← Med Spa Success Strategies
Med Spa Success Strategies
The Most Important Concept in Med Spa Marketing - True ROI Measurement (2025 Marketing for Med Spas Part 2)
00:24:35
Loading summary
Transcript1 lines
- [00:00]
A
Hey, everyone. I'm Ricky shockley, owner of MedSpa Magic Marketing and host of the Med Spa Success Strategies podcast. This is part two of our 2025 series on how to market your med spa more effectively and to ensure maximum growth. So on part one, we talked about the prerequisites for success and how to get MedSpa customers to choose your practice over the other options they have available for that initial visit. It's really important. Go back and watch episode one of the series if you haven't yet. And today for episode two, we're going to talk about measuring the results of your marketing campaigns in a manner that creates maximum confidence. Right. You need to know that your marketing dollars are truly an investment and not an expense. How do you get that data and what things should you be paying attention to? I think this is maybe the most important video in the series and I think it's going to be revolutionary for a lot of you to see what we're going to present here, and it's probably going to impact the way you think about your marketing investment quite dramatically. So I'm excited to dive into this. And again is the goal is we don't want empty, we don't want empty treatment rooms like this, right? So we need to figure out, hey, how do we ensure we don't just get patients through the door, but that they're coming back for recurring service and how does that play into roi? Okay, one little thing I wanted to talk about because I know you see a lot of marketing companies do this type of thing. They'll say 30 patients a month guaranteed, 50 patients a month guaranteed. And I get it. This is not a knock against that. Like they're trying to reduce the risk, they're trying to guarantee you some level of result. Here's why I believe it's problematic. I've had clients that I've talked to where we ran ads for something like a facial and they got a bunch of people through the door, a lot of bookings, but those people were not cross sold or upsold into services at any sort of reasonable level, and they were not retained at any sort of reasonable level. So if I have 30 patients coming in every month spending $99 on a facial promo, not rebooking and not being retained for other services, it's not really helping me in my long term growth trajectory. Same thing can true with, be true with how you advertise Botox or any service in your practice. So there's a lot of nuance here because the name of the game for most of the services you offer as a med spa is retention. So. So the new patients in the seats is only part of the picture. That's kind of what we're going to talk about today. So let's go through a couple scenarios to illustrate a point in scenario one. And I'm going really deep in the math on some of this, so I'm going to try to slow down because I know I tend to talk fast. But let's say for scenario one, you're spending $5,000 on ads and you have 100 bookings for $5,000. But of those hundred bookings, you, your initial visit revenue is only $100. Let's say it was a $99 facial, all right? And almost no one was upsold. Let's just say everybody, or maybe it was a $50 facial and enough people were upsold that the average initial Visit revenue was $100 overall. Well, that gives you $10,000 in initial visit revenue. But let's say since that was a facial, people came as like it was a one and done pampering service. They really weren't that interested in becoming a client on an ongoing basis. They you only had a 10% retention rate and a lifetime value, lifetime revenue of $1,000 on the patients that you retained. That would mean that you had $20,000 in total revenue attributed to that chunk of $5,000 ad spend. But you saw 100 bookings in, so that's a 4x return on ad spend. And again, that's not the full picture which we're going to get into because you have cost of goods and other things you need to consider. Let's say example two. You have $5,000 in ad spend and you only have 20 bookings, 1/5 the number of bookings you had in scenario one. Let's say those people though all came out of the gate for they were coming in for some high value, you know, package that includes filler and Botox, like a facial rejuvenation, something that's expensive. So let's say your average initial visit revenue on those 20 bookings was $1,000. That gives you twice as much initial visit revenue for from 1/5 the number of patients. If you retain 50% of those people, it's a smaller pool, but you've retained 50%. You still had 10% retention, the same retention you had from the 100 bookings while collecting more initial visit revenue. So let's say the quality of patient that comes in for the thousand dollar visit, they're probably a better patient that's spending more money on average than $100 patient. So let's bump their their number up to $1,500 in recurring services. Just to illustrate the example that would have created $35,000. So in this case, from only 1/5 the appointments, 20 appointments instead of 