Secrets to Success: Benchmarks From 250+ High Performing Med Spas! Interview with Louis Frisina

Summary

Med Spa Success Strategies: Secrets to Success - Benchmarks From 250+ High Performing Med Spas! Interview with Louis Frisina

Release Date: June 18, 2024

In this insightful episode of the Med Spa Success Strategies Podcast, host Ricky Shockley engages in a comprehensive discussion with Louis Frisina, a Harvard-educated biotech entrepreneur and a luminary in the aesthetics industry. With over three decades of experience, Louis has been instrumental in building multimillion and billion-dollar ventures for renowned companies like Fisher Scientific, Collagenesis, and Q Medis. Currently semi-retired, Louis dedicates his time to private consulting, sharing invaluable benchmarks and strategies gleaned from collaborating with over 2,500 high-performing med spas globally.

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1. Introduction to Louis Frisina [00:00 - 02:23]

Ricky begins by highlighting Louis's impressive background, emphasizing his pivotal role in introducing Restylane to the U.S. market. Louis recounts his journey from discovering Restylane in Brazil to navigating the FDA approval process and eventually selling the product to Medicis Pharmaceuticals. His extensive experience encompasses advising private equity and hedge funds on mergers and acquisitions within the aesthetics sector.

Notable Quote:

“I ended up getting the product registered and ultimately selling it at the time to a big aesthetic company called Medicis Pharmaceuticals to move ahead.” — Louis Frisina [01:34]

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2. Key Benchmarks for Med Spas [02:23 - 08:17]

Louis delves into crucial benchmarks that med spa owners should monitor to gauge their practice's performance:

• Average Annual Service Revenue per Patient: Approximately $2,400.
• Average Spend per Visit: Around $563, with patients maintaining an average of 3.2 to 4 procedures annually.
• Visit Frequency: Best-performing med spas see patients visiting 3.8 times per year.

He explains that while med spas generally outperform dermatology and plastic surgery practices in patient visit frequency, economic downturns like the Great Recession and COVID-19 posed challenges. The key to overcoming these hurdles lies in enhancing the patient journey and experience, thereby fostering trust and encouraging repeat visits without resorting to commoditized pricing.

Notable Quote:

“It's all about the trust. And you know, you're putting your face in your body, in the hands of somebody else.” — Louis Frisina [06:46]

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3. Enhancing Patient Relationships and Communication [08:17 - 16:39]

Ricky and Louis discuss strategies to increase patient visit frequency, especially during economic uncertainties. Louis emphasizes the importance of personalized communication and treating patient relationships akin to personal friendships. Implementing VIP programs, utilizing emails, texts, and social media, and maintaining continuous touchpoints are pivotal in keeping patients engaged and loyal.

Notable Quote:

“You're trying to do two things. You're trying to get them to come in more frequently, and you're trying to have them meet the pricing without having to go to some type of commoditized pricing in your practice.” — Louis Frisina [05:20]

Louis also highlights the significance of creating a memorable and exceptional client experience, comparing it to the hospitality standards of brands like Ritz Carlton. From the moment a patient walks in, every interaction should reinforce their decision to choose your practice over convenient, impersonal alternatives.

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4. Financial Management and Profitability [16:39 - 24:17]

A substantial portion of the discussion centers on the financial aspects of running a med spa:

• Gross Profit Margin: Best practices aim to maintain a 70% or higher gross profit margin, ensuring that the majority of revenue covers operating expenses and profitability.

• Expense Allocation:

  • Rent: Should not exceed 5% of monthly revenue.
  • Marketing: Currently rising to 7-8% due to increased competition and the need for diverse advertising channels.
  • Staff Costs:
    • Estheticians: 15-20% of gross revenue
    • Mid-level providers: 20-25%
    • Doctors: 30-35%
  • Medical Supplies: 2-4%

Louis underscores the necessity of meticulous profit and loss (P&L) management, advocating for daily and monthly reviews of financial statements and key performance indicators (KPIs). This granular approach ensures that practices can swiftly identify and rectify financial discrepancies, avoiding the perilous "rob Peter to pay Paul" scenario where cutting essential expenses leads to long-term detriment.

Notable Quote:

“And unless you do that, you're subject to commoditization in your pricing and ultimately, you know, from a financial standpoint, subject to declining profitability in your practice.” — Louis Frisina [11:01]

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5. Strategic Equipment Purchases and Service Expansion [24:17 - 34:42]

Transitioning from financial management, Louis addresses the critical evaluation of equipment investments. He advises against high-capital expenditures, especially when projected returns on investment (ROI) are uncertain. Instead, he recommends focusing on services with lower initial costs but high revenue potential, such as:

• Weight Management and Control: Utilizing therapies like Ozempic, Semaglutide, and Tirzepatide to manage patients' BMI, fostering cross-selling opportunities.

• Hair Restoration: Offering treatments like PRP (Platelet-Rich Plasma) and Exosome therapy, which require minimal capital investment while addressing a growing patient demand.

These service expansions not only diversify revenue streams but also enhance patient retention by addressing broader aspects of health and wellness.

