Timeless beauty: Options abound for boosting spa business, even during an economic downturn

Timeless beauty
Options abound for boosting spa business — even during an economic downturn

Nancy A. Melville
Staff Correspondent

With the economy teetering towards recession, medspas find themselves in an odd position. On one hand, they may see a dwindling of customers who were already pushing the limits of their budgets for treatments, yet they may see an increase in the form of new customers who, because of the economy, may have decided to put off that $10,000 face lift for a few years and take care of things with a few Botox or laser treatments instead.ng to Isaac Starker, M.D., a plastic surgeon, Florham Park, NJ.

Even before the economy took a serious downward slide, noninvasive cosmetic procedures were soaring, and figures indicate that cosmetic rejuvenation remains a high priority for many baby boomers.

Beauty trend
The number of cosmetic procedures performed in the United States in 2007 was up to 11.7 million, after staying steady at 11.5 million procedures in 2005 and 2006, according to the American Society for Aesthetic Plastic Surgery, and the number is expected to continue to grow. Meanwhile the society’s statistics also show that while surgical procedures have increased 142 percent since 1997, nonsurgical procedures have increased 743 percent since then — and that’s good news for medspas

“It would be a key mistake for medspas to assume people will stop spending disposable income on cosmetic procedures,” says Cheryl Whitman, CEO of the Beautiful Forever Medical Spa Business Consulting Firm.

“Obviously, no business escapes the impact of an economic downturn,” she adds. “However, our aging population is still very focused on appearance and is willing to funnel some disposable income into achieving a more youthful appearance.”

Marketing motivation
The precarious economy has nevertheless given some medspas the motivation to rethink their business approach and strategize not just on creative ways to build new business, but on ways to retain existing customers.

“The economy has inspired many practices to focus on enhancing their marketing efforts and providing exemplary customer service,” Ms. Whitman says. “More than ever, patients are determined to get the most for their money and they won't hesitate to shop around.”

That means providing service that is better than the next guy. “Your marketing will draw them to you, but you and your staff must take the time and make the extra effort to build and nurture both new and existing client relationships,” she says.

Medspas have plenty of options for addressing the tighter budgets that some clients have to deal with, according to Ms. Whitman. For one thing, there is financing: “To make cosmetic procedures more attractive, medical spas have the option of offering patient financing, allowing services to be paid for over time.”

“Partnering with a financing organization not only allows patients to get the procedures they want without waiting, but also provides full payment to the practice and alleviates the need to send invoices or address payment defaults,” she adds.

Medspas can also broaden the extent of their products and services to offer a range of price choices. “Consider diversifying your menu of services to include less expensive alternatives such as facials, Botox treatments and fillers, as well as services and products that address a consumer's need to save money,” Ms. Whitman says.

Dana Fox, president of Strategic Edge Partners, a consulting firm for plastic and cosmetic surgeons, adds that in addition to offering ancillary services, medspas can address clients’ cost issues by creatively packaging those services.

“Practices can certainly do well by offering multiple options instead of just the big ticket procedures,” she says. “Be realistic about what consumers are going through and offer specials or bundle certain procedures together to make them more affordable, even if only for the short term.”

Above all, involve the entire staff in make the adjustments and setting goals, Ms. Fox says.

Many practices have never bothered to set goals, and in a recessionary market, the most important thing to do is sit down with your staff and plan how you’re going to ride this wave.”

Dollars & Sense
Another item near the top of the list of mistakes to avoid during tough times is to stop advertising, Ms. Fox emphasizes. “Many people stop advertising, but that is actually the last thing you want to do,” she says. “The fact is, this is when the better prices can be negotiated for advertising, and since others are cutting back on their advertising, your ads are all the more visible.”

And in addition to negotiating better rates for themselves, medspas should be prepared to do some negotiating on their own rates and services as well during the sluggish economy.

“If you want to hang on to every dollar, you won’t survive in this market,” Ms. Fox advises. “You have to be willing to negotiate a little and be flexible, just like every other luxury product or service on the market.”

“It is vital to prepare a worst-case scenario that includes a 12-month cash flow plan that anticipates a 10 to 20 percent drop in revenue,” she says. “The plan should outline the changes you might need to make and when you may need to make them.”

And whether or not the economy enters an official recession, The International Medical Spa Association already has the bases covered. The group has published a “Recession Survival Guide,” offering tips on “how to increase your market share in spite of a slow economy.”

The guide includes the following suggestions:

• Examine your operating expenses: Look at expenses involving business, staff, treatment and cash flow and see how they compare to your original business plan. Consider things like what to trim and how many clients it takes to cover $1,000 in operating expenses.
  
• Increase your exposure: Use advertising, public relations, traditional marketing to existing clients and viral marketing with e-mail to old and new clients. Also, take a good look at your retail displays and consider whether they are effective and inviting.
  
• Form new alliances: Partner with distributors and manufacturers; offer gift certificates through your local florist; join the local merchant association; make your medspa familiar to local hotel concierges; and hold special events such as “Spa Awareness” open houses.

(Source: International Medical Spa Association)

Above all, don’t underestimate society’s irrepressible quest for youth and beauty and how that affects consumer spending.

Marc Cornell

Dana Fox

International Medical Spa Association
www.medicalspaassociation.org