100, you actually saw a 7x return on ad spend. So that's all to illustrate that yes, customer acquisition cost and butts and seats is something you want to optimize for, but it's not the full picture. So understanding that framework, let's get into the next slides. To truly understand roi, we we need to understand how money comes in over time. There are two bad ways to measure ROI in a med spa or any business that relies on retention. And the worst way is initial visit revenue. Very timely. I had a call yesterday with a prospective client and we went through number crunching on this ROI calculator, which I'm going to show you here in a second. And this is an updated version. We got a lot of new stuff and some tweaks and fixes from what we had rolled out last year. So we went through this example and he looked at the numbers, he was like, why would I do that? To get that client through the door. Like on the first visit, I'm not barely making any money, maybe even losing money, right? That can be true. This is a business that relies on retention. In the book Med Spa Confidential, they give this example of spending $333 in advertising costs to get a new Botox client, and then that new botox client only spending 400 on the initial visit. So after your ad cost and your cost of goods sold, you lose money on the first visit. Why would you do that? Well, it's because the potential for lifetime value might be 5 to $10,000. And you're going to make that money back as you see recurring visits. But you have to understand that so you can understand cash flow. So initial visit revenue, terrible way to measure ROI as a med spa, especially for services that are recurring. So we can't use that as a metric for success. Lifetime value, though, I would argue is also less than ideal. So if we use the Med Spa confidential example here, and I were to say I spent $333 to get the client that bought a 400 worth of Botox, but over the lifetime, maybe they spend up to $10,000. I don't know when that $10,000 is actually coming through the door and at what pace. So it doesn't help us forecast at an accurate degree, our real growth path and the ROI as it compounds over time. So I'm going to go over the ROI calculator here that we've developed. I give this away for free so you can email me ricky r s e k ydspa magicmarketing.com that's rickydspa magicmarketing.com for your free copy. And again, I'll try to keep you audio listeners kind of in the loop so this makes sense. Again, this is a video on YouTube, but for the audio listeners, I'll do my best here to be cognizant of that as I walk through these examples. All right, so this is the growth path you're realistically looking at as a med spa who operates on recurring revenue models. So like, if you're doing something like Botox, those people are hopefully coming in three or four times a year for years. And so you might spend a couple hundred dollars to get that client. If you retain the client, though, they're going to be worth, let's just say, $1,000 a year on average or $1,500 a year. As you snowball patient acquisition, your ROI calculation gets better over time because you have more a larger percentage of the revenue each month coming from previously acquired patients who are rebooking for service. Very important to understand that this is a visual representation of that. This is a real stat from one of our clients that they have a pretty low ad spend a month. They were only spending $2,000 a month on ads. As an aside, we've raised that requirement for clients that are advertising with us because you want to maximize the results. And if you're not putting enough money into the system, the result is too slow. But what this looks like is like a compound interest calculator. So if you've ever done the exercise of looking at an investment and it only goes up like 8 or 10% a year. But as you go up 8 or 10% a year, year over year over year, that curve just climbs more dramatically as time goes on. Same thing happens as a med spa or any business that relies on recurring revenue and repeat visits. So the first months you do this, your margin is kind of small because you're only getting the initial visit revenue. But as you get three months, six months, 12 months down the line, you're getting the same initial visit revenue from new patients acquired each month. But now you've got this massive snowball that's getting bigger and bigger and bigger because at year one, now you have 11 months worth of patients that are rebooking for other services or are up for renewal for like their Botox, for example. So this is a real life example from one of our clients and that shows how the ROI calculation works. It's a very small, maybe even negative ROI the first month or two. And then you get to a point where it's 2x in a given month and 3x and 5x and it expands because that $2,000 ad spend for them remained the same month after month. But the gap between the revenue generated from the campaigns and the ad spend gets bigger and bigger and bigger. So again, growth is compounding. Very important to understand. 