Notable Quote:

“And I highly encourage these practices to take a hard look out there. And there are really good, many good opportunities and best practices have already incorporated this kind of wellness piece into that so that they're doing almost a 360 degree view of the patient.” — Louis Frisina [34:19]

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Conclusion

Throughout the episode, Louis Frisina imparts a wealth of knowledge tailored for med spa owners aiming to elevate their practices. From maintaining optimal financial health and enhancing patient relationships to strategic service expansions, Louis's benchmarks and strategies provide a robust blueprint for sustained growth and profitability in the competitive aesthetics industry.

Notable Quote:

“You got to do it on a timely basis. It's more about the window of opportunity in terms of business success than it is necessarily about the amount of opportunities that you have.” — Louis Frisina [31:06]

For med spa and aesthetics practitioners seeking to scale their businesses, this episode offers critical insights and actionable strategies to navigate challenges and capitalize on opportunities in the ever-evolving market.

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Note: This summary excludes advertisements, introductory remarks, and concluding segments to focus solely on the content-rich discussion between Ricky Shockley and Louis Frisina.

Transcript

[A]

Welcome to the MedSpa Success Strategies podcast. I'm your host Ricky Shockley and this is 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. Very excited today to be joined by Luis for Xena. Louis is a renowned biotech entrepreneur and aesthetics industry thought leader. He's Harvard educated with over 30 years experience building multi million dollar and billion dollar ventures for companies such as Fisher Scientific collegenesis, Q Medis More he's an advisor currently to several private equity and hedge funds for merger and acquisition and he actually discovered the aesthetic filler Restylane originally in Brazil and built the US market. So Louis doesn't even have a call to action. He's semi retired, just doing private consulting, not even taking on clients at this point. So he just wants to give back to the industry. And we were fortunate enough to talk to him today and to have him share these benchmarks and insights from the hundreds of practices that he's worked with. So use these to measure up your six to measure up your practice. Make sure that you're hitting these benchmarks. Use this as a blueprint for success and pay attention to the insights that Louis is providing us today. If you have any questions, feel free to shoot them in the comments section and we'll make sure to coordinate with Lewis to get a response to those comments or questions. So with that said, let's jump into today's episode. Hey Louis, welcome to the podcast. We're very excited to have you on today. Thanks for joining us.

[B]

Thank you Rick for joining us.

[A]

My audience members who aren't familiar with you, I know you've spoken at a lot of industry events, been around for a long time. Could you just give us a little bit of a background on yourself?

[B]

Sure. Well, this started actually back in 1997 when I became wind of a product called Restylane that was actually being sold only in Sweden and in Brazil and became interested in the aesthetic space, went over to visit him and the rest is history. I brought the product into the United States, took it through the fda, which is not an easy thing to do and you know, the clinical trials and everything else, and then ended up getting the product registered and ultimately selling it at the time to a big aesthetic company called Medicis Pharmaceuticals to move ahead. So since that time I've seen from here to Shanghai about 2000 aesthetic medical practices have seen all of the good stuff and all of the bad stuff and hopefully I Can share some of this and pay a little forward to everybody who's on the podcast.

[A]

Yeah, I'm so excited and I got to go through. Lewis sent me over some materials to prepare for the interview today. So I was able to go over some of your previous presentations, some of your notes that are updated for 2024, and kind of just craft some questions to help guide our conversation today. So the first thing I wanted to talk about were some of your benchmarks that you had outlined and then specifically related to those benchmarks. If you're a practice owner and you're listening to this and you feel like you're falling short of one of these stats where you generally see Louis people falling short in terms of, you know, operations management that caused these things to happen. So the first number that you had in your presentation, I know this one's going back a few years, was the $2,400 ish service revenue per patient. Was that an annual amount?

[B]

That actually was an annual amount. The average spend per patient that I have, and it's about 258 recorded with PN, MLS and over years and everything else. So I've got a database of practices that I've worked with and have helped consultant advise to over the many years is about, I think it's $563 per. Every time that they come in. We'll get to that a little later. Best practices take multiple bites out of the apple out of that particular patient. So it's not just a one off annual 563 or $600. They're averaging about 3.2 to 4 procedures. They're basically bringing in that customer through a treatment plan or through upselling and cross selling almost four times a year for separate procedures and looking in the tools of the toolbox that the practice has.

[A]

Yeah, okay, that's awesome. Yeah, that was the next thing that 3.8 visits per year. And is that data that you have, is that crossing over from like I know the med spa space is. So the lines are very gray. Right. They're dermatology practices, plastic surgeons, just strictly med spas. How does that data break down in terms of practice type?

[B]

The med spas have a tendency of actually bringing in those patients more frequently than medical aesthetic dermatology practices or the surgical plastic surgery, med spa practices.

[A]

Okay, interesting.

[B]

And that number would probably exceed four, you know, on an annual basis. And that was the trick during the Great Recession and it was the trick during COVID was to. To basically not everybody was coming in during that time. But for Those who were coming in who wanted to continue with their aesthetic maintenance and regimen, you know, those were the one ones that they decided to go after because they were the ones who were opening their pockets, had the credit card, and were willing to continue their program.

