- Wednesday, November 17, 2010
- Ryan Hogan
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The following post was written by author and educator Kym Wimbis. It was originally posted on his blog, Access Fit, on 25 October 2010.
When it comes to marketing, advertising, lead generation, sales, and retention we almost always want more… more leads… more sales…and more retention.
When it comes to more members we don’t want a trickle we want a flood.
Makes sense… right? More members means more money… right?
Who in their right mind would want a trickle of members when they could have a flood?
Well it depends on the members.
The typical flood scenario is the big promotion (Christmas specials, New Years specials, Spring specials) usually coupled with a significant price discount. The flood feels good, wave after wave of money rolls in, the club is awash with new members, it’s all very satisfying for the owner or manager.
However, we know that [the following two paragraphs are excerpted from The Evolution of a Health Club Member: Survival of the Fittest Is NOT a Retention Strategy] deep discounting attracts a disproportionate number of beginner and early-stage intermediate members who are mitigating their risk. The health club numbers swell with the influx of new members. However, beginner and early-stage intermediate members don’t get the attention they require to survive. The health club always seems overcrowded, there are long wait times for equipment, the instructors always seem too busy, and the regular members always seem frustrated and annoyed. More and more out of order signs start appearing because of the overuse and abuse incurred by having too many members, especially ones who don’t know what they are doing (low expertise). Malfunctioning equipment means even longer wait times (resulting in even greater angst among members), especially given that every other health club is going through precisely the same thing and repair and maintenance providers are overwhelmed with the additional demand. In this environment, new members invariably begin to feel ignored, overwhelmed, and out of place. Buyer’s remorse sets in, memberships are allowed to lapse or are cancelled (the negative experience is compounded if the disenchanted member also has difficulties cancelling a membership), and beginners and early-stage intermediates dessert the health club like rats fleeing a sinking ship.
Even exceptional sales figures are typically accompanied by poor retention figures, resulting in zero net growth. This sales and attrition cycle is repeated year after year. In fact, as a strategy, deep discounting doesn’t scale very well. The bigger the discount the more beginners and early intermediates are acquired. The more beginners and early intermediates, the greater the burden on resources (including time and space). The greater the burden on resources, the more negative the experience. The more negative the experience, the greater the attrition.
When the flood abates everything goes back to business as usual.
The far less spectacular trickle (referrals, lead boxes, internet sales/enquiries, trial memberships) allows new members to be integrated into the club far more effectively with less competition for resources, better access to instructors, less impact on existing members, and ultimately better retention.
The trickle is not very sexy but it is better (and more profitable) for acquiring and retaining beginners. The flood is exhilarating but beginners brought in on the incoming tide are invariably left at sea when the tide turns. The flood is better for more advanced members who have no trouble staying afloat on their own.
The point is that member retention begins with member acquisition. The type of member (beginner, intermediate, or advanced) and how that member is acquired will have a profound impact on their retention.
A trickle or a flood… be careful what you wish for.
Posted by: Ariel Gonzalez- Motivte You Fitness & Personal Training www.motivateyou.com.au |
19-Nov-2010 12:39 PM |
Great article! Sales is one thing, retention is the other side of the equation. deciding what type of member or client you want makes the world of difference to your marketing. You cant be everything to everyone
Posted by: Kamahl Barhoush |
25-Nov-2010 04:59 PM |
The trickle versus flood argument has been used widely across many small business sectors. Kym's article is a wonderful eye opener into what over 87% of small businesses "Think" they need to do to boost sales - that is - discount, coupon (insert flashy marketing idea here). the reality of course is cemented in the Law of Consistency.
The Law of Consistency states that when a client spends $10 on a product or service (Discounted from $20 for instance), then they have payed for your best quality service (which is what is almost always delivered up front), at a cheaper rate. The problem, this client will be looking for SIGNIFICANTLY MORE VALUE if you want to then charge $20 when the special deal has ended.
Even though they KNEW it was a limited special - the Law of Consistency is ingrained (if I did it once, I should be able to do it the same again).
PT's and Small Business Owners Note: DISCOUNTING YOUR CORE PRODUCT IS THE QUICKEST WAY TO CUT OFF YOUR AIR SUPPLY.
Look at the Pizza industry as an example:
In the 80's and early 90's, Pizza retailers were charging $20+ for Pizzas (a very high amount for Take-away by comparison in those days). Clients were enticed by free garlic bread, kids packs etc and everyone flourished.
Then an American Franchise started lowering the retail price of their core product (the Pizza), people came to expect the same quality product at a lower price. Enter the Law of Consistency: People started expecting the same quality product at a lower price from ALL of the providers...and now...you can pick them up for $4.95.
A Cert IV PT with 5+ years of experience should be charging a MINIMUM of $80/hr for their time and never discount...anyway...I'm rambling.
The key to marketing success is to attract a high volume of leads, then have a system in place that filters them down (as if in a funnel) through 3 or 4 filtration tools so that the small amount of clients that reach you are an exact match for you and your business.
Find your exact match and you lift the lifetime sales of your client from an industry average of c.$3,000 to over $20,000. You make more $$$, client is way better served and our industry booms.
Believe me, i have learnt this the long and hard way, but I now have a business that will earn me over $250,000 by end of financial year, and I work it 3days per week (4 if I'm feeling extra energetic).
The key: generate tons of leads and have a system in place to work out which of these leads is a match for your business.
Posted by: Anonymous |
03-Jan-2011 10:38 PM |
You have a business that will earn $250,000 by end of financial year working it 3 days.....I don't believe it!
Cripes how much do you charge??