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 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 so let me pull up a couple other things on the ROI calculator. I'm going to exit this tab and try to walk you through this for the audio listeners here. Again, I want to illustrate a couple things and I'm actually going to tie this to the final slide here so that I can do this in a way that makes sense. So here's some key takeaways to understand from these exercises. Cost of customer acquisition is the first place you want to optimize. I want to get my cost of customer acquisition as low as possible. But you need a gauge on retention to ensure success and roi. Because if you get your cost of customer acquisition down, but you're attracting low quality clients who are not spending much money and are not being rebooked, then it can be a very inefficient strategy. So cost of customer acquisition is a great place to optimize first, but it's not the end all, be all. So you have to track retention and true roi. The other thing to remember from video one is this basic formula as the cost. Sorry. When the attractiveness of your offer goes up so it's more exciting. Seth Godin calls it a purple cow. Right. It stands out. It's different than what everyone else is doing. It's more substantial than what everyone else is doing. As the attractiveness of your offer or marketing message increases, your customer acquisition cost goes down. That is an inescapable trade off. Every time you make a decision to make your offer less attractive, you're raising your customer acquisition cost. So understand that when you make your offer more attractive, you're lowering your customer acquisition cost. A great example of this, we've got clients on the west coast that are running ads for Disport and they've got a discounted promo, but it's kind of the run of the mill promo offer for new patients that everyone in their area is doing and their lead cost and their cost of customer acquisition is on the higher end for us. Like they're paying $200, $180 to, to get a new disport client through the door. We've got another client that's in a very competitive market in California that is getting a customer acquisition cost of under $70 because their offer is super attractive. So the attractiveness of the offer is going to directly correlate to customer acquisition costs. Remember that as you're planning your advertising. So if you've got a every thousand dollars you spend, if you've got immediate like an offer that's not attractive, maybe you're only seeing three or four clients. If you can increase the attractiveness of the offer, maybe now you're see 12 to 15 clients. But again, you have to gauge retention and revenue spent to make sure that that trade off is worth it. All right. Recurring revenue services are going to see better ROI over time, but not early on when you do the ROI calculation. So if you're doing this on your own or you're working with a marketing provider, your month, one month, two ROI numbers might not look great, and I'll get to that on the calculator and illustrate that in a second. But by the time you have ad spend and cost of goods and the cost to hire an agency to run the ads for you, you might be cash Flow negative for a month or two. And that's something nobody explains, but it's a reality in a lot of cases. And then for immediate roi, you're going to need to focus on high ticket sales, products and services. So something like a coolsculpting or a laser hair package where you're selling it for $3,000, you might have a 6, $700 customer acquisition cost. But if that's creating immediate profitability and you have low cost of goods because you paid $700 to sell a $3,500 package and you're at a 5x return on ad spend immediately, that's a better cash flow position for you. Month one, month two of an advertising initiative, but it's a slower growth path long term because with a lot of those high ticket services, especially if they don't relate to the recurring revenue services, if it's a cool sculpting or a laser hair, people, people come, they get the result and they drop off. So you have to account for that as well as you're doing your planning. They can also provide long term roi, but it's generally less like for the services that I mentioned. Again, if you're able to sell a 1500 package for toxins and filler, then that can look a little bit different, but you have higher cost of goods than on those. So let's go back here to my ROI calculator and let's run through some examples to illustrate the point. All right, so what this calculator attempts to do is project growth over time. We talked about there being two bad ways to measure roi. Initial visit revenue and this vague number of lifetime value. Because first of all, we need to make sure the lifetime value is actually happening. So we need systems to track that. But we also need to understand, even if it is happening, how it affects our cash flow over a period of months. So let's run through an example here for something like Botox. If you're a practice that's spending $4,000 a month on Botox ads, let's say you're getting 225. I'm going to use Facebook as the example, although the principles are the same. But let's just say