Marketing based meritocracy

I was recently speaking to one of the therapists working at Salus Wellness and she was surprised about different prices charged by various practitioners offering similar therapies.  According to her logic, prices should be proportional to therapist’s experience. I had to explain that, in private practice, very often good marketing is what determines prices for a therapist; this is what we can call marketing based meritocracy.

When working in the NHS, or a large private health organisation, salaries are often determined by qualifications, experience and seniority.  When working in private practice usually therapists set prices within a range of market prices acceptable for a particular area, e.g. the same service in rural Norfolk will cost less than in Cambridge city centre.  However there is no strict rule about linking experience and prices which states that someone with less experience must charge lower rates than his/her more experienced colleagues/competitors.  So it happens that more junior therapists with a nice and broad online presence, working for respectable premises, are charging fees which are much higher than professionals with 20+ years’ experience and perhaps more senior academic roles.

In marketing based meritocracy the person who is most visible is the one that will be seen first and will attract the first enquiries.  Although many people might be sensitive about the fees they pay, many of them will automatically be prepared to pay a higher fee for a person who looks very professional and ticks all the boxes.  When the demand for this person’s services becomes very high he/she can set his/her prices higher and still get enough clients to have a busy practice.  It’s a kind of self-adjusting mechanism although sometimes increasing prices just drives more clients in.

For the above explained reasons it’s important to invest in a well thought and designed image, e.g. a good website and high quality marketing material, as well as publishing significant articles and other papers to create a very professional image.  All of the above will help you climb the ladder of marketing based meritocracy.

The dilemma of spending money to make more money

For people with any corporate experience, particularly those with an understanding of management accounts, the concept of cost of sales is given for granted.  When you run a business you (should) know that in order to sell you must spend some money.  Cost of sales might include the cost of purchasing a product or service, the cost of distribution and cost of marketing and advertising for that product or service.

When we consider this concept within private practice we can mention, among cost of sales the hire of a venue to supply your therapies and the direct cost of advertising.  Most people in private practice would love to have a queue of clients waiting in front of their door but, most of them, don’t have it.

I was chatting with one of our therapist earlier this week and she was complaining, despite having a fully booked schedule, about the cost of her online advertisement.  I was curious so I asked how much the advertising costs was and how much income the advertising was generating.  The answer was respectively £240 and £2400 per month, while working one day per week.  My immediate answer was that I would love to play a game where I get £10 every time I spend £1.

From her point of view a 10% direct cost of sales was too high and she would love to earn the same amount of money without spending a penny; fair enough, but unreasonable.  So I explained that with adequate marketing and the correct image she could probably raise her prices by £5 or £10 per session and further increase her profits.  By the end of it she was satisfied that having a medium-high net income, without costs, would be great but it’s just no practically possible and agreed with me that she is in a good position from a business point of view.

Sixty practitioners and counting

We recently recruited in short succession practitioner #60 and 61; my gut feeling would be to celebrate as it’s a great achievement.  While celebration is an important aspect of acknowledging a certain level of success I feel at the moment it’d be wise to delay celebrations for a while and here is why. We currently have about a dozen experienced and qualified practitioners who are on their way to start working with us.  So, as we celebrated practitioner #50 in summer 2015 together with our first five years in business, I feel now inclined to wait until I can celebrate practitioner #70 which will be an amazing result in both absolute and relative terms.

A lot of people keep asking us how do we manage the allocation of 60 practitioners into a clinic with 8 therapy rooms? The answer lies in three simple truths:

  • Many practitioners are using a room just a few hours per week or month; this is because they work in other clinics, often outside Cambridge, they offer therapy part time as a side activity to a part or full time job or simply they are semi-retired but still want to keep occupied and earn some money in the process.
  • We are offering a range of agreements which allow many people to join our team of practitioners with a minimum monthly cost which, at the same time, allows receiving a share of enquiries we get from web and walk in clients.
  • We have organised each room to have 3 slots of 4.5 hours per day in order to allow, potentially, 3 different people to work in each room on a regular weekly routine. We then manage to fill up the various gaps between regular bookings with individual ad-hoc hours bookings.

So we are going to hold on our enthusiasm for a few more weeks/months and then celebrate all together practitioner #70 and our 7th year in business.

Our latest Groupon Campaign – the game for massage hunters

Groupon is a great marketing tool, particularly to market new products and services, which has been around several years. At Salus Wellness we have been working with them since 2011, a few months after we opened.  Groupon is great to generate business which would not usually get attracted to our company, simply by offering deals which are heavily discounted compared to the original price for the services being offered.  We usually run a campaign when we have a few massage therapists which need to get established in Cambridge and are prepared to work for it.  By partnering up 4 or more practitioners it’s relatively easy to handle many new clients while taking care of the existing ones.

Thanks to a Groupon campaign we can easily sell several hundreds treatment within a few months. Like many other business we use Groupon to attract people which would not usually visit our clinic without a financial incentive. We offer, at super discounted rate, the same level of service and quality we would offer at full price, with the aim of converting Groupon clients into full paying ones.  In our experience we can group clients we get via Groupon into three categories:

  1. Bargain hunters; these are people who are waiting for the next offer to get a cheap massage and will never buy a massage at full price, often because they cannot afford it. They are usually the ones with the highest expectations in terms of customer service and reaction time, and historically they are virtually impossible to convert into regular clients.
  2. Best practitioners’ hunters; these are people using Groupon to try a few new practitioners with the aim of finding a professional who will become their regular practitioner. They are easy to convert for the practitioners who offer the right massage and customer service.
  3. Gift hunters; many people buy a voucher for a loved one as a gift. In this case the person using the voucher is different from who bought it so conversion is random.

Whatever kind of massage hunter you are, we are here to help and looking forward to meeting you at our next Groupon campaign.