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Med Spa Success Strategies
Why Med Spas Aren't Growing Like They Used To - And What To Do About It
00:18:17
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Hey, practice owners. This is a detailed follow up on something I talked about in an episode a few weeks ago, which is this idea that we might be facing this concept of a shrinking slice. And I wanted to talk about what I'm seeing anecdotally in conversations with med spa owners like you. So maybe this will help you feel a little less crazy about what you're dealing with in the market and the realities of what we were facing right now in the competitive landscape and then what to do about it so we can achieve growth even in a competitive market. So in conversations with clients, this keeps coming up and I look at stats from, you know, like AMSPA studies and other studies, and all you hear is that everything's great. The industry's growing, more people are buying these services. There's a bunch of new, like, everything sounds good on the surface. But as I started to break down the data and look at some of the numbers, and this is again, anecdotally spurred on by conversations with clients, this felt like pretty commonplace. I talked to one of our biggest clients that has five, six locations. From our ADS efforts, we had added $8 million in new patient revenue in the last 27 months. But their business overall was flat. And they're trying to open new locations. There's private equity involved, and so they're concerned with this sort of stagnant growth of their business, despite marketing efforts that have brought in $8 million. I wanted to talk about what's going on and what we can do about it. So I think the first thing is I went through this exercise with, and this is all source, so if you want this free download, I'm going to put it in the link in the show notes below. So anywhere you're looking at the show notes, just go to the link in the show notes and you'll see this document and I'm going to pull it up. I'm actually going to share it on my screen. For those of you that are watching on YouTube, you won't need to. There'll be plenty of insights here that I'll talk through verbally. So no need to look at the screen. But for those of you who want it, after go to the show notes, I'll link to this entire doc. We did a nice little report here with the help of Claude and some of my research. But the first thing to note is if, if you opened your business in the late 2010s, early 2020s, the market you grew up in is probably gone. And this is a challenge for many of us. As when I started in the marketing space Professionally, it was 2011, 2012, coming out of college. So I've been doing this for about 15 years. And coming out of the Great Recession, up to, from the Great recession up to 2020, we had a pretty consistently growing market across the board in most industries. Right. You could look at something like Google Analytics year over year, and you could say, look, we're up 6% over last year, and we're up 15% in the last three years. So from 2008, 9, coming out of the Great Recession all the way up to 2020, we had a solid decade of steady improvement in most markets. And I would say that's probably true for the Med Spa space as well. But introduce 2020 and you had a ton of volatility. We all had a big crash when everybody stopped leaving their houses for a little while there, and then a huge rebound coming out of COVID and then we've had a leveling off. And so that's the basic market dynamic. And in the Med Spa space, that's been paired with a dramatic increase in competition. A very dramatic increase in competition. So I want to talk about the market realities, and these are the three numbers that explain everything. So the numbers that I was able to get from my quick research here. And again, take these somewhat with a grain of salt, but I think they're. They've been representative of the conversations I'm having with clients. But the first thing is let's look at population growth and the data that I was able to pull from just before COVID going into Covid 2019, up through the 2024 data set, we've had roughly a 3% increase in US population. So that's the first thing to note. Your, your base, your total addressable market, your TAM has grown by 3%. If you just look at it as a US population stat. Some places are down, some places are up, but that's just an average across the country. Now let's look at the increase for demand for the most popular service that you offer. I just looked at a report from our friends over at Corral Data, and again, neuromodulators, neurotoxins, these are the number one services that drive the Med Spa space. We've had. We had a boom and then a falling off of glp. You've got some new emerging services that don't have mass adoption yet. The thing that drives the Med Spa space, I talked to Ben Hernandez from, from Skytail Group about this. The. The healthy Med spas that are being acquired are still 60%, 65% injectables. So using that as a base reference point, you got a 35% increase in neuromodulator demand over that half decade. So sounds good, right? We've had a 3% population growth, but demand for services has grown 35%. Well, here's the thing that these stats are ignoring that matters for your specific med spa, not the industry as a whole. There's been a more than doubling of med spa competition in that time. So we've got 35% increase in demand for services, a relatively fat, flat population and a more than doubling of med spa supplies. And the stats that I was getting from this research were based on real actual med spa businesses. This doesn't even count. This necessarily the single provider in a room they're renting somewhere. So when you look at that, this is probably even more of an issue than this report even outlines. So 2019, we had neuromodulator procedures at 7.7 million, estimated 10.4 million. In 2024, there's that 35% change. But med spas have grown from just over 5,000 to nearly, probably over 12,000 now as we're looking at this in 2026. And so if you do some basic math on the number of med spas relative to the number of procedures and services being performed, there's a 30% change in a negative direction on average per spa if left to your own devices. Now again, the Pareto Principle 80:20 distribution. If you've got a med spa that's truly dialed in, you're the best in town. People do their research. It's just obvious that you're the choice. Your Instagram, you're showing personality, you're developing rapport, you're building brand, you've got a perfect five star rating on Google with hundreds of reviews, you might be bucking this trend. But if you're anything short of that, if you're in the A minus B plus category, this is the headwind that you're facing. On average, that means the procedures per med spa is down about 30%. So if you look at the average neuromodulator revenue per SPA, in 2019, it was $593,000. Based on that division, it's $552,000 in 2024. So there's a 7% decrease in five years per SPA. Inflation adjusted, it's 25%. So the nominal number is 7% adjusted for inflation is 25%. 