[A]

Yeah, that makes a lot of sense. I know people listening to this. You have people concerned about, you know, economic headwinds and inflation and things like that, and people spending less money. But you just outlined two examples, right, Great Recession years, Covid, where you were in those types of situations working with practices. And one of the ways to get past that is you might have less people coming in, but to increase the frequency at which your customers who haven't been affected. Right. And every economic downturn, their income might have gone up $50,000, $100,000. So any strategies for getting that number up, like making sure that you're kind of hitting that benchmark of four plus potentially visits per year?

[B]

There's a number of ways, but at the end of the day, it comes down to the patient journey and experience in that practice. And you're trying to do two things. You're trying to get them to come in more frequently, and you're trying to have them meet the pricing without having to go to some type of commoditized pricing in your practice. So you're trying to keep your, your prices up because you're getting squeezed by some of the big vendors out there. You're trying to increase the frequency they're coming in that requires special treatment. And in best practices, that can be anywhere from putting together and establishing a VIP program for those particular patients where they get special emails and text blasts and various specials and various events. But it's the touch points to those individuals that these practices continue to stay in contact with them almost as if they were friends, you know, and reminding them to come to the website because there's a new procedure or a new provider or you know, a, a new treatment that the practice is brought in and stuff. So.

[A]

Yeah, so some people I know are like afraid of over communicating. They don't want to be annoying. But like you just said, if you're kind of treating the relationship as a personal relationship, like you would be a friend, you're sharing that kind of stuff with a friend. So is, does that kind of play into the psychology of what you're trying to do? There is, is make sure that communication is personalized, that it doesn't feel like you're annoying the prospects because you do ideally have a relationship with your clients.

[B]

Yeah, it's all about the trust. And you know, you're putting your face in your body, in the hands of somebody else. And this is a voluntary procedure, it's not a medically necessary procedure. So patients increasingly are more careful about, you know, who they have as providers and you know, this is the aesthetic market. These are people who are, you know, continuing to travel and continuing to spend money on their self care and wellness. And they will spend it and they will spend it wisely, but they will also spend it significantly and materially as they do with many of the practices that I'm involved with. The bottom line is, is that you've got to, you know, create that value in that practice and that meaningfulness and that trust in order for them to be able to come in more frequently and be able to pay the prices that you're doing. And it's not different too much than the hospitality industry and so forth. You know, when you go into a St. Regis or Ritz Carlton, there's a certain expectation of service but there's also from a consideration from their side, a consideration that you're willing to pay those prices and you're willing to, you know, to be able to come in at the frequency that you're doing. So it's a two way street and best practices manage that two way street on a continuous basis, almost weekly with touch points with these key providers. And that could also be a phone call. And it, you know, there are other mechanisms besides them just coming in, communicating them via text or e blasts or you know, through some type of proprietary social media mechanism.

[A]

So you're trying to leverage any sort of communication you can to like get that relationship to become closer and closer and closer where it's the norm that you're getting a phone call every week, just checking in, seeing how things are going and asking if you need anything, you know, otherwise.

[B]

In the market today, the market is down 6 to 12% this year, you know, based upon some of the funkiness, you know, in our macro environment and some of the political things that are going on. So there's a little reservation on the part of a lot of people to hold their, their coins, so to speak, in their pocket. But there are many that are continuing to go out and I have best practices that are up 20 this year in the middle of this, you know, macro environment. And it is because of this journey. When you talk to those patients, they're not going to go anywhere. They're highly retained by these particular people. They have vested their time and their emotions, you know, into whether it's an esthetician or a mid level provider or the doctor himself in the practice.

[A]

Yeah, that's great advice. I'm thinking about like, you know, if you go to a hair salon, right, You've built a certain relationship with that person. A haircut is not a haircut. You go to that person because you know you're going to get a specific outcome. You're going to have a certain level of service and treatment and you have that relationship. You want to develop that type of relationship in your med spa. You don't want it to be Walgreens where people think they can just grab the product or service off the shelf at the place that's most convenient to drive past.

[B]

Exactly. And people will travel for that, you know, out of their schedule to go to that one individual. And it's the same type of a relationship that, you know, that is maintained almost religiously with a lot of these providers. They're constantly there for them. That doesn't mean just be between nine and five. That sometimes is during the evening, a patient coordinator will call a prospective client or an esthetician or a mid level or a doctor will actually make contact with them even on the weekends. This is, you know, to some extent a little of a 24, 7 business that extends beyond 9 to 5 during the evenings. That also includes work hours and also on the weekends and then also includes office hours there as well.

[A]

Yeah, that's great. I totally agree with that. I don't use this example a lot on the podcast. I do it a ton of my YouTube channel. But one of my favorite quotes in marketing is from a book called the Advertising Effect. And the quote is action changes attitude faster than attitude changes action. And it's the idea that the best way to shape the perception of a prospect is to get them to come in, have a great experience doing business with you, and they're going to know like and trust you based on that personal experience at a level that's different than anything they could just see or read in third party online reviews. So I always mentioned my wife and I. You just said we still drive to our dentist 35, 40 minutes into the west side of Nashville. We live in the suburbs east because we know like and trust them based on personal experience. So you'll have stickiness if you're providing a high level of service to your clients.

