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Med Spa Success Strategies
Here's Why Discounting Strategies for Med Spas WORK - Interview w/ Lauren McAtee
00:13:50
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- [00:00]
A
Hey there. I'm your host, Ricky Shockley, and this is the Med Spa Success strategies podcast where MedSpa and aesthetics practice owners come to discover strategies and tactics that help them better market and manage their practices so they can grow, improve profitability and have more financial freedom. Excited to be doing another episode Today with Lauren McAtee. Lauren's our lead digital marketing specialist at MedSpa Magic Marketing. She manages and guides online advertising strategies for med SPAs in nearly 20 different states, overseeing roughly a million dollars in online advertising expenditures. Today, Lauren and I are going to talk about the math related to discounting strategies and why you're probably way better off financially leveraging discount strategies to attract new patients. We're actually going to break down the math, show examples, explain the trade off in customer acquisition costs, so you can really understand discounting strategies at a much deeper level. So let's jump right in. Excited to do this episode. All right. Another episode I'm really excited about here. We're going to dig deep into some marketing psychology and marketing decision making, and today we're going to go a level deep on discounting, discounting strategies, answering all the questions we typically face from clients and understanding the framework around discounting and how it sets you up for success. So if you're watching this on video, you'll notice Lauren and I are wearing the same shirts as the last episode. That's because we're filming these back to back. If you're on audio, forget I even said that. But. So one of the first objections we hear from clients when we talk about discounting, and I have a whole other video on our YouTube channel about discounting, but we're going to cover some of that in this video and go a couple layers deep. So the first thing we hear usually is, hey, I don't want to attract the wrong customers. I don't want the Groupon people. I don't want the discount shoppers. I want to attract the right types of clients. Well, the reality is you're going to attract a mix of clients no matter what you do. Some people from, from a discounting strategy perspective are going to be the discount shoppers, but some of those people are going to be rock star clients. And we're going to explain how the trade off usually works and why this still makes sense. But I just think that entire idea of that I'm going to attract the wrong customers, it's a black and white assessment that's incorrect. You're going to have some people that are discount shoppers that don't come back to you for service and, and you're going to have some rockstar patients in that group when you're using discounts to attract new customers. Right. What we typically see like on a Botox ad even when we're running discount promos is average initial visit revenue 4 to $600 with some people spending a thousand 2,000, $3,000 on the initial visit. So we also see 65 to 70% rebooking rates on ads leads when we use discounts. So that's I think an indication that these leads are not going to be all bad leads. There's going to be a mix of quality in terms of your clients and prospects. Sarah Schickman on a couple of our earlier episodes, I've used this example several times. She built a multi location, multi million dollar practice that she sold when she audited her business. Of her top 20% spenders, 80% of those people originally came from Groupon. Now I think Groupon's changed since Sarah was doing Groupon. You have more people using Groupon now that are just the trained discount shoppers. It's the extreme user that's really likely to just be looking for the discount and to be hopping around. But from Facebook and Instagram ads for example, that's not going to be the case or other ads methods when you're presenting a consumer with an offer just in their Facebook newsfeed or via a Google Ad, you're not by nature going to attract the wrong client. So I just think that's really an incorrect assessment upfront. Lauren, any other notes on the attracting the wrong customer? And then the thing we're going to go into really deep is objection number two.
- [03:17]
B
Yeah, I think too to keep in mind is we always talk about there's trade offs and everything. So of course, of course you're going to get maybe a couple people who come in and say oh I don't want to spend any more than your discounted price or I don't want to get any more botox units than 20 units or I don't want to spend any more than $200. Of course you're going to get those handful of people. But it's all about taking the zoom out picture. Looking at everything from an overall perspective. How many great clients have you got in and is it worth getting in maybe two or three who are looking for a discount. All the cross selling and upselling opportunities that can take place from people coming in from a discount too and getting them interested in other. The number one thing that wins over these people after getting them in from the discount is the experience they're having at your practice. So they fall in love with the provider, they fall in love with the space, they return for months and years to come, then they're a great patient and you're happy you did that discount. But again, you will have a couple people that are gonna not want to spend more than what they say and you leave it at that and you take the goal for what you get.
