This post is an article that was posted on The Wall Street Journal by Sara Randazzo and Leslie Josephs. Below this post you will find my comments about the article.
The mass marketing of plastic surgery is starting to show its age.
Lifestyle Lift, a nationwide chain of about 50 cosmetic-surgery centers, abruptly shut its doors earlier this month, laying off nearly 400 employees, its spokeswoman said. Its founder, Dr. David Kent, is “exploring a number of strategies,” according to his lawyer, which could include filing for bankruptcy or an infusion of new capital to restart the brand.
Fueled by its heavy use of national advertisements, the 14-year-old company with 77 doctors had grown to command a major share of the face-lift market. At its peak in 2013, it brought in $186 million in revenue and performed 18% of all face-lifts done by board-certified physicians in the U.S., according to data prepared last fall by James Phillips, a former outside financial adviser to the chain.
The company’s collapse illustrates a challenge of operating a lower-cost cosmetic-surgery chain at a time when many consumers are opting for less invasive, and less costly, antiaging treatments.
Nearly nine out of 10 cosmetic procedures in the U.S. last year were minimally invasive procedures, such as Botox injections and chemical peels.
About 128,266 face-lifts were performed in the U.S. last year, a 4% drop from 2013, according to an estimate by the American Society of Plastic Surgeons.
But Lifestyle Lift’s woes also illustrate a common pitfall for small businesses: An intense reliance on advertising spending and overexpansion can trip up even a growing company.
When it comes to ad dollars, “it’s all about return on investment,” said Robert Donnelly, a marketing and branding consultant whose clients include many small firms. Mr. Donnelly didn’t advise Lifestyle Lift.
Founded in Troy, Mich., in 2001 by Dr. Kent, Lifestyle Lift aimed its marketing at women age 50 and older, its former financial adviser, Mr. Phillips, said. Unlike most face-lifts, its signature face-lift procedures were done using only local anesthesia. They were generally priced at $6,500 to $9,000, payable upfront or through zero-interest, 18-month payment plans.
“Do you wish you could look as young on the outside as you feel on the inside?” a male narrator asks in one of Lifestyle Lift’s TV commercials, as before and after photos of women’s faces flash on the screen. “Want a younger looking face? Call America’s expert.”
Such TV advertisements, some featuring its onetime spokeswoman, the singer Debby Boone, helped bring awareness of Lifestyle Lift to the masses, generating close to one million annual inbound phone calls, according to the data from Mr. Phillips, reviewed by The Wall Street Journal.
Mr. Phillips also was executive chairman of the chain from October through February. Dr. Kent fired him over differences on the best path for the company, both Mr. Phillips and an attorney for Dr. Kent said.
The company spokeswoman declined to comment on the analysis.
Dr. Dennis Hurwitz, a plastic surgeon who co-branded his Pittsburgh private practice with the Lifestyle Lift name, said its ads managed “to engender interest in individuals, mostly women, who otherwise were not the typical candidates for a face-lift.” About 42 Lifestyle Lift doctors worked part time as independent contractors, according to Dr. David Santos, a former medical director at the chain. Thirty-five or so were full-time staff.
“We were a close-knit group of surgeons,” added Dr. Ravi Dahiya of Rockville, Md. “It allowed us to share ideas, and over the years the care and results we were able to deliver have improved dramatically.”
The typical full-time Lifestyle Lift surgeon performed around 300 face-lifts a year, saidDr. Jason Swerdloff, its former chief medical officer. The American Society for Aesthetic Plastic Surgery says its typical member performs 12.4 face-lifts a year, on average, according to surveys. However, many of its 2,600 members specialize in other procedures.
But the high cost of sustaining its marketing—as much as $1 million per week—contributed to Lifestyle Lift’s downfall, Mr. Phillips said in an interview. Neither Dr. Kent nor his lawyer responded to requests seeking comment on its advertising budget.
Its ads brought a “small” conversion rate, added Mr. Phillips. Only about 2% of people who contacted Lifestyle Lift about its services in 2013 became paying customers, he said.
Some Lifestyle Lift customers who were dissatisfied with the results of their elective surgery complained to the Florida attorney general’s office or the Federal Trade Commission, according to FTC data, as well as letters to Florida officials, reviewed by The Journal. In addition, the Better Business Bureau registered 90 complaints against the chain over the past three years, with almost 90% involving alleged problems with the product or service, according to its website. “With more than 200,000 procedures,” done over the course of the company’s 14-year history and 90 physicians at its peak, the number of complaints against Lifestyle Lift seems “extremely modest,” the Lifestyle Lift spokeswoman said Tuesday. In comparison, the BBB received 460 total complaints against 260 other cosmetic, plastic and reconstructive surgery offices, or doctors, over the same three-year frame, the BBB said.
Lifestyle Lift isn’t the only high-volume plastic-surgery business to have spent heavily on advertising. A marketing affiliate of Strax Rejuvenation and Aesthetics Institute, an 11-year-old plastic-surgery provider in Lauderhill, Fla., filed for Chapter 7 bankruptcy in September 2013.
Strax founder and Chief Executive Jeffry Davis said it has since trimmed its marketing budget to about $50,000 a week, from as much as $70,000 a week in 2013. It is also focusing more on Facebook and other social media.
“Times change,” Mr. Davis said. “People today want to hear more true stories and testimonials. We’ve gone away from direct response, meaning TV ads, and gone more to social media and patient testimonials for referrals.”
Strax staff have performed more than 40,000 procedures, he added. On its website, it advertises a $4,500 face-lift.
Lifestyle Lift broke even in 2013, taking in roughly $3 in revenue for every $1 it spent on ads, according to Mr. Phillips, who is a Newport Beach, Calif.-based restructuring adviser. It also had expanded into Botox, as well as full-body procedures, such as breast augmentations, he said: “We were very aware of what was going on” in the cosmetic marketplace.
But under the weight of an $18 million loan from J.P. Morgan Chase & Co., which the company took out in 2010, Lifestyle Lift’s sole owner, Dr. Kent, approached several investors and advisers last summer to help turn the company around. Mark Mitchell, founder of medical-services organization U.S. Medical Management, invested $5.4 million in Lifestyle Lift in mid-2014, according to a lawsuit in Michigan state court.
By last fall, Lifestyle Lift largely cut off its commercials. The number of potential customers contacting the company dropped by about 90%, according to Mr. Phillips.
In his Oct. 9 lawsuit, Mr. Mitchell accused Dr. Kent and the company of providing “false, fraudulent and intentionally misleading” information on its finances, and of breaching the terms of his investment agreement. Mr. Mitchell’s lawsuit included an internal memo, written by Mr. Phillips, with some of Mr. Phillips’s analysis on the company’s marketing.
The court entered a judgment March 11 requiring Lifestyle Lift to return Mr. Mitchell’s investment, filings show. Through his lawyer, Dr. Kent said he and the company “vehemently deny” the allegations in Mr. Mitchell’s lawsuit, “including the internal memo(s) attached to those pleadings.”
Several surgeons who previously worked at Lifestyle Lift surgical centers received eviction notices in recent weeks, including Dr. Santos of Seattle. Dr. Santos said he’s now working from another local surgeon’s office.
You can also read the article on The Wall Street Journal here.
My Take on the Trend
To me it’s the beginning of the end of an awful trend. One where high octane advertising, high volume and modest cost led to mediocre plastic surgery.