this is a Facebook and Instagram ad. Let's say for every $4,000 you spend, you're getting 225 leads. So your cost per lead on Facebook is $17 and your conversion rate from leads to booked appointments is 15%. So for those 225 leads, you're going to have 34 that actually book and show up for service. When all is said and done, that means you have 34 new patients a month for your $4,000 ad spend. So many numbers. So I'm going to, I'm going to just make sure I'm going slow here. That gives you a customer acquisition cost of $118. Means for every $118 you spent on these campaigns in advertising expenditure, you saw 34 or you saw a new patient through the door. So $118 a new patient through the door. $118 a new patient through the door. That's how we got 4,000 into 34. Let's say your initial visit revenue is $400 on your Botox visit, let's just say, or disport, that gives you month one total revenue of $13,500 from your $4,000 ad spend. So that's a 3.38x return on your ad spend. So if we're just looking at the ad spend ratio, right, I put $4,000 into the ad spend on Facebook and Instagram. It created $13,500 in initial visit revenue. That's a 3 greater than 3x return on ad spend. But after you factor in retainer and fees, like if you're paying an agency, that might be a 2x return on ad spend. After you factor in 40 or 50% cost of goods sold, that might be only 20% more than a break even. So that ROI calculation is very insubstantial that first month, right? It's not something like, you're not going to start running these ads. And Even with those 34 new patients, you're going to be looking at your bank account and you're going to say, okay, it looks exactly the same as it did last month. Why is this not working? What's going on? That's the math of what's happening. Very important to understand as you get into any sort of advertising initiative on injectable services or services that rely on retention. As time goes on, though, we're going to kind of anticipate some numbers here with the ROI calculator. So if you're using this calculator and you're seeing the visual, there are numbers that are highlighted here. Those are the numbers that you fill out and you kind of estimate and then you can fill them out more accurately as you get this data, which I'm going to show you in the next videos of the series, how we actually pull this data for clients, it's kind of complicated, but I think it's important data to have. And your EMR and even your high level or your marketing automation tool doesn't pull this for you automatically, at least not to my knowledge or my experience. But what this is showing us is that we're estimating a retention number. So we're going to say that we retain 40% of these clients actually stick with us. And when they do stick with us, they're going to be worth $2,500 over the next two years in additional revenue. But since 40% of them are going to stick with us and 60% don't, in this example, that takes our average revenue per patient over the next two years down to $1,000. All that to say we've assigned a dollar amount per patient of $83 each patient is worth to our practice on average, $83 a month in revenue. And again, you can fine tune this as you get more data, but starting out of the gate, this can give you a baseline to project success. Hey there. Wanted to briefly interrupt the episode to make a quick ask. If you're a podcast listener, it would need the world to us if you leave a review for the podcast, whether that's on itunes or Spotify. It's something I hadn't really remembered or thought of asking for, but it does help us show up more frequently so that we can reach more people with the information that we're providing. So it mean the world to us. If you leave a review on itunes or Spotify, if you're listening on audio, if you're watching on YouTube, make sure to hit the subscribe button so you're in the loop for future videos and you don't miss any of the content that we're putting out. What you see here is, you know, month one, you put 4,000 in to get $13,500 returned. By month six, you've put in 4,000 to get the same $13,500 in initial visit revenue. But now you've had 34 patients come in for five straight months and that estimates to be $14,000 in recurring revenue from previously acquired patients. And now you're at $27,000 a month in revenue growth over a six month period from running these ads. And, and you go back to the chart, the compound interest calculator. This number just gets better and better and better as time goes on because you have a larger database of previously acquired patients that you're pulling from for rebooking and retention. So that's to explain how ROI works for the injectable services. I know that's heavy on numbers. Super technical. I know that can feel overwhelming, but I would challenge you to pause this. Put me on point seven speed if you have to listen to it again, because that concept is just so critical in any marketing provider. Your in house marketing team, if they don't understand that concept, there's going to be a disconnect between they're telling you everything's looking great and you feeling like the bank account number's