[B]

Right. But otherwise, if you don't have that, you're subject to a 6 to 12% decline in the market, which means less patients coming in. You're subject to commoditization in your pricing and ultimately, you know, from a financial standpoint, subject to declining profitability in your practice. That's the abyss and that's the spiral downward that you're trying to avoid. And hopefully some of the tips that I can give you today will help you kind of stay away from that abyss.

[A]

Yeah, and I like that Ritz Carlton example. Like, right, people are expecting to pay a high price point when they go to the Ritz Carlton, but they're also expecting a high level of service. So it's a two way street. And we just did a video on the YouTube channel and said, putting the spa in med spa.

[B]

Right.

[A]

You really want to focus and emphasize level of service. So any specific actionable tips where you find practices that are maybe they're just, okay, they're middle of the road, they're not doing anything abhorrent, but they're just not achieving a top notch customer experience where you see people generally falling short.

[B]

Right. And it starts when they walk into the reception room. Sometimes the lighting is a little different, it's dimmed down, versus in the exam room. There could be, you know, slight music in there that, you know, in my best practices, people at reception stand up and greet them. Sometimes they even go away from their particular chair and come out and greet them and shake their hand, bring them to their chair, ask them even, especially if there's a little of a backlog in terms of their waiting time, asking them anything that they need at that point in time. And that could be anything from lunch to when I was in London offering prayer rugs to some of the Muslim clients because they were coming in at that time of day and knew that that was an important thing. And it's paying attention to that detail that creates that unique journey experience that you're just not walking into a place to get 25 units of Botox. Yeah, it's not about the Botox. People are in there for self care, for self confidence, and to enjoy a pleasant and hopefully memorable experience that might be different when they walk out of there than the rest of their day. Whether it's family or children or pressures at work or pressures with financials. It's that one period of time that they have for themselves that's only for themselves and helps them both mentally and physically improve their self care and awareness.

[A]

I like that little tip about like even getting the person lunch. Like there's a little bit of a wait. Like there's a coffee shop next door. Let me go grab you a coffee. What can I get for you? While you're waiting, like so instead of just thinking to yourself, as a practice owner, you know, art staff is nice. They welcome people when they come in, the office is clean. Trying to find the things that can really help you go above and beyond to create an exceptional client experience.

[B]

Clients in focus groups. You find out that these clients and patients are looking at every single touch point when they come out of the elevator or when they walk into the med spa. You know, in terms of the cleanliness and the greeting and the feeling that, you know, in best practices, they know exactly who's coming in by photos. So they, when they come in, they actually say their name. It's a nice thing to be recognized among a crew of other people in the reception area that you know that you're well noted and that you're special for 500, 600, a thousand, $2,000 that they're going to spend to you in less than an hour. They should feel special about that.

[A]

That's great. I love that. Can you elaborate on that a little bit more? So, like the idea of a first patient coming in and instead of them checking in at the front desk and saying, what's your name? And having to piece the conversation together, to literally see them walk in the front door and have a picture, a reference, so you literally can welcome them by name. How do you do that?

[B]

Logistically, what happens is the night before and best practices, the practice manager who's responsible for managing the day, you know, the patient flow and efficiency daily, they will look the night before at the patients that are coming in. They'll know who are Wales people who spend six or seven thousand dollars in skin care. They'll know some of the people who might be a little difficult the next morning. They will have something which is absolutely imperative in every practice and I please recommend that you do it. It's called the daily huddle. You have employees coming in in the morning from an evening or a morning commute that, you know, could cause all type of disruption and discombobulation in terms of their focus, you know, walking through those doors. And that daily huddle basically kind of organizes and focuses all of the employees on the people and the flow and efficiency that's coming in that day to get them really understanding what's going to happen during that eight hours where they're double booked and triple booked, where there's going to be issues, where the, you know, the heavy duty VIP customers are coming in. And that 10 or 15 minutes before the day starts is absolutely critical. It's done in every Single one of my best practices. And it helps for sure organize that flow and efficiency. And there's a way of conducting those huddles which, you know, I have my own tricks to be able to, you know, optimize that opportunity. Calling out, you know, calling out one of the staff from the day before in terms of how great of a job they did with that particular customer that was referenced yesterday and hopefully Sally or Judy or Ben and so forth. With this VIP coming in, you'll be able to do the same thing that was done yesterday with one of your team colleagues.

[A]

Yeah, that's great. What great nuggets. It's just reinforcing. It's kind of reinforcing so many ideas on previous episodes. And I think the realization I'm coming to is that as a med spa owner, medical aesthetics, business owner, you have to really be a business person first and foremost. Almost like you can't just understand the medical side and know, like, I know how to administer Botox so I can open a med spa. You really have to get good at these other things for your business to really be successful. You have to understand operations, standardizing processes, customer experience, managing a team. And all those things really have to come together or you're going to struggle.

