of the cost of goods and the cost of services for any individual treatment. You know the cost of goods often being if there’s a consumable, if there’s something that’s being used in there, or if you’re going to assign a fraction some cost associated to the lease or the original purchase of a piece of equipment to that service delivery, the cost associated with the labor and obviously that’s going to be higher with your more complex clinical services, and then you can look at the marginal analysis and say what do I want the margin to be across all of my services for it to be worth our time to deliver? And that can I think that can help you spot those things that you may be undervaluing um because either the good that’s required to, the consumable that’s required to deliver that service is more expensive or it takes really skilled labor. Those are all opportunities I think to step back and say okay well I probably need to make adjustments in individual service lines to keep the total profitability of my clinic up.
So it’s great inspiration there Terri and the next the next piece fit though is really about that communication and the timing. It’s a, I think the fundamental question is do I say nothing and hope nobody notices, do I broadcast it out and communicate about it, and so how do you help a clinic because I don’t know that there’s one right answer, how do you help a clinic find the answer that’s right for them?
Terri: You said it, there’s many ways to skin the cat so this is my opinion. I believe that if you’re running a business, um it is an obligation to communicate. Right, I think right to communicate you have loyal patients, you have built that known, liked, and trust factor. I wouldn’t want, I mean I think about my Equinox membership right, I mean my gosh it’s $260 a month, and I haven’t been I mean I’ve stopped it, but if they raised it to $300 and never told me I would be frustrated and I think we’re all used to buying some level of subscription models. So I do believe that there’s value in one, what you just said you’re making a business case because you understand your business metrics that requires you to make that shift in raising your prices and you know 10% here or there or a dollar here or there that definitely impacts the bottom line and patients don’t really feel it, and so if you’ve built that value you’re going to reduce churn by communicating and then giving them an opportunity that you’re giving them an advance notice.
Perhaps you do it in the new year so you give them two months. You allow them to pre-purchase before the prices go up and people value that and understand what it takes to run a business and that you’ve given them the respect and the communication. Especially for your high-profile people and maybe it’s a personal call, maybe and it’s sending out several different methods of communication, and most of the time people are very okay with it.
Ryan: Yeah it’s an interesting opportunity. I think you bet that I hadn’t thought about that, the idea of you know running a campaign for your VIPs, for your loyal clients, to let them know in advance a couple months hey this is what’s coming you have the opportunity to pre-purchase any preferred service during this window of time and then you know redeem it depending on your state, this next year or indefinitely.
There’s state laws that govern you know the prepayment of service and how that’s ultimately going to be able to be legislated, but um use it as again, it’s not a negative it’s a positive. I’m letting you in and I’m giving you a special opportunity to essentially buy at last year’s pricing and to do that now. I love that idea, I think that’s really brilliant.
We’ve got a couple questions coming in and just a quick note to everyone we’re going to pivot in just a moment towards an open Q&A session. If you do have questions that you want to pose with Terri you can just hit the Q&A button at the bottom of your interface, it’s going to open a new window where you can you can drop that question and I’ll do my best to work it in for you.
Now, this is actually we’re going slightly off-topic but I think it’s a really interesting question. Stacy is asking about differentiation across different specialties, and full disclosure on this call today I know that we have we have medical spas, we have dermatology-led aesthetic clinics, we have plastic surgery-led aesthetic clinics, and Stacey’s question is really about differentiating in dermatologic space, and I think we could ask it more generally. You know any clinic is going to find that there’s something unique that they believe is unique about themselves. Advice that you have for them in articulating getting that value proposition out, and in front of, and understood by the consumer so that they can try to compete um by something more than just price.
Terri: So is this a medical derm or a cosmetic derm or both?
Ryan: It’s a cosmetic derm with a medical spa.
Terri: Okay so I think one of the most fundamental things that I see that don’t happen 80-90% of the time, we talk about our unique value proposition. Right, our why, why should patients come to you and oftentimes if I were to say, and do it go ask your team, like line them all up and say why when patients call us on the phone and they say hey Dr. Smith down the street’s cheaper or how are you credentialing the practice or me or the provider. I bet you they would all say something different and that’s a sad place to be. Right, so even in our APX platform there’s a unique value proposition worksheet that we offer and you know you have your team do it so that the articulation is what you can expect Ryan when you come to ABC medical spa or Dr. Smith’s surgical practice is what you can expect is you know you’ll be meeting with the provider for 30 to 45 minutes, we take a comprehensive approach. Right, you’re articulating that to me on the phone so that I’m like wow that was so great, god nobody ever really talks to me like that on the phone.
So I think it’s going back to why are you different and maybe that is just the approach you take on the consultation process. It is you know the coffee and water that you serve when you walk in. It’s the when I showed the treatment plan, it’s the new patient packet that somebody gets when they walk in. Those little things that might seem elementary to us they’re not because most practices don’t do it and don’t take the time to do it, and I promise you this is not anecdotal I didn’t read it in a book I’ve been doing this for so long and again when I had to figure out in Beverly Hills how to scale Lasky where in a three-mile radius you could throw a stone and everybody was doing the same thing, I had to get creative and I had to take risks and I had to charge for consultations when nobody else was. But I had to right, really train the team, train the team that I wasn’t willing to settle for mediocrity and I wanted to hold my team accountable to a different level of threshold. Right, so that everybody can articulate and we’re all speaking some uniform language about why we’re different and that we all focus on those mission and visions at our monthly statements or our morning huddles that you should be having I hope you’re having.
