Video summary

Medical Spa Show 2023 Keynote: Selling Memberships Masterclass, Phil Sitter

Main summary

Key takeaways

Business

Business focus: Selling (and building) medical spa memberships as an operating strategy

  • Memberships are framed as an active, coordinated sales/operations strategy (“not passive”).
  • The goal is higher valuation via recurring revenue (MRR/ARR) and better business resilience versus one-time services.

Key frameworks, definitions, and playbook elements

Core membership KPIs & business math (as definitions)

  • MRR (Monthly Recurring Revenue): Revenue earned each month from memberships.
  • ARR (Annual Recurring Revenue): MRR × 12 (used for forecasting).
  • Churn rate (monthly): The % of members who cancel per month.
    • Annualized churn: monthly churn × 12 (used to estimate how much must be resold annually).
    • Target guidance: “Good churn: 1%–3% max.”
  • Enterprise Value: Valuation impact from recurring revenue (emphasized as a major lever for sale/franchise potential).

Membership launch target (operations goal)

  • Determine overhead costs and ensure they are covered within the first 6 months of launching memberships.

Strategic valuation logic (capital markets lens, high level)

  • Membership/subscription businesses are valued more on top-line recurring revenue (not just net margin).
  • Comparative examples illustrate how valuation multiples differ based on the share of revenue that is recurring.

Market/customer behavior data (used to justify urgency)

  • 7 out of 10 patients want ongoing membership aesthetic treatment.
  • 4 out of 10 practices have memberships (implying unmet demand).
  • 76% of patients consider themselves a “lifetime visit” after the third patient (a relationship turning point).
  • 78% of Millennials prefer membership-model pricing (framed as a budgeting/subscription habit).
  • Members spend ~44% more annually than non-members (more repeat visits, more opportunities for closing).

Metrics & targets mentioned (explicit numbers)

Revenue generation for clients (credibility benchmarks)

  • $297M generated for clients “last year”
  • $49M of that is from memberships (category benchmark)

Typical operational targets

  • Overhead covered within 6 months of membership launch
  • Churn target: 1%–3% monthly

Membership performance targets (selling milestones)

  • Selling >$5k/month, >$10k/month, and >$20k/month
  • >$50k/month cited as standout performance

Growth/retention rationale

  • If 10% cancel monthly, annual churn becomes 120% (used to show how churn destroys scalability).

Business valuation examples (comparative scenarios)

  • Example A
    • $3M/year with $600k non-recurring, 20% net margin
    • Enterprise value shown as ~$2.4M
  • Example B
    • $3M/year with $2M non-recurring and $1M recurring memberships
    • Enterprise value shown as ~$7.6M
    • Emphasis includes “6× ARR” valuation logic in an example takeaway

Types of membership offers (product/packaging playbook)

The presenter outlines multiple membership structures and why each can work:

  • Membership = discounted price per unit
    • Example logic: discounted toxin per month.
    • Goal: keep existing patients from switching to competitors while running “specials” elsewhere.
  • “Beauty Bank” (savings-account style)
    • Monthly contributions/perks (examples: $20–$100/month tiers).
  • Tier-based memberships
    • Variety of treatments + tier pricing.
    • Preference: tiers that increase reasons to return (not a “single facial treadmill”).
  • Long-term series / maintenance programs
    • Example: a “maintenance plan” after an initial series (discounted to lock in retention).
  • Annual or monthly pricing options
    • Annual offers provide improved deals/perks.
  • Coordinated high-volume model (“Sonya model”)
    • Example: high discount across treatments (e.g., 50% off on specific services).
    • Requires a dedicated sales force to sustain volume.

Concrete examples / case studies (practices with outcomes)

1) Michelle Bauer (Corpus Christi, TX)

  • MRR: $19,000/month
  • ARR: $216,000
  • Enterprise Value: $1.7M
  • Membership style: Beauty Banks + tier-based + price point logic
  • Key mechanism: 12-month commitment that effectively “finances” treatment volume (example math described via Botox units)
    • Bundles like 150 units of Botox / 200 units tied to commitment duration

2) Dr. Teresa Camden (with Chris Camden)

  • MRR: $43,000/month (later referenced as $56k–$60k/month)
  • Enterprise Value: ~$4M
  • Status note: “already having conversations with private equity”
  • Reason cited: membership style + coordinated sales process

3) VIP program (example practice with “VIP Talks”)

  • Price points mentioned:
    • $20/month low end
    • $365/month treated as “expensive,” but selling due to ability to treat multiple body areas

4) Dr. Kate Holcomb (Pure Dermatology)

  • MRR: $38,000/month
  • Enterprise Value: $3.6M
  • Membership approach: broad inclusion (“anything you want”), including:
    • Churn control via varied availability (more options to reduce cancellations)
    • Branding emphasis: membership-exclusive events
      • “Create demand + belonging; ‘no membership, no access’”

Why memberships fail (operating/management root causes)

Presenter lists common failure modes tied to execution breakdowns:

  1. No staff incentives
    • Claim: in practices doing >$5k/month, staff incentives are used.
    • Without them, sales coordination underperforms.
  2. No coordinated process
    • “Half pregnant” approach: fully commit to membership practice or don’t start.
  3. Incorrect discounting behavior
    • “Ultimate failure” framing: discounting outside membership offers.
    • Recommendation: do not offer treatment discounts unless the patient becomes a member; membership becomes the discount gate.

Payment operations risk (hidden churn/collection failure)

  • Credit card “dunning” is identified as a common hidden churn/collection failure point.
  • Presenter expects 5%–15% of credit cards decline in any given month (higher in January).
  • Risk: if staff/systems aren’t set up, the business “feels like success” but becomes failure due to missed collections.
  • Action principle:
    • Implement credit card decline handling + ownership (clear system/staff responsibility).

Actionable recommendations / sales execution tactics (explicit)

Presenter closes with “things you can do to sell more,” focused on conversion and adoption:

  • Rule: Don’t discount anything unless the patient buys a membership
    • Membership provides the discount (e.g., 20% off referenced).
  • Use a strong first-month offer
    • Options: first month free or 50% off first month.
    • Rationale: reduces hesitation and leverages “auto-renew forgetfulness.”
  • Become a “membership-first practice”
    • Position membership as a coordinated sales event, not passive availability.
    • Example execution: staff proactively talks to patients; training retrains staff to sell/coordinate memberships.
  • Launch memberships as an event
    • Make it special: champagne/red carpet/social media.
    • Include giveaways (e.g., Louis Vuitton bag mentioned).
    • Goal: create urgency, awareness, and social proof.

Presenters / sources

  • Presenter: Phil Sitter (founder/C-level at PMD; speaker in “Medical Spa Show 2023 Keynote: Selling Memberships Masterclass”)
  • Referenced external source (high level): JP Morgan / “Jamie Diamond” (market consumer trend context; no detailed investing actions provided)

Original video