[B]

Absolutely. And this is, you know, at the end of the day, managing profit and loss statement. And the practice manager and the owner, you know, are responsible for this. You know, in an average med spa, you know, and especially with commoditization going on, you're trying to maintain and hold as much of that gross profit margin as you possibly can. So, you know, if a neurotoxin is costing you almost $7 a unit and you're selling it for 10, you know, and that's a little high on the cost per unit there. But just to keep it simple, that's a 70% cost of goods. That's a 70% gross profit margin that you know that you're going to have to try to maintain here. And it creates squeezes and stuff like that. And so the average best practice med spa is trying to hold on to a 70 plus percent gross profit margin. Because most of the business that they're doing is around injectables, whether it's dermal fillers or neurotoxins, you know, after that you only have, with 70 cents on the dollar that you brought in, knowing that you're going to have 30 cents to give to one of the top vendors out there, you know, you have 70 cents to be able to cover all of your operating expenses. For the month and be able to make a profitability. And you know, at the point in time when you're interested in selling and I'm involved in a lot of those transactions at this point in time, they're looking for 20 to 25% in the bottom line. So if you've got 70% on a gross profit margin, you really only have 45 cents to be able to cover on an average basis the rest of your operating expenses. And that means keeping all of those operating expenses in their lane. Those, whether it's the rent or the marketing or the staff expenses or the incentive compensation or the medical supplies or any of the other things that impact those operating expenses before you finally get down to profitability. So especially in 2024, this is micromanaged by the best practices and they manage it on a daily basis. On a monthly basis, I have 3 hour, 4 hour reviews of the month and we may go through 100 and 150 KPIs and metrics to make sure we understand what happened during that month, what corrective action we can take, you know, for the next month, and what corrective action we can take on a, on a timely basis. So it truly is a business.

[A]

Yeah. So you mentioned those lanes and having understanding the benchmarks for each of these lanes. Could you give us just some general guidelines that you're usually using the average.

[B]

Practice, they're bringing in say $100,000 a month. I'm just going to use it as an example. You know, 70,000, they spend 30,000 on cost of goods, what they pay in tips and consumables and neurotoxins and dermal fillers and all of that stuff. And they end up with $70,000, you know, for that month in terms of gross profit margin, you know, They've got about $45,000 to basically cover their overhead. If they're going to come up with a 20 to 25% profitability, where does that 45% go? And so forth. You shouldn't be spending more than about less than 5% on your rent. If you're not spending, if you're spending more than that, then you're going to either have to generate more revenue or you have to figure out how to manage that rent expense. And sometimes people take on, you know, new rents, new facilities, you know, new costs, you know, new tenant improvements and so forth. You know, don't purposefully, you know, when they're planning these things, make sure that it stays within that 5%. In the area of marketing, which is more complicated the cost of marketing has gone up because of the level of noise out there and the level of vehicles that you have to attend to. It's not just SEO that you have to pay for the 15 to 2500amonth to maintain directories and linkages with your webmaster and so forth. This also involves Google Ads, meta ads, Instagram, you know, all types of costs there. Cost to put together E Blast, cost to put together events, cost to go out, you know, on a weekly basis for community outreach and visit other key influencers in the market. Like you said, hair salons and Pilates and yoga studios where you would find similar patients going to these other influences that you might be able to bring into your practice and so forth. That number is like 7 to 8% at this point in time. It used to be 4 and a half to 5%. But it's becoming increasingly expensive and best practices who are profitable and growing, you know, are spending at that aggressive level and quite frankly in my best practices are outspending the local competition and taking their market share and that's what that's about and so on. In the area of staff, which is your most expensive thing, expensive cost and cost lane and so forth, that all depends upon quite frankly what you have in terms of mix of estheticians and mid levels and doctors and so forth. But you know, estheticians shouldn't be making more than 15 to 20% of what they're generating in terms of gross revenue. Mid level shouldn't be, you know, charging, costing you more than 20 to 25% to deliver that gross revenue. And doctors shouldn't be, you know, honestly charging the practice or having doctors in the practice that are generating revenue and are asking for more than 30, maybe 35%. But it's the mix of all of those different providers in a practice, the esthetician mix along with the mid level provider mix along with the doctor mix, especially in a med spa that keeps that cost effectively in a lane that shouldn't exceed around 22 to 25%. And then you have some medical supplies, the cotton balls and swabs and other things like that, that should be 2 or 3 or 4%. And then you have other miscellaneous expenses, you know, a lot of other little miscellaneous expenses that have to be managed. But the ones that I just mentioned are the ones that are key to ensuring at the bottom line that you're generating profit. Otherwise you're running a non profit. You know, the patients are coming in that you're charging them $100, you're making $70. You're spending all of that $70 basically paying for the operating expenses of the business. And at the end of the month you've generated no additional value for the practice and quite frankly no opportunity when you're ready to be able to have liquidity event and quite frankly a life changing valuation and a payout that a lot of these practices deserve. But it's a journey to get there and it's not an easy journey and sometimes it takes six months, sometimes it takes 12 months to be able to quite frankly straighten out some of these profit and loss statements. Some of them are hard decisions that have to be made by the practices and some of them are low hanging fruit and just need to be implemented and executed.

[A]

All Episodes this episode is brought to you by MedSpa Magic Marketing, my agency. We help med spas and aesthetics 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 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 your business. So if you want to do that, you can go to medspa magic marketing.com I guess real quick on that. What are the things that you see that are low hanging fruit generally? Like if you had to kind of most of the time, if you see certain things that pop up in that low hanging fruit column, what are those things? And then what are the things that you're usually having to take a hard look at? And then one of the things that comes to mind is that 5% rent rent benchmark. I talked to Dr. Carol Clinton, one of the co authors of Medica Confidential before she passed. We were lucky to have her on the podcast and she talked to this about this idea of Right. Sizing. If you've got a space that's too big, do you have any tips or insights on kind of managing those expenses and where you see the most common mistakes happening for practices that are profitable?