453,000. So this is the pinch that so many of you are feeling. So if you've been feeling this like everybody tells me this industry is growing, everything is great. Why do I feel stressed? And you kind of feel the strain of competition. This is why I mentioned on the last episode a client that I talked to in the southeast who said when they opened up they only had a handful of people, three or four people in their area performing these services. There are now over 30, half, less than a half decade later their population has grown by 2%. So what does that mean by default? It means the pizza, the pie. I'm going to use pizza pie in my example. This, the pizza is grown just by a little bit even in this example, maybe 30% over that time. But the competition, the people that are trying to get a slice of the piece in their case is 10x. But let's just say at least across the country it's doubled. And in most markets where you have med spas that concentration is probably heavier. So it's probably more than doubled. So now you've got a lot more people competing over the same, the same pie. And so what happens by default you're getting a smaller slice and that's what most of you are facing in terms of the headwind. So if you're, if this is happening, why hasn't the industry totally collapsed? So here are some of the things that the top performing companies I think are doing different and then some action items and things that you can do to make sure that you're bucking the trend and that you're growing through the challenges of the market. Hey practice owners and marketing directors. Interrupting this episode to invite you to schedule a one on one strategy call with me to discuss how we might be able to improve and level up your digital marketing efforts. So we're rated five stars on Google, we're HIPAA verified by Compliancy Group and we have a track record of taking clients from 30,000amonth to 120,000amonth dollars a month and adding multi millions of dollars in additional revenue for some of our bigger multi location med spas from more effective marketing strategies. So on the free strategy call, it's really educational. I basically spend an hour going through detailed reviews of all of our best performing plays that we run for our clients. You have it to take and run with it if that's what you want to do and if you think it might be a fit to work together, then we're excited about the possibility to partner with you. But if you're interested in better More effective digital marketing solutions for your Med Spa visit Medspamagic marketing.com that's Medspamagicmarketing.com to schedule your one on one strategy call with me. So here are some of the things I think top performing med spas are doing different based on our research. Again, this is assisted by Claude and I went through this exercise because this has just been coming up. I just had a podcast interview with Tracy Andreasen and we talked about this. She's got a very successful business and she agreed this is absolutely happening. We talk about it on the episode. But we want to treat neuromodulators as the entry point, not the destination. The first Botox visit is a start of a relationship, not the end of the transaction. We have to be absolutely dialed in in cross selling and educating clients so that we sell a wider variety of services and we can increase revenue per client and we're not doing this in a sinister way for educating our clients. And we believe in the services that we offer. Those things go hand in hand. I just talked to one of our practices that we work with in California yesterday, one of the mutual consultants that we're friends with and we were looking at their, their marketing stats and their ad stats and they had only rebooked. About 20% of patients had a default appointment on the books when they left. I've had clients run the same type of promotion and offer that have a 90% rebooking rate, at least on the during visit. Right. So they've changed it so that the default expectation is you're leaving with an appointment on the books and if you end up canceling or no showing, we'll deal with that then. But the default is going to be appointment on the books, right? You have to be dialed in in your two things. Huge, huge things. And I know we all talk about these, but I would challenge you to be super intentional about trying to figure out how to take these two things in your practice from a B B plus to an A plus. Number one is the consult. It's going to increase average ticket sales. The disparity I see among our client roster that bring in clients for similar type offers is huge. And that all comes down to the consult for the most part. And so I've got people that have an average initial visit revenue of $300 for new clients they bring in and I've got people that med spas that have over $1,000 in average initial visit revenue with phenomenal five star reviews. So that's a huge lever that you can Pull to buck this trend. Dial in your consult. Don't assume you've got this box checked. Make sure that it's consistent and it's calibrated to perform at an exceptional level across your company. So we've got some resources for that on the YouTube channel. But dial in the consult. And then the second thing is be relentless booking and retention and deepening patient relationships. Ensure that the default is that when someone leaves, they've got an appointment on the books, memberships and loyalty programs so that there's always people fighting for your slice of the pie. So again, figuring out what you can do to incentivize people to come back beyond just ally. People can use ally at any med spa. What are the things that are unique to you that are only going to give them a benefit at your med spa without sabotaging your price points completely? Be careful position around the injectors and your providers. We talked about this in a recent episode with Raquel Merlini is you have got to sell the provider and their tact, their treatment philosophy, their experience and their knowledge. Because the service itself, Botox, for example, is a commodity. The providers are not so trusting. The hand that's holding the needle is the actual moat that can create a buffer for your business, niching down with your marketing message. So figuring out who you serve, your dream outcome, and really being specific to a specific