Saying that “times have changed” would be a massive understatement when referring to growing a cosmetic practice in today’s marketplace.
To make sense of it, it helps to understand the structure and stages of an industry so you can then adapt to it.
THE LIFE CYCLE OF THE COSMETIC SURGERY INDUSTRY
Every industry goes through stages of introduction, growth, maturity, and decline.
Why? For lots of reasons, but the biggest one is because society and its consumers accept products and
Services at different rates. As society begins to adapt and accept an innovation, the demand for new services grows and eventually reaches maturity.
But a lot happens between these stages.
THE INTRODUCTION STAGE
Just one generation ago growing a cosmetic practice was straightforward. At that time, cosmetic surgery was still a taboo topic and only for celebrities and consumers of high-worth value. Because demand for cosmetic surgery was limited, so were the number of service providers, most of whom were plastic surgeons who did a lot of reconstructive surgery and wanted to spread their wings to the cash side of medicine.
Advertising was minimal and consisted of a few surgeons investing in mass advertising via TV, radio, and print ads that centered on the surgeon’s status.
Prospective patients looked up to surgeons and, most often, went with the surgeons’ recommendations since they were regarded as the experts.
When prospective patients called the office, it was to book a consultation with the surgeon. More often than not, patients showed up for their appointments and conversions were fairly straightforward.
This old cosmetic practice growth funnel worked well. There were few plastic surgeons to choose from and they enjoyed regal status.
As society accepted cosmetic surgery more (thanks to the media who report on it and the Kardashians who partake in it… a lot), consumer demand increased dramatically.
The growth in demand for cosmetic surgery, coupled with exciting technological advancements, not only opened up the industry to an increase in consumers, but also to an increase of service providers.
No longer was cash-based cosmetic medicine limited to board-certified plastic surgeons. Any MD could open a medspa and provide convenience and service for cash-based, non-surgical procedures that filled the need for consumers not ready for surgery.
Then, as government regulations deterred medical providers from practicing insurance-based medicine due to low reimbursement and high cost and hassle of reimbursement, that supply of cash-based service providers increased even more.
Once there was proven consumer demand for cosmetic surgery, big business and pharma also jumped in and created more solutions for service providers to offer to consumers.
And, all of that increased the competition dramatically.
Today, consumer demand continues to increase even more and includes new types of consumers (men and the younger population), as well as geographic opportunities, so the future looks promising.
But all of this leads to commoditization within the aesthetic industry.
As the competition enters the market, they frequently offer aesthetic services at lower prices. They almost have to since they don’t enjoy status and need to enter the marketplace to attract new cosmetic patients somehow.
This creates a downward-sloping demand curve that reflects the willingness of consumers to purchase more of the commodity at lower price levels.
Now, consumers have a plethora of solutions at a range of prices to choose from. This scenario forces cosmetic surgeons to either lower their prices to compete or add more value to justify the higher prices.
Adding value includes creating an image and brand to position the practice in a crowded marketplace as a high-end service provider offering a better quality of results, excellent customer service, an upscale experience, and so on.
With so many service providers and many more manufacturers offering countless solutions to address consumers’ cosmetic concerns, it is becoming competitive to attract new cosmetic patients. Profits peak at the beginning and the end of the maturity stage with increased competition, so total sales continue to grow during the first part of the maturity stage.
In the remainder of the maturity stage, profits decline because even though many consumers are buying, they are buying on price more often than value.
Here is the point: Even inefficient practices make a profit at the growth stage, but the best run practices are the practices that will endure the maturity stage.
Less efficient practices struggle to generate positive cash flow in an uber-competitive environment because they are not able to spend enough to attract the number of patients needed to generate positive cash flow, so they get weeded out.
Growing a cosmetic practice now is different. Today’s cosmetic practice growth funnel is more complex. Cosmetic practices have to be able to balance their advertising costs and overhead expenses to keep a steady stream of patients coming to them without going broke.
SURVIVING IN A MATURING MARKETPLACE
The trick to staying in the game is to leverage existing assets to get more value from costs that already occurred and to become more efficient, thereby generating more revenue using fewer resources.
The practices that do this best win. The weakest practices don’t because they cannot afford to operate profitably and compete on price at the same time.
Here’s how to win:
Rather than compete on price, compete on friendly customer service, efficient processes, time-saving technology, and relationship-building.
Invest in the best staff you can afford and train them in customer service and converting. Quality of work, great attitude, and excellent converting skills will make you money.
Increase the value of every patient by developing a relationship with them so they return for other services, consent to their photos being taken, refer their friends and give you a 5-star review so other prospective patients also see you as the best choice.
Turn your current patients into your unpaid sales ambassadors who grow your practice organically by sharing you with their friends and followers on social media.
All of your leverage is with your number one asset-your patient list. You have already spent the time, money, and effort in attracting them to you. They will grow your practice for you if you let them-for free.
They chose you once and, if you focus on them, they will choose you again and bring their friends with them. This means you redirect some of your advertising costs to training your staff and nurturing your current patients.
So, now, you are growing a cosmetic practice internally and externally and that’s how you survive and thrive in today’s marketplace.