Ryan: Yeah and for my part, you know we talk about mission and vision, there’s a third piece in there that I think in some cases easier to put our thumbs on because I’ve watched clinics spin and spin on the perfectly articulated mission statement but if you ask them, ‘tell me about your values’ that I find very often that clinic leaders can without even a pause talk about what they will do and what they won’t do inside the operation of their clinic, and I think that that’s a place for that Stacy might, you know I realize you’re asking Terri, but for my part, my advice back is pull back to your values as well and do more to expose those to your team because that’s ultimately going to craft and impact the service that patients experience when they come to the clinic.
I’ve got a question coming in from Jane and perhaps Terri this ultimately becomes a really great transition to, in a moment maybe I’ll ask you to talk a little bit about APX.
Jane is facing something I think that a lot of clinic owners are struggling with is I don’t know if I’m doing okay because there’s not in our industry, there are many others, but not there’s not a lot of free and reliable sources of especially financial benchmarking. So for someone who’s looking to understand what is acceptable in terms of their cogs, who’s looking to benchmark salaries, who needs help knowing where there are maybe vulnerabilities financially in how they’ve built their business. I swear this isn’t a plan this feels like the perfect plug so can you talk about um you know, how you help somebody with those questions.
Terri: Yes, I’m going to answer Jane’s questions by talking a little bit about why we developed APX and what it is. Well, I’ll answer it first and then I’ll talk about what’s in the platform.
You’re right kind of what I said in the earlier start of this webinar is that there is no MBA school of aesthetics and um when I was not able to speak when COVID first hit my team and I um well I was so happy but you know Terri Ross Consulting went up about 70% and I think it was the first time practices um had to take a good hard look at the fact that maybe I’m not the best leader, not my choice but um maybe I don’t know my numbers and I don’t look at my data and this is a statistic, I sit you know I’m on the work with AmSpa and I work with ASAPS so I have access to a lot of statistical data that comes out, and less than 90% of people measure their data. Okay so it’s a very small amount of people so you’re right how would you know. So as a consultant we have had the pleasure of being able to work and develop tools that allow you to do that. So APX stands for Aesthetic Practice Accelerator, it really is um business intelligence dashboard based on solutions for the aesthetic practice and it is around three core components and that is training.
I realize, and you know we have a new Co-CEO Izhak Musli I’m so happy you know he had Atlas KPI prior, and data only is important if you know what to do with it which means the bigger gap in the industry is that there is no place to go to train. So I’m going to say it again and that when your staff is trained in finance, in sales, in conversions, in metrics, how to talk to a patient, how to build a treatment plan, all of the things that have to go into a successful profitable practice the number one area we have to not ignore anymore because we can’t risk not having cash reserves in the bank with when COVID happened or having high turnover now and then not know how to pay. You talked about profitability of a procedure, cost of labor, there are metrics right your gross profit should be well over 50%. People don’t know that. Your cost of provider labor should be under 20%. People don’t know that.
So what we did in APX was we built sales courses, financial courses, operation courses, we’re working with industry partners such as yourself, Allergan, big companies to provide educational content within the APX platform. Once you understand the how and the why your team is equipped right, and there’s accountability metrics built in this educational portal so that they’re getting certified in best practices and going back to their accountability metrics of what to do. But we built seven financial calculators. These calculators allow you to plug in data from your practice management software, which by the way only gives you raw data doesn’t tell you, so you take that data from your software and you plug it into our financial calculators and it spits out for you, it spits out for you the answers.
We’ve had practices grow over a million dollars in COVID. Now you have the power, now you are equipped to make informed decisions for your practice that you’re going to say you know what I’m going to stop doing these couple surgeries or I’m going to stop doing these procedures. I’m going to reallocate my efforts and go focus on these more profitable procedures. Now I know I can coach my team and say hey Ryan you’re tracking $400 an hour we got to get you to $700. Now I can get you to $700 because I’m going to tell you what procedures make the most money. Now we’ve got compensation calculators, we built a forecasting tool, so we built all these data analytics so it’s really based on training courses, analytics, and then the cherry on top was that me and my team didn’t want it to be just this you buy APX and bye, our community we have over 150 users we just launched our advisory board and I think Dr. Canales is on this call, I’m so honored, so we have a very robust advisory board of all the heavy hitters and all the key opinion leaders that you guys all would know and I’m so blessed and honored. But we provide weekly coaching, weekly coaching, and accountability every single week for people that are within our APX community to make sure that you guys are on the best trajectory that you can.
Ryan: Yeah so I think that that answered Sheila’s question as well was really looking for, looking for that that blueprint for those business fund- for the financial fundamentals for the aesthetic practice and it sounds like across both the training and I think the metric set, the tool set that you have in there, um that that would, Sheila to answer question, sounds like that blueprint.
Terri: That’s your answer.
