Understanding the Med Spa Industry
John Vakidis - Partnerships and Enterprise Sales in Healthcare
Growing sales through strategic partnerships.
Last Friday, I was fortunate to attend The Medical Spa Show 2020 in Las Vegas hosted by The American Med Spa Association. In their opening session, I took down some notes about the industry and here is what I learned.
Understanding the Med Spa Industry
Current Industry at Large:
- $10 Billion per Year Industry
- Estimated by Allergan that Medical Spas are currently only at 5-7% market penetration
- AmSpa estimates that there are 6,500 med spas right now that employ over 53,000 people
- 2017 50% growth
- 2018 30% growth
- 2019 estimated at 28% growth
- Last 7 years has experienced a 28% overall growth
Next 5 Years Expected Trend:
- Expected 20% growth over the next 5 years which means it should double
- It’s expected to be a $20B Year industry by 2023
Average Med Spa:
- $1.5M per year in revenue
- 80% of owners have a single location
- 20-25% profit margin. That means the average med spa owner profits $300-375k per year
- 80% of owners have a single location. The remaining 20% own 2-3 locations.
- There are a few outliers that have even more, like 10+ locations.
- Some owners (top performers are making $6-11M in revenue per location!
Business acumen in this industry is extremely low:
- Less than 10% of med spa owners track business metrics
- 60% of owners could not calculate their total expenses
- 30% cannot track how much they are making
- 21% cannot tell you where revenue is coming from by service
My thoughts:
There are plenty of opportunities. If you are thinking of getting into the medical spa business, there is no time like the present. With such little market penetration and projected growth in the industry, there is a lot of money to be made. There is plenty to room to be successful whether you are a practice owner or a provider of products or services to the industry. Become a specialist if you are a service provider and tailor your products/services to the industry and you'll find more success.
Invest in yourself and your staff regularly. Training is one of the key things that will separate you from your competitors. Take some business classes and the time to review your business metrics often. Understand what works and what doesn't. Read books and take training classes on leadership and building a strong culture. Invest in training for your staff related to sales, customer service, etc. Set goals, review them weekly and hold your staff accountable to delivering the standard and results that you expect. It's the difference between running a $1.5M or $10M per year location. Training matters! A culture of high trust that executes its TOP priorities is hard to beat. Become one of those types of practices!
Invest in marketing. I recently heard a quote during a sales training event I attended, "Pipeline solves alot of problems." In the med spa world, I would translate that to "High lead volume solves a lot of problems." If you have more leads than you can handle, that's great! You can hire more providers to handle the capacity or you can even raise your pricing over time and receive healthier margins. Marketing is an investment in the business, just like your training is an investment in yourself and your team. A healthy practice looking to grow year-over-year (YOY), will typically spend 8-10% of revenue towards marketing. A start-up can expect to spend 10-12% of projected revenue on marketing. YOY practice growth doesn't magically happen.
It takes a solid Omni Channel Marketing Approach and being able to close the leads. Just like understanding your business metrics, it's important you know your marketing metrics too. At a minimum, you need to understand how many inbound leads or opportunities are coming in your door, know your conversion rates and know what sources are driving the most leads so you can make smart business decisions.
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Invest in technology. Whether you are looking for a great EHR that automates activities for your staff so they can focus on the patient experience or you are purchasing the next new medical device, do your research. Technology changes rapidly and you want to make sure you are not buying the oldest technology just because the company selling it has a lot of customers. Ask your peers in other markets what platforms they like and don't like.
Join The American Med Spa Association. There are huge benefits to joining AmSpa. They have many great resources and educational opportunities that can save you front going down the wrong path. They have vendors as partners that can help accelerate your growth and some can help you save you money for being a member. You'll have an invaluable resource of like-minded peers you can learn from. Click here to get started today!
BTW, I'll be speaking at the Los Angeles Boot Camp on May 30-31, 2020.
I hope you found this article helpful. If you are looking for a partner for website design or digital marketing (SEO, Reviews, Local Listing Management, Content Marketing, Social Media Management, Paid Advertising, Video Marketing, Managed Chat, etc.) let's talk!
To your success!
John Vakidis
Do you have questions about marketing your practice more effectively online? If so, shoot me an email to [email protected] or call me at 469-458-7126.