By Michael S. Byrd, JD, Partner at the law firm of ByrdAdatto

Med spa patient loyalty and retention is one of the biggest concerns among med spa owners, according to the 2017 Medical Spa State of the Industry Report. The report also states that fully 55% of medical spa practices have instituted some sort of membership program. Paid membership programs can be a valuable tool to increase customer retention as long as you are keeping up your standard of care, and these programs can also be a huge help in gathering operating capital up-front and projecting future income.

"This membership model built Skin Body Soul," says Brandon Robinson, founder of Skin Body Soul Spa. Robinson believes that paid memberships help to bring in patients that are willing to commit to the spa as much as the spa is committed to the patients.

Subscription billing for products flips the traditional product purchase model on its head. Rather than purchase a product, consumers purchase the right to use the product. Netflix and Spotify embody the power of this business model.

On January 17, 2016, Forbes magazine published an article titled How the Subscription Economy is Disrupting the Traditional Business Model. Tien Tzuo, CEO of Zuora, points out that in this model the emphasis must be on the consumer experience and relationship. Tzuo states, "Remember that subscriptions are relationships, and relationships are a two-way street!"

With the success of the subscription billing model for products, the question becomes whether this model can work with professional services. The aesthetic industry has seen a shift toward providing non-invasive services on a subscription basis. HintMD, a technology startup based in Silicon Valley, developed a dynamic subscription platform to enable medical aesthetic professionals to offer their services via a subscription offering.

Aubrey Rankin, CEO of HintMD, says, "Our aesthetic subscription platform not only enables consumers to gain access to high-end aesthetic services and providers, but more importantly makes it easier for patients to commit to their prescribed treatment plan. By a patient simply following their treatment plan, a true win-win situation is created. Patients achieve optimal treatment outcomes through the ease of a predictable monthly subscription payment, and the aesthetic practice sees an increase in patient loyalty, which ultimately drives growing practice revenues."

Our law firm, ByrdAdatto, has offered legal services on a subscription billing model for several years to our larger clients, and in January 2017, our firm expanded the subscription billing model to provide access to our smaller business clients as well. The adoption of this subscription business model by our clients far surpassed our expectations.

The goal with ours was to provide options for our clients in choosing how to pay for legal services. A little over a year since the roll-out, our Access+ subscription billing platform now represents close to 50% of our monthly revenues.

For organizations considering a transition to a subscription billing model, the following must be considered:

• The subscription billing model does not replace the need to provide excellent services; rather, it emphasizes the need to deepen the relationship with clients.
• Defining the scope of covered services becomes imperative.
• Key performance indicators to measure the success of your business dramatically change.
• Plan your cash management in the transition process.

Subscription billing is not for everyone, so proceed with caution before completely switching to this billing platform.

ByrdAdatto represents physician practices, dental practices, law firms, medical spas, and other professional services companies throughout the United States. AmSpa members can take advantage of an annual compliance consultation call with the firm.

If you have any questions regarding your business model, need assistance with designing corporate structure, or merger and acquisition activity, feel free to reach out to us at mgire@byrdadatto.com or call 773-831-4692.

Michael S. Byrd , JD, is a partner with the law firm of ByrdAdatto. With his background as both a litigator and transactional attorney, Michael brings a comprehensive perspective to business and health care issues. He has been named to Texas Rising Stars and Texas Super Lawyers, published by Thompson Reuters, for multiple years (2009-2016) and recognized as a Best Lawyer in Dallas by D Magazine (2013, 2016).