Cosmetic practices and medspas have been hearing for years about the benefits of retailing skincare products. They improve and prolong the results of in-office treatments, boost your bottom line and are a natural fit because patients want professional recommendations from their aesthetic providers. These statements are true, yet they do little to ease the frustration of owners and managers as they face shelves of unsold products and watch patients move online to search for better deals on the lines thoughtfully recommended by staff.
If your homecare sales are less robust than you had hoped, there are several strategies you can take to improve sell-through—it starts by closely examining your sales history, patient demographics and current treatment offerings. “Many physicians are still trying to understand how to maximize the opportunity when it comes to skincare dispensing. When we work with a client, we find there are a multitude of things that can be improved, and the very first is their assortment,” says Delaram Saidi, president and founder of DS Group, a full-service business development consultancy for aesthetic practices.
The Core Three
When seeking to improve the status of your skincare business, it makes sense to follow the same strategy you use to improve the health and well-being of your patients. First, you need a history. Saidi recommends reviewing the past 18 months in sales by SKU and by season. “Based on this information, you can refine your skincare assortment to reflect your demand, your services and your patient profile,” she says. “There’s an interest in having the newest brand or latest innovation, but very few people go back and say, ‘Does this fit within my practice’s portfolio, and what do I need to discontinue?’”
When examining your retail area, consider the three core products every aesthetic practice needs to carry. “Every person, regardless of age or skin need should have three things: an antioxidant, an exfoliating product—preferably a retinol—and the proper sunscreen,” says Saidi. “That’s the foundation you start with and build upon.”
The next step is to examine the services you offer and the age and typical skin concerns of your patient base. For example, a practice that serves primarily younger patients will want an acne treatment line. If your patient base includes older patients and those with darker skin tones, you may want to add a skin lightening and antiaging line.
Introducing Home Care
Many practices depend on their nurses or estheticians to educate patients on homecare products. These staff members take part in manufacturer training and have the luxury of spending more time with patients to discuss the ingredients and benefits of the practice’s lines. But it’s important to remember that patients come to a medical practice or medspa for the expertise of the physician.
Therefore, the best strategy is for the physician to make the final recommendation. “The person who closes the deal by agreeing with the skincare recommendation made by staff is the physician,” says Saidi.
Joel Schlessinger, MD, a dermatologist in Omaha, Nebraska, and president of retail site lovelyskin.com, agrees. “It is important for a dermatologist to control the dialogue with patients regarding cosmeceuticals and their claims and unique benefits,” he says.
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This is echoed by Jason R. Lupton, MD, director of San Diego Dermatology & Laser Surgery, who finds that it is most effective if the physician is the one to introduce the idea of using better skincare products to patients. “When I’m in the treatment room with patients I will talk to them about skin care,” he says. “Then I turn them over to our nurse who further describes the benefits of the products and provides details, such as how much to apply and how often.”
Mary Beth Mudd, MD, founder of the New You Center for Advanced Medical Aesthetics in Columbus, Ohio, opens the discussion of home care by asking patients what they currently use on their skin. If the products they use are not a good fit for their concerns, this opens the door for product recommendations. She suggests not overwhelming patients with a lot of products at first. The question about what they already use “is a good entry point to talk about a cleanser,” she says.
In an effort to avoid bombarding patients with too many new options, “I try to incorporate a new product or two with what they’re currently using,” says Dr. Lupton, who finds that patients appreciate his guidance on what products to use and notes that retail sales are a way to help keep a boutique practice like his thriving.
In some cases, it may make more sense for the nurse or esthetician to begin the homecare education process by talking with patients about their skincare history and current product usage prior to treatment. The nurse or esthetician can then share their recommendations with the physician. “They can slip a note into the chart or somehow communicate with the physician about the relevant talking points. That way, the groundwork has been set and the physician can follow up. For example, ‘I understand my nurse Stephanie has talked to you about these homecare products, and I agree with her recommendations,’” says Saidi.
Advanced Selling
In addition to reviewing your sales history and talking to patients about their current skincare regimens, taking some time to examine your service menu and track your most commonly performed procedures can help you zero in on the types of skincare products you should carry in your office. This exercise also helps to boost sales because it provides additional openings for recommendations and may present opportunities to bundle products with specific treatment regimens.
“For example, a physician could say, ‘You’re here about your acne breakouts. What we recommend is a series of peels to get your acne under control and light treatment to target the bacteria, but what’s really important during that time is to get you on the right homecare products to support what we’re doing in-office,’” says Saidi.
Physicians often recommend hyperpigmentation products and sunscreen to protect the treated skin following laser, chemical peel and IPL treatments. Savvy practitioners can offer to bundle these products into the price of the treatment series. “We also find that post-care instructions are essential in ensuring optimal outcomes,” says Saidi. “If a practice doesn’t include post-care products, patients will go out and buy Aquafor and a sunscreen at the drug store that may not be the right sunscreen for post-IPL or post-peel skin.”