not increasing as fast as you think it is. This calculator explains why and shows you the reality of your cash flow considerations related to your marketing investments. Now if you were to flip this and do this for something like coolsculpt, where you have really high initial visit revenue numbers, let's see what that kind of looks like. So let's say you take the same $4,000, but now is a more expensive service. So our lead cost is going to be much higher. Let's say we're paying $66 per per lead. And since it's more expensive than leads that convert into bookings is going to be lower. So let's say that's only 10% in this case. That's going to give us a customer acquisition cost of $667. So for that same $4,000 that we put into our Botox campaign where we were seeing 34 new patients on Coolsculpting, maybe we're only seeing six. So here's kind of the benefit of this though. Let's say for every coolsculpting patient, we're selling a $3,000 package and we have low cost of goods. Let's say it's 15% cost of goods and you can replace coolsculpting with whatever you have in your head. That's maybe your equivalent of a high ticket, low cost of goods, product offering or service offering for that $4,000, you're now seeing only six new patients a month. So going back to the Botox example, we saw 34 patients a month. You look at that, after the course of a year, you're in well in excess of 300 patients. I do that for coolsculpting and I'm at like 70 some patients, it's a much smaller number. So the patient volume is going to be smaller and you're collecting more revenue upfront, but the retention number is worse. So the first month you do this, now you spend $4,000 and you have $18,000 in initial visit revenue from those six patients that came in because they're buying a $3,000 package. Well, even after, because you have low cost of goods. Even after cost of goods, your margin in month one, month two is much better than it was on the Botox campaign. On the Botox campaign, it took us till month month six to get to a true 2 1/2x return on investment in a given month. On this campaign, we're doing it immediately out of the gate. So that's the benefit. If you're a practice that's worried about cash flow right now, you're going to need some portion of your ads mix going toward services where you're able to collect a lot of revenue upfront, even though your customer acquisition cost is going to be really high. Most of you see this number and you're like 666 bucks. And I got one Coolsculpting client. What a failure of a campaign. Not really. If you're selling a $3,000 package, your cost of goods are low, you're making an immediate return on investment. That's much more substant than the Botox client. But again, the trade off is most of these people are not retained long term. So in this case we're going to say only 10% of our patients are retained. So now each patient that comes in for coolsculpting after their package purchase is only worth 21 to our practice a month on average. Right, because they came in, got what they wanted. They're not tending to come back for like Botox services necessarily. You might get some. That's why we're putting 10%. But now you look at the growth path on our Botox campaign. Over 24 months, that campaign's projected to bring in $1.1 million in revenue. The CoolSculpting campaign's only bringing in $466,000 in revenue. So if you're looking for long term growth, the injectables ads are going to put you in a better position for long term growth. And building your patient database in a way that compounds high ticket products are going to create immediate profitability, but they're going to put you in a slower growth position 12, 24 months from now and beyond. So I hope that makes sense. Again, I would really encourage you to maybe watch this twice because I think these concepts are critically important. These are things most people overlook when they're doing their marketing planning, but they will absolutely make all the difference in the world if you understand these concepts and have real confidence that your marketing investment is doing what you want it to do. Again, a quick note as we close this video out. If your business relies on retention. The best marketing program in the world is not going to solve your problems. If your business is not growing great. You have to have a top notch patient experience. We talked about that in detail on video one. You have to effectively communicate and sell your solutions and you have to rebook and retain clients. If you've got an injector turning over every three months and you're building a Botox database of people that are lawyer loyal to an injector that's not there, no amount of marketing is going to solve that problem. Back to the David Ogilvy quote, great marketing only makes a bad product fail faster. So that was our video on roi. On our next video we're going to talk about the importance of automating our lead nurture process. So if we're running any sort of online advertising campaigns how can we maximize the number of leads that we're booking into appointments? I'm excited to go into that and the additional videos of the series.