[B]

Right. So I had a practice, opened up a second location. We were targeting about, you know, 5%, you know, doing about $100,000 a month and the rent not being more than $5,000 in that time, that they ended up doing half that amount of revenue for various reasons. And so that rent cost as a, you know, as a percentage of the total income statement went from 5% to 10%. What did we do? We actually decided based upon what we could do from a revenue generating standpoint. We could only do what we could do. We went back to the landlord to see if we could get some rent dispensation. Of course, he said, nice try. And there wasn't anything that actually, you know, quite frankly that could happen there. So what we decided to do was to bring in other lookalike providers that could either rent the space or participate in the reduction of that rental expense. And so, for instance, in one of the practices which has great procedure rooms, they brought in a plastic surgeon that was able to do minor surgeries in a procedure room. And he was blocked out. He happened to be blocked out in time with the hospitals and so forth. So he started coming about two or three and now four times a month. And that actually has now brought that rental expense, as an example, down to about 3.8%. And they're quite happy as they're trying to build their own revenue. And sometimes stuff doesn't happen as planned. With the brightest minds, even including myself, we weren't anticipating sitting on 50,000 versus the hundred thousand. We had that locked and loaded. But something else happened in the marketplace, it doesn't matter. Fog happens, as we say in Nantucket. And you can't get that plane over and land and see your family over on the weekend. And just like in life and in business and so forth, stuff happens. And you've got to be able to put together contingencies and not allow that to continue because that's where the laziness and that it becomes now a structural cost to the business. Now I've taken, I'm five points over my rental now and I can't do anything about it. Or you think you can't do anything now I've got a five, five points. Now you're trying to steal five points from other parts of the P and L statement. You try to take it out of your employees. You try to take it out of your marketing and so forth. You try to take it out of fundamental areas, out of the practice and so forth to increase or improve your profitability. And you're quite frankly, robbing Peter to pay Paul.

[A]

What a perfect quote. Because I just had a client use that quote on a call last week, robbing Peter to pay Paul. That's how she felt like she was managing.

[B]

And I tried, but I find that happening all the time because it's a hermetically sealed job. You're not going to get more. Maybe you'll get 75% gross profit margin, but you're not going to get more than that if you're doing the regular things. And I would encourage med spas out there that are primarily injectable providers to start looking at other procedures and other silos to bump up that gross profit margin because inevitably there is a squeeze going on with the vendors and there's a squeeze going on in the pricing because of the level and number of people who are coming into this very exciting and long term attractive market and opportunity.

[A]

Yeah, yeah. What good advice be, be creative. You can't just, you can't just ignore that number. You got that rent expense, all of a sudden it's 12% of your revenue and you're just hoping it goes away or that you're going to make up for it somewhere else. Like at some point you have to make the decision to fix the problem and to address the situation and getting creative with solutions like you just mentioned is right.

[B]

And fixing that problem on a timely basis. Yeah, the best of my practices, the owner sees the revenue on a dashboard at 5:03pm every single day by provider and by procedure. He knows exactly what happened that day. He also knows what the budget was supposed to be for that particular day. And so some people are managing this in a real, you know, and I think you have to, you have to granularize this opportunity. And you know, a day is extreme. A week is not uncommon for, you know, meetings to occur with the manager and the patient coordinator and the providers to look at opportunities to improve or make calls or do other things, you know, that are necessary in the coming week. But inevitably, all of my practices have a monthly review. They get the financials in. We wait about five to 10 days from the accountants to kind of record the accurate and complete financial statements. We take a look at them, we start going through a deep dive of all of the metrics that surrounds those numbers. And by the time we get through that review we know exactly where we are, we know exactly where we're not, and we know exactly where we need to get to. And everybody has to do that. There isn't any extra time in this business to waste anymore. Because when you're not doing that and I'm involved in a practice down the road, that's not a good thing for you.

[A]

Yeah. For those of you listening, how many times you have to hear some of these things related to financials and understanding that these things are going to make or break your business, like act, identify the issues and create a course of action to resolve these problems. You have to stare them down. You can't just hope they go away.

[B]

And you got to do it on a timely basis.

[A]

Yeah.

[B]

It's more about the window of opportunity in terms of business success than it is necessarily about the amount of opportunities that you have.

[A]

Louis, you had a note on one of your presentation documents talking about equipment purchases, and it's been a common topic on the podcast. I wanted to get a little bit of related to this conversation around financials, what you're seeing, what you generally recommend around evaluating your equipment purchases.