She counsels practices to review their current treatment options and identify two homecare products that will support the recovery and long-term results of each procedure—then bundle them into the cost. “If you’re bundling into a series, say it’s a laser or IPL that requires four or five sessions performed monthly, each product lasts approximately three months. So the patient starts the homecare products and then during the span of that cycle, they will need to replenish,” says Saidi. “This allows you to start them on a regimen and then build upon that regimen with repeat sales.”
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Capturing Reorders
Repeat sales are one of the biggest challenges for practices and medspas that offer homecare products. With the growth of e-commerce, it’s only natural that once a patient finds a product she loves, the next step is to jump online to see if she can get a better price elsewhere.
DermalogicaMD, a new physician-dispensed line from skincare provider Dermalogica, has come up with a novel approach to keep sales within the medical practice. Rather than stock products in-house, the line is sold online through a portal connected to the practice’s website. Practices make an initial $350 order, which includes an in-office display with testers and samples. Once the recommendation is made, the patient receives samples to take home and the full-size products are delivered directly to the patient. When it’s time to reorder they log on to the portal and a 60% commission goes to the practice.
“The doctor doesn’t have to carry any of the products in their office. We will ship them to the patient within one to two days,” says Ken Merola, vice president of Global Business Development at DermalogicaMD.
For facilities that offer more traditional retail models, Saidi recommends creating a loyalty program to incentivize patients to purchase their homecare products from your facility. “Incentives can be free product or dollars back, but what we find to be very successful is offering rewards toward services,” she says. “For example, when the patient purchases X amount of skin care, she becomes eligible for services such as a free chemical peel or free Botox. That tends to be really impactful.”
For practices that have an e-commerce site, “it’s really about having a sophisticated patient tracking system that will send an e-blast out—based on the three-month supply—reminding them to reorder,” says Saidi. “The e-blast should include a link directly to the site and a code for a free sample of a new product to incentivize them to reorder.”
Even facilities that don’t offer e-commerce can benefit from sending regular e-newsletters on specific procedures that feature a retail product tie-in. “What we do for clients is create a calendar on a two-month basis and say, ‘Here’s the service we’re promoting and here’s the corresponding product,’” says Saidi. “The e-blast goes out with the service, the benefits and the promotion. Then mid-month, another e-blast goes out highlighting just the product. We find that a lot of patients who have appointments or make appointments for the promotion will come in and say, ‘I saw your email about such-and-such product, can you tell me more about it?’”
Calculating Inventory
To avoid wrapping too much cash up in inventory, practices do need to continue to track sales to identify top sellers and reduce or eliminate items that are not moving. If they’re just getting started on retail, Dr. Schlessinger encourages practices to limit their offerings to 10 to 20 different products. “I would start out slow and grow over time,” he says.
Saidi counsels clients to track sales and keep two weeks of stock inventory on the shelves. Some practices with robust sales order their retail products weekly, while others order on a monthly or quarterly basis. Since many high-end skincare ingredients have a short shelf life, Saidi recommends ordering at least monthly. This also allows you to take advantage of any specials or promotions that come along. “Skincare brands change their promotions each month, so if you’re ordering quarterly, you might miss out on good deals or added values that can be passed on to your patients,” she says.
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Since the amount of inventory a practice needs to carry varies widely based on the patient base and sales history, it’s difficult to give an exact number for how many of each product a practice should keep in stock. But Saidi says that generally, less than four pieces of each product is too few. “The majority of our clients, who are average sellers, keep six to eight of each product in stock,” she says. “Our top sellers keep an inventory of about 24 pieces and they tend to order on a weekly basis.”
Product Pricing
When it comes to selecting retail lines, practice owners also need to look at the profit margin they can achieve. “The most important thing is to make sure you have a good profit margin,” says Dr. Schlessinger. “It should be at least 50-50.”
Dr. Lupton has been selling retail products at his office for 15 years. About five years ago he decided to sell products under his own private label, which he calls Derm SD. He chose to go this route because patients were complaining about the high cost of products.
“This gives me more control over the cost,” he says, noting that sales leapt dramatically when he lowered the price of his products. “Our product sales went up 60%. It shocked even me. I never expected it would be that much.”
His prices currently range from about $25 to $50 on the low side for a cleanser, to about $100 for more expensive offerings like a DNA repair product. “I think our patients appreciate our pricing because it doesn’t break the bank,” says Dr. Lupton. “Keeping our products more modestly priced has been better for us over the long term for product sales.”
He purchases his products from Osmosis Pur Medical Skin Care based in San Diego. Lindsay Cuker, regional sales manager for Osmosis, says that private label has benefits for physicians, but practices need to be careful and vet any products that they are going to brand themselves. “If you’re going to put your name on it, you want to make sure it works,” she says.
Whether you carry branded products, private label or a combination of both, your practice will benefit from regular sales reviews. “In my experience, physicians look at their skincare business as a lump sum. Few people take the time to dissect their sales SKU by SKU, month by month, and category by category to see how they’re selling,” says Saidi. “I know it’s tedious but it’s very insightful. We often have a very different perception of what’s happening vs. what the sales actually reflect.”
Annemarie Mannion is a freelance writer based in Chicago.
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