Tesla as a Company
We lease a Tesla Model Y. My wife says it’s the most fun car she’s ever driven. This is despite what I view as inconsistent customer support that I can only partially blame on the pandemic. While their online ordering tools are great, the human interaction leaves a lot to be desired. But our experience as a customer is as a sample size of n=1. The real question is, how are they doing as a company?
Tesla’s recent financial results are simply remarkable. The electric vehicle pioneer is now more profitable than either GM or Ford. This comes while selling one-fifth (v.s. GM) or one-third (vs Ford) the number of automobiles in 2021. Wall Street recognizes this, valuing Tesla at over $800 billion; GM and Ford are each valued in the $50 billion range. And this is after Elon Musk announced his purchase of Twitter, which has caused Tesla’s stock price to drop.
Whether you admire or dislike their CEO, here are three bedrock policies Tesla has taken that have helped generate the above results.
3 Ways Tesla Is Doing Things Right
1. Tesla Does Not Advertise
Their advertising budget is zero, compared with several billion spent each by GM and Ford. Their product is unique enough and causes enough joy that customers end up being their best advertising.
2. Tesla Does Not Discount
Just try negotiating with a sales representative. You will get nowhere. They’ve removed one of the biggest friction points when car shopping and as a result have maintained price integrity. Even as they raise prices to cover their additional costs (ie, inflation wreaking havoc on their suppliers), they sell every car they build.
3. Tesla Controls Costs Remarkably Well
Their profit margin on each car is over 30%, around the level of the iPhone and far higher than the typical single-digit profit margin earned by legacy automakers.
How This Can Help Your Medical Practice
Think about the impact if you could enact those same practices in your medical practice!
- An offering that is so good in terms of outcome and overall experience that patients do your advertising. Your ad budget is zero, and those funds can be invested in new offerings or a better experience for your patients and your team.
- Pricing integrity so that patients understand that there is no discount. They need not worry that they are paying more than the next patient. Your counselors and schedulers will thank you for this.
- A sufficiently tight handle on expenses so that your fees and net income reflect the value you are offering to patients. Your financial stability will improve and your accountant will be impressed.
Like Tesla, that type of result would cause your practice to be valued far higher than your peers. And like Tesla, it requires re-thinking what it means to have a successful medical practice. If you haven’t already, it’s time to Join the PX Movement!