- [04:18]
A
Yeah, and I wanted to add to that too. There's some nuance here. So when you're setting up your ads, not to go totally off on a tangent again, but you also want to be cognizant of where you're targeting your ads. Right. I have this framework that people make purchase decisions based on three buckets of factors. Factors of know, like and trust, or what we can call perceived quality of outcome. Factors related to price and factors related to convenience. So if you're targeting your ads to people that live 45 minutes away from you, you're more likely to be attracting people that are coming only for the discount and have less of an intention of returning. So being strategic with your ads, targeting is one component that can reduce the chances that you're attracting those discount shoppers. I think that's something else that's kind of important to keep in mind. The other thing here is it's important to focus on services that are inherently sticky. So the reason Botox disport filler ads work so well is because they check two primary boxes. One is their services that require repeat visits for maintaining the result. Right. If you're getting Botox, you have to keep coming back several times a year to maintain the result. You can't just do it once and leave. The second thing is those are services that have a perceived differential in outcome. If someone gets your Botox with you and they're really happy with the results, like Lauren mentioned, they had a great experience. Your average savvy consumer is not going to risk the way that their face looks to go save $75 on a visit somewhere else, you know, three months from now. So for those reasons, we just, we just reject the idea that you're just as a black and white thing going to attract the wrong customers. Sarah mentioned in our episode, everybody loves a discount, even your most affluent customers. And when people are making that purch, right, they've got alternative options. So they've got other people in town that have good reviews and good reputations. They've got other practices that are close to where they live or work. How can we tip the scales in our favor to attract more business for that first visit? Discounting is a really effective way to do that. So that kind of gets into objection number two, which is, hey, I don't want to take the financial hit. I just don't want to. I'm not making any money if I do that. So we really wanted to break down the financials here. This episode is brought to you by MedSpa Magic Marketing, my agency. We help med spas and esthetics practices grow with more effective marketing strategies. And I know that's a vague phrase, right? That's a vague claim. So I have an offer for you. I offer this to any new prospects if you're interested in exploring any of them. Another marketing option, a new agency, or just getting into Facebook, Instagram, Google Ads for the first time. I'd love to show you why we're different, what we're doing for clients. And we can do that via a one and a half hour planning session where I'll outline a specific marketing plan and I'll give you all of the blueprints that we would implement if we were to do business together. Now, you can take that, use that on your own, hire someone else to help you execute it or work with us. We really don't hold anything back on that strategy call. And I think you'll have a lot of confidence in how you manage your marketing investment moving forward, understanding some of the nuances that can help you implement more effective marketing strategies for your business. So if you want to do that, you can go to medspamagicmarketing.com I think one of the things that's really interesting to understand is what we typically hear from clients that don't want to take the hit in terms of the discount is they don't realize they're paying for this. Either way, you're either going to pay for it in terms of customer acquisition cost or you're going to pay for it in terms of discounted services. So, Lauren, did you want to walk through the sample math equation that we kind of created based on real stats? These are real projections of what we see when we audit campaigns and when we run campaigns.
- [07:36]
B
Yeah. So breaking down some of the math here. In terms of what we're going to see in terms of customer acquisition costs if we don't discount versus if we do discount and at the discount promo price that we recommend and that we see work the best in ads. So if we look at it for people who are doing no discount, we're just Trying to win in the ad space. Based on our reputation, factors of know, like and trust, factors of perceived differentials and outcome, etc. We're looking at maybe an average of $14 cost per unit on Botox. Let's just put that out there as the average number. We would expect that your cost to acquire customer on a promotion like that, or sorry, on no promotion, just on your $14 a unit trying to win based on reputation, that your cost to acquire customer would be at least $300, if not more. So conservatively estimating, for every $300 you spend on ads with no discount, you're getting one new client through the door. At the promo prices or standard promos that we like to do for Botox, we combine them or bundle them into a 20 units for X range. That typically is right around 20 units for 189 or about $9 and 45 cents per unit, which I know a lot of you're thinking $9.40 per unit of Botox is really cheap. But when we zoom out and look at the math like we're going to do here, you see where it makes sense. So if you're doing a promotion like that, the 20 units for 189, our cost to acquire customer is typically $100 or less in a lot of cases. So when you look at that overall, you're really only discounting $91 worth of product in total. So those first 20 units at $14 a unit would be about $280. And your first 20 units at 189 would make $189. So only $91 in difference there. However, you're either going to take the hit on $91 in product or you're going to take the hit on your cost to acquire a customer, which in this case, what we're looking at is a $200 difference. So no discount. You're spending $300 to get somebody through the door. With our promo price, you're spending $100 to get somebody through the door. So again, you're taking the hit somewhere. It's either in your product at only $91, or you can double that and pay extra in your cost to acquire a customer there. Ricky, do you want to go into some of the initials of revenue?