audience. Another thing, I think the most successful med spas are doing really well. And then make sure you've got the retention piece, like I said, dialed in before worrying too much about acquisition. Because you can make a lot more money from retaining existing clients than you can from acquiring new clients. Not that you don't want to do both. You absolutely do, and we'll get to that in a second. Second. But the practices that are winning now, they are absolutely dialed in in investing in retention. All right, so some specific action items. What can you do to buck this trend? It's about dotting your eyes, crossing your TE's and moving from B to A plus. So many of you listening to this, you got pretty good Google reviews. Instagram is okay. You've got some nice videos up there. Your website looks somewhat professional. Right? There's nothing glaring wrong. But that's not the market that we're in. That's not going to suffice. You've got to dial this stuff in. So number one, D down or double down on the service itself. The most overlooked growth lever is also the simplest. Be measurably better at the work. Better outcomes, better techniques show it you have a pitch and you have proof. So make sure that you actually have a library of content. If you just have a stock photo or a model that doesn't show your work, make sure you're showing your actual work. In a crowded market, the practices with the best clinical reputations are going to win by default. Number two, differentiate or face commoditization. If a patient could swap your practice for any of the other med spas around your town and not notice a meaningful difference in results or experience, then the only variable left is price. And that's a race to the bottom. We want to avoid that, so own the story. A niche, a method, clinical philosophy, patient profile, signature services. Generalists are losing share to specialists, so make sure that you're dialed in and niching down and avoiding commoditization. Number three. I've talked about this extensively for the last six months, but treat branding as infrastructure, not decoration. I've probably discounted this historically and I've leaned so much more into this last six or seven months. But remember your logo, your palette, your colors, that's not your brand. Your brand is the answer to why you and not the spa down the road. Right? What are the things that create true magnetism? Practices with a coherent brand message will convert much higher and you'll beat people to the punch. A. I want people seeking me out, excited to do business with me before they ever have to go perform a Google search. I want them to avoid the Google search entirely because they know so much about me. We've inundated them with a marketing message that builds rapport, develops trust. Those know like and trust deposits so that they seek us out. Number four, we talked about nail the consult. So critical. Like if you're not educating clients, your average order value and your retention is going to be really sabotage your results and your profitability in your med spa. So it's probably the single highest leverage billable hour in the building. And then the last thing we talked about here is kill it with retention. A returning patient. Like when we look at our marketing efforts, let's just use some rough examples of math. The client I was talking to in California, they have $175 cost of acquisition on ad spend. So for every $175 they put into the ads system in terms of ad dollars, they generate a new booked and paid client. Well, great. Those people are coming in. They're only spending $333 and they're only retaining 20 some percent of them right now you're going to sabotage your results if you pay that same $175 to acquire a client, but you're killing it with the consult. So your average order values are 6$700. Spurred by these splashes of $2,000 purchases of people that are just excited to do everything with you that really bring that average up and then you're nailing it with the retention piece, you'll be off to the races. I ran this report on our ROI calculator to illustrate this. But with low retention, any acquisition strategy almost completely falls apart. Even with inefficient acquisition where you're paying more to acquire the client and you're losing money on first visit, if you've got good retention numbers coming out of that, you'll be off to the races. With revenue growth and profitability in your med spouse, you're going to have to kill it with retention. And again, even doing all five of these things in this market might not be enough. It might only be enough to hold on. So one of the other things that I think you have to remember is you need to be intentional with marketing and advertising and branding. You gotta be the client I talked to in South Carolina that I referenced on the last episode. When you're relying on organic search, for example, or word of mouth, that's naturally going to fall to the comp the competitors that are viable solutions. So when we've had a 10x increase in competition, all of that organic or word of mouth referral business is now being split 10 different ways. And so what's the solution to overcoming that? If we want to achieve our growth goals, we're going to have to be more aggressive with strategies. Branding, marketing, advertising offers that attract new patients at a consistent rate. So when I look at our best ever case studies like my client that's got five locations that we've brought in $8 million in new revenue from new patients for in 27 months. It's a result of being aggressive in advertising. So once you have these things dialed in, you can put fuel on the fire by being intentional with building brand and marketing aggressively to make sure that you're growing your slice of the pie in a competitive market. So I hope that was helpful. Again, if you want this brief, I'm not going to put it behind a gate or paywall. We're just going to link it straight in the show notes. So make sure to go grab it. I think it'll give you a good little digest maybe to share with your team and to give you some action steps and things that you can do to grow in the face of an increasingly competitive market. And again, I think those of you who nail this stuff and do this well, you're gonna have people that drop out and fall off because they're not going to be able to run profitable businesses, right? So if you can get this stuff right, you'll come out of it stronger than ever. But wanted to share that because it wasn't just anecdotal, I was able to back it with some evidence here. If you have thoughts or any data that contradicts this or just any additional insights, we'd appreciate if you share them in the comments below and we'll see you on the next episode.