Ryan: Yeah and there’s some questions that come up, just a moment before we’ve got a couple other things that are minor questions coming in that I wanted to touch on for everybody’s on the call, we have been recording the call today we will be making today’s call available for playback. It takes us just a couple days because of ADA conformance we have to offer the video with a full-text transcript these days so it takes a couple days to get that transcript created and proofed. We’ll get it published and for everyone who registered we’ll be sending out the link. We’ll also include contact information for Terri, her consultancy, and uh and APX.
Really quickly here, there’s a question coming in and I think there’s a lot of, you teased some benchmarks and that’s got everybody’s questions up, so the $600 to $1,000 an hour for injections is that how are you differentiating between that benchmark on a nurse injector as opposed to an MD injector.
Ryan: So don’t even think about it that, don’t think about it as just injector. I think oftentimes we are pigeonholing an injector, I don’t look at it that way. See somebody can just be an injector but if you look at a med spa in totality, and if we’re talking about the value of a treatment plan, we’re talking about the value of doing anything. So a non-surgical room, let me preface it that way, a non-surgical surgical treatment room right should generate $600 to $1,000 more an hour. For example, people will say Terri god should I get this tattoo removal, what about laser hair, I would tell you absolutely no. I’m not saying don’t do it if you want to do it you can do it. But I promise you when you, run your numbers that’s not going to get you to where you need to be so if you want to be smart, I mean look at there’s a bunch of clinics that just do hair removal and there it’s the turn and burn. It’s really going back down I always say there’s riches in the niches. You don’t have to be everything to everybody but you have to understand what your market demands, and you have to, you can’t, again it’s your obligation, we have to go back and look at your metrics and look at your numbers because that is the only way you’re going to be able to say wait a minute I’m paying this provider way too much money, she’s not even generating what she needs to be. Right, so we talk about we know we can’t commission in medical right, but you can do productivity bonuses, we teach you how to pay and I promise you people have changed and it becomes financial freedom because you can have an intellectual transparent conversation to say hey Ryan here’s what you’re doing right, you know maybe here’s the benchmarks I’d like you to get to. But now you have the power and you have the um you have the methodology because of APX that says I’m going to take this training course, or I want you guys to go watch the finance course or watch the sales course, and now you are equipped as an owner to coach you on how to get to those numbers because you’re going to show me. Now we’re just putting all of the pieces together to give the industry what it’s truly never had before.
Ryan: Gotcha, so then let me, let me read back so that $600 to $1,000 an hour benchmark is less about the um individual production and more about what your, what your real estate needs to be producing, and from that you can look at it and say well if I’m giving, whether it’s an an RN or an MD, this room for a day, and our goal is non-surgical treatments, they should be able to produce $600 to $1,000 dollars an hour out of that room.
Terri: That’s right.
Ryan: If instead, I’m putting an esthetician in there I’m making that choice, I built my business that way, and we’re going to see that lower benchmark assigned simply because of the range of services available to the esthetician are more restricted in their value.
Terri: Correct, so again one of the calculators, there’s two power I’ve lectured at every society conference this entire year. The first two calculators are profit per treatment and revenue per hour. Those two things alone if you do nothing else I promise you again that’s where people have grown millions of dollars last year and this is proved, there’s a ton of testimonials that we have from clients, again that’s why our advisory board has decided to work with us because it’s power in the data and once you know that, and again most people don’t, you’re able to say oh my god my cost of goods are too high, or maybe I’m not charging enough, or maybe this provider is taking too long. Those are the three things that you have the power to change but only if you know how to do it. So in our APX platform in the rev per hour calculator, it spits it out, it literally spits it out so you’re looking at a sheet, you’re like oh my god wow wait a minute I am losing money. You know maybe I need to increase the price of these things because right now I’m not making any money and it’s powerful.
Ryan: Excellent Terri, well I want to thank you first of all for all of the time that you spent in preparation for today and then your generosity with insight and information with us and with our audience today. I also want to thank everybody who came out and joined us, and again Terri we’re going to post it on, when we share the recording, but if folks are interested, if they want to learn more about your consultancy or more about APX, where would you send them to get that insight?
Terri: Right here, well right here there’s a QR code if you guys are interested. Again, thank you so much Ryan and the Etna team, I am truly blessed and always honored to be able to be here to provide. I hope that you found it to be very valuable information and our support um we only want you guys to be overly successful. Right, so if you want to get further faster I invite you to scan this QR code where you can meet with our sales team, do a discovery call, learn more about APX, learn what our um our subscribers, we’ve got over 150 people and what they have had to say, and by doing that please say that you um you heard about us from the Etna webinar and you will receive 10% savings off APX for the first year, and then if you guys want to reach me personally this is my personal cell phone number, my email, and please join our aesthetic accelerator Facebook group. It’s actually Static Insights now, and then anybody who’s part of APX, we do have a private APX community as well. So, I look forward to hearing from you, seeing you, and hopefully having the opportunity to work with you.
Ryan: Excellent Terri, thank you so much again, everybody, have a wonderful day and we look forward to connecting with you on another webinar here soon.
Terri: Thanks Ryan, thanks everyone.