- [09:45]
A
Yeah, sounds good. And I love this example because people don't understand. They just, they kind of focus on the one aspect of this, but they don't understand the trade off. You're paying for it either way. And in this example, you're literally paying more when you don't discount because your cost of customer acquisition is higher. Getting a layer deeper on this, let's actually go through some financial projections to show how this affects your return on investment and the activity that you have in your business. Let's give you the benefit of the doubt here. And let's say the client that does come from the know like and trust ad, on average, let's say they spend a little bit more money. So in our example, we're going to say that the client that comes to us just because they love our ad and they think that we're awesome and they love our reputation, they're going to pay maybe $750 on average for the initial visit. And then we're going to say over 24 months they're going to spend on average $2,500 for this example. And then with our discount strategy, let's say the average initial visit revenue is only $500, so $250 less on initial visit revenue. And let's say they only spend $1,800 over the next 24 months. So in isolation it seems like, well, hey, it's worth it if I, if I pay $300, if I have to pay $200 extra, but I make $700 more over the next 24 months, that's still a good investment, right? No, because you make up for it way more in volume when you use the discount strategy. So we're going to use an example here of a $5,000 ad spend with the numbers we just referenced. So I know this can be a lot. Feel free to pause the episode, go back. I would. This, this might be one of those episodes you listen to twice. And we're going to give you the key takeaway at the end. But I want to show the work here. We've thought about the scenarios, we've outlined the math. So with the example we just described, at $5,000 in ad spend, when you were deciding to only win on reputation, with what we would call like a no like and trust ad, you might have 16 new patients through the door, booked and paid. So with the higher spend, $2500 over the next 24 months, that campaign, that group of clients is going to be worth $40,000 over a 24 month period. An 8x return on ad spend. Right. 5 to 40. That's an 8x. With the strategy that we outlined related to discounting, you're just, you're just eating $91 in terms of product cost, but you're Lowering your acquisition cost by $200. And now inst 16 clients. You have 50 clients through the door for $5,000 and that means $90,000 in revenue over the next 24 months. An 18x return on ad spend. So by all accounts, it makes a lot more sense for most of you to be using discount strategies to attract clients for the first visit and then to get them to stay because they know, like and trust you, right? One of my favorite quotes in marketing is from a book called the Advertising Effect. I use it all the time on the podcast and YouTube. It's action changes attitude faster than attitude changes action. It's just the idea that traditionally through marketing, we're trying to influence their purchase decision by making them like us via our ads. But really the best way to make them really like us is to get them to come in and do business with us. So for these reasons, yeah, the margin is less per client, but the volume is so much higher that the return on ad spend is substantially better. When you implement discount strategies, especially you newer practices or you practices that are moving to a next level of growth for $5,000, 16 new clients every month, that's a much slower growth path than 50 new clients every month. More at bats, more opportunities for cross sells and upsells. It helps you scale your word of mouth, right? 16 people have a certain amount of reach. 50 people have an additional reach in terms of word of mouth, referrals and overall impact and the waves that resonate from that. So for those reasons, we really recommend new patient promos and discounts to attract new patients. I think it's the way to go and I think we showed the math to back that recommendation today. Again, if you have any questions or want to elaborate on this or schedule a call with us, we include the links below in the video or feel free to leave a comment. Again, I hope you all are liking these deep dives. I don't think anybody else is bringing this type of content, so I'm hoping that you all find it uniquely valuable and that we're bringing something to the table that you're not finding elsewhere. Thanks and we'll see you on the next one. Thanks everyone for tuning in. This podcast is a production of medspa Magic Marketing. If your med spa or aesthetic practice is in need of digital marketing services, help with advertising on Facebook, Instagram, Google lead generation and booking more appointments, please visit medspamagicmarketing. Com.