[B]

Yeah, so there was a world, there was a day, and we've all been through that. And they're now door knockers, you know, or door stoppers, as we call them, you know, where 200 $300,000 purchases were being made and, you know, salespeople, you know, sometimes earnestly, most of the time, you know, would represent that doc. All you need is 27 patients to come through at $6,000, you know, or $8,000 or $20,000, you know, a patient, and you'll be able to pay with. Pay for this in three months or six months. Well, that went to nine months, that went to 12 months, that went to 15 months, that went to 24 months. And I think we all got a little smarter about what we were doing in terms of the return on investment and economics of these primarily energy based devices and so forth, which are capital equipment, you know, and are expensive. Everybody should know that. You know, these capital equipment companies, they have somewhere between a 60 to 80% gross profit margin or more on those pieces of equipment. So these things are not costing them $200,000 to build. Some of them that are, you know, that are very high quality, are more expensive, but not even close to the numbers that we're talking about. So what best practices do is they'll do two things, and some of them have leverage that not smaller practices have, but in the bigger practices with more leverage, they'll Tell that person of this series about it, drop it off for a week or two, leave some consumables, we'll test it out with our patients and see what the uptake is. And if we're good, we'll end up paying cash for that piece of equipment. Don't worry about financing with us or anything else. That's one strategy out there in the smaller practices and so forth. I would not recommend these, these higher cost, expensive purchases at this point in time. I would be looking for more like 50 to $100,000 opportunities because you're going to find out that that average cost per procedure is going lower than what they represented, you know, in their ROI analysis. And you've got to discount almost everything that they say. And we do that. I work with very, very small practices, million, two million dollar practices, you know, that, that talk to me all the time. And we're looking for, you know, the best, safest piece of equipment that we can purchase. But you have to do it on a, on an economic basis. Right now I don't have that many pieces of equipment out there that I'm strongly recommending, I'm recommending actually other silos for them to go into that don't have that high hurdle, that high initial cost of capital to get into actually doing a procedure. And more and more med spas are looking at non capital intensive silos to go into. And we can talk about those at the appropriate time.

[A]

Yeah, I guess. Can we jump to those now? Because that's been my experience talking to practice owners. What you just reiterated right there, I think is so true. And when you look at those percentages and you're doing financial planning really throws a wrench in your numbers when you have a $400,000 $300,000 machine and no business purchasing the product. So yeah, that's great. So in terms of some of those additional services to bring in extra revenue that aren't.

[B]

So when we look at the market right now, there is a little morphing going on between aesthetics, the outer beauty and the inner beauty of inner beauty or health of a lot of these patients. And of course, if you take care of some of the fundamental internal things, you know, functionally with patients and so forth, it actually can actually improve the health and well being of your skin and facial appearance and body appearance and other things. But most recently, and because of this capital equipment issues that are out there, you know, a lot of the med spas and a lot of the best practices, whether they're combined Durham aesthetic practices or combined plastic Surgery. Med spa practices are looking into three other areas. One is weight management and control and that is the ozempic, the semaglutide and the tirzepatide crew. This is not going away. This is a fundamental opportunity for med spas. They're charging, you know, $500 per patient to have them do a procedure like this. They're seeing instantaneous results. So there's self gratification. These patients are coming in to manage their weight loss and their BMI on a once a month basis. They're starting to improve and feel good about themselves. Suddenly they're talking about other procedures that they cross sell and upsell with these patients. The second area is hair restoration. These are the fastest growing opportunities. And hair restoration, you know, can be done two ways. One autologously, through something called prp, which you have to get one of these spinners, you're spinning down blood and extracting the plasma and then re injecting that into the forehead. There are other products that are off the shelf that patients that are getting aware of and practices surely are getting aware of. And that's the area of Exosome therapy, which is a payload of immune and growth factors. And there's a number of Exosome companies out there, some much better than others. Please be careful about that and please email or text me if you'd like to hear any more about the Exosome area. But that's a phenomenal growth opportunity in the hair restoration area. The two areas that I've talked about at this point in time cost you nothing from a capital equipment entry and hurdle basis. And they're the fastest growing. Two of the fastest growing areas, you know, that we see in the market right now is weight management, control and health, body health, as well as Exosome therapy, whether it's therapy or in your skin care. And I highly encourage these practices to take a hard look out there. And there are really good, many good opportunities and best practices have already incorporated this kind of wellness piece into that so that they're doing almost a 360 degree view of the patient. And when you're taking care of their weight and you've lost weight in front of you, besides all the crying and the oh my God, I've been doing this for 30 years and nothing has worked, those pockets are wide open for you, you'll never lose that patient. And if you do Exosome therapy or something like that, and you've got hair regeneration, these products work, or prp, and you've restored some of the health and the, and the loss from alopecia or from COVID or from stress in our society and so forth. These are all high retentive, highly satisfied, highly enthusiastic and exciting patients to want to do more with you.

[A]

Yeah, you're eliminating risk in terms of the capital expense and you're generating a result that makes clients happy. Win, win.

[B]

And they're available. And these, these two weren't available five or ten years ago, but they're available today. And, and it's female and male. So we're not just dependent upon, you know, 85% of the patients coming in to be female. We now have a 50, 50 split between body health and weight management, as well as hair loss as well. And those are two areas that. There are others, other areas, but that has to do with the customization and specifically with the practices at this point in time.

[A]

Yeah, that's great, phenomenal advice. The last thing I wanted to wrap up with here in terms of discussion was one of the presentation sheets that you sent me had this note about a suggestion that your top practices, the best practices that you work with top performers, were averaging 5.8 days per week that they were open. So could you elaborate a little bit on that? Obviously nobody's open for maybe 5.8 days.

[B]

Exactly.

[A]

But where that number comes from and the advice that backs that recommendation.

[B]

Yeah, it turns out that Mohammed actually had to go to the mountain after all. It didn't look like that in the Bible and in other religious scripture and so forth. But it's a new world. And quite frankly, it's understandable. There are people, you know, I can talk about this 25, 30 years ago, somebody in the middle of the day had to go to a doctor's office. Somebody had, in the middle of the day had to pick up their kids. Somebody in the middle of the day had to do something. They go out the door. Everybody would understand it. Sometimes the hours would be made up, sometimes it wouldn't be. This is a very different employment environment. Employee, employee relationships are a very, very sensitive area. And from a risk mitigation standpoint, has to be really, really watched, you know, quite frankly, at this point in time. But best practices, and some of them go back five years ago. I have best practices that were open two to three nights a week and seven days a week five years ago. And those are the ones that achieve the profitability. They're the ones that actually ended up getting sold because, you know, those private equity people are looking to, you know, looking at these hard working, you know, you're open three nights a week to 8:00 and you're there and you're open on the weekends and you're there on Saturdays and Sundays. This is the type of person we want to have on our management team, you know, in the next phase of this, you know, market consolidation and restructuring about how procedures and other things are delivered. But, but people just don't have that time anymore. And you know, and they're busy. And they're not just busy, by the way, with the regular things having to do with family. They're also, they have self care to do, you know, and they, you know, they're working out or they're biohacking or they're resting and so forth. And so they need other, you know, more convenient times to be able to bring these. So my average practice in those 250about it's 1.8 nights per week, which means pretty close to one or two nights. They're open to 8 o'clock. You could you look at other parts of the week, maybe you close a little earlier on Friday afternoon because it's just not one of those markets that people are gonna, you know, to be able to be convenient. It doesn't matter. There's a lot of places on Friday afternoon that are slightly, a little slower. We make up that a little on the weekend and so forth. And then, you know, on the weekends they're open, you know, they're not open necessarily on Sunday, but most of them are open realistically between 10 and 4 on Saturday. And there are plenty of professionals are coming in and there are plenty of professionals that coming in not just for aesthetic procedures, but for things like IV therapy for like glutathione for self care and management. And that takes, you know, 45 minutes an hour. And they want to do it on their free time, you know, maybe after going to the gym and then they go get their IV push, you know, their IV therapy, whether it's glute or nad number of, you know, vitamin building up so that they can get back into the workplace or into their, you know, somewhat stressful, you know, family or personal lives coming into the next week. And you've got to do that. And it's not just about best practices. It's basically a C shift in the convenience again and providing an experience to those patients, as I said at the beginning, that basically makes them special. That where you're special enough that we'll see you on a weekday night, you're special enough that we'll see you on a Saturday and you know, God help us on a Sunday.

[A]

So, yeah, so I did a presentation earlier this year on marketing, and we talked about how people make purchase decisions. And I kind of reject the idea a little bit of a unique value proposition. I think it's these incremental differences in perceived value that help you stand apart. And people are making those decisions based on a combination of factors, factors of know, like and trust, reputation reviews, factors related to price, and factors related to convenience. So this is one way to manipulate your. That subconscious scorecard. On the factor of convenience, you're giving people the option to see you after work on Saturday. So instead of blueprinting your hours as to what you want to work and what you wish your schedule looked like, you have to map that to what your clients want.

[B]

Right? And it turns out, and I've been on many millennial market research and podcasts and everything else, the millennials are looking more. They want Mohammed to come to the mountain. They want that convenience. They want that opportunity to be able to feel a little more control over their lives, over their time and where they spend it and what they spend it on. And so it's just, it's a different cohort that I grew up with that was, you know, 9 to 5 and, you know, strictly and understood what was going on, didn't complain, you know, stayed in line. And millennials kind of like just blew that. Right. Blew that whole mentality and probably for all the right reasons. Reasons.

[A]

Yeah. Well, Louis, this was phenomenal. I really appreciate your time. Thanks so much for coming on. Any references or places that you would point people for additional information to kind of get more of just what, what you've taught and what you've been up to.

[B]

I don't have any public, you know, things, but I mean, you're more than happy to, to email me or to text me. Be more than happy to, to respond to any of those follow ups. Obviously, this is a short podcast. I've got, you know, a hundred metrics that, you know, we haven't.

[A]

I would love to do it again. Like, I would love to schedule another episode because like you said, I'm sure we could go deep dive on so many of these different things. So if you're up and get it.

[B]

And get a real understanding, a real, more granular understanding of what it takes, you know, in best practices to run a successful, growing and profitable enterprise.

[A]

That might be the podcast episode title. Well, like, if you have any questions for Louis, put them in the show notes. If you're listening on Spotify or I itunes, there should be a Q and A section and on YouTube just leave them in the comments section. We'll make sure that we get to Louis and hopefully maybe correspond with some of you all. But Louis, thank you so much for joining us today. We really appreciate it.

[B]

Thank you very much. Appreciate it Ricky.

[A]

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.