// New Year, New Profits
Your passion for fitness is critical to your success, but don’t let it cloud your judgment when it comes to business. By focusing on three key areas you can help to create a culture of revenue generation, writes Casey Conrad.
Businesses operate to make a profit. Ironically, the people attracted to the fitness industry are so passionate about helping people that they often lose sight of this basic business principal. Some go as far as fighting sales and marketing efforts because they generalise all money-generating strategies as pushy.
I frequently find myself in heated discussions with club employees who have the attitude that because they are in a service business they shouldn’t need to put so much focus on sales and marketing. This couldn’t be further from the truth. I believe that every single employee of a club should be focused on helping to generate profits. And I mean everyone. Of course, those in sales are hired to sell, but those team members who work in housekeeping or childcare, on the front desk or on the fitness floor, also need to promote the club, and pioneer profit-making by constantly looking for ways to generate more revenue and reduce expenses.
If you think it’s impossible for a childcare employee to be as focused on revenue-generation as a salesperson, consider it from a different perspective. Sure, a salesperson may have more immediate and day-to-day impact on revenue generation, but within their own domain every employee can make a difference to the bottom line.
Although creating a ‘revenue generating mentality’ may take time and require a significant cultural shift, it is a change that every club owner or operator should strive for in 2012. There are dozens of ways to accomplish this goal, but the following three areas are excellent starting points.
1. Referral opportunities
Referrals are the lifeblood of the fitness industry, but most clubs do a poor job of proactively generating these leads. Many facility operators have been convinced by their sales staff that point of sale referrals are too difficult to obtain and that a better strategy is to simply give the new member some guest passes to pass on to friends and family. The result is that most referrals happen organically, which is nice but also means that a lot of opportunities are lost.
The reality is that referrals are a natural part of the human psyche. People like to tell others about things they enjoy and that they believe in. Instead of giving up on point of sale referrals, engage your entire staff to find new and creative ways to ask for referrals – and not just at the point of sale, but within every department. Have you ever asked housekeeping staff for ideas on referral generation? They may actually be closer to your members in terms of knowing what they really think and want than a salesperson is.
I challenge you to start the New Year by looking for new and creative ways to generate member and employee referrals. Consider the following:
- Have each department meet and brainstorm ways in which both their specific area of the club, and the club more generally, might be able to generate referrals with members.
- After they have brainstormed member referral ideas, encourage team members to focus on employee referral ideas. With the right incentive and system in place, even a club with a small staff could generate significant referrals. Who better than your staff to be passionate advocates for the benefits of membership at your club?
- Research six totally different businesses (not fitness clubs) and discover what they are doing to encourage referrals. Take their strategies and see if they can be adapted and applied to your club.
Generating more customers, obtaining bigger sales purchases and enticing customers to buy more often are the primary revenue-generating categories. Most businesses focus the majority of their efforts on obtaining new customers. This is a mistake because getting existing customers to spend more is actually easier.
The up-sell, so famously perfected by McDonalds’ ‘Would you like fries with that’ slogan, is a great example of increasing customer spend. Every time a customer makes a purchase – whether buying their initial membership, a massage, personal training sessions or simply a sandwich at the café – an opportunity to up-sell exists. To establish what these opportunities are, you need staff to understand the value and then come up with some creative ideas that will entice the customer to buy.
As with the referral exercise above, get staff together by department, educate them on the concept and then brainstorm ideas. Points to consider:
- Up-sells are often impulsive, but today’s more frugal customer is still more likely to respond to offers that are good value for money.
- In the early stages of testing up-selling, use a multi-tiered offer. This helps you identify which offer is most enticing for the customer.
- Keep in mind that up-sells can be products, services or consumables – or combinations of these. Be creative!
- Up-sells do not need to be large. If you club collectively makes 50 up-sells a month with an average dollar value of only $10, it still adds up to $6,000 per year of additional revenue.
3. Leveraging technology
Health clubs are often woefully behind when it comes to using technology. Sadly, many club owners and operators work harder, not smarter. Technology is more accessible than ever before and is often inexpensive to integrate into your club system, so it is worth investing the time and effort into making these changes.
One of the most under-used aspects of technology by clubs is opt-in pages for all prospecting activities. Opt-in pages are nothing more than online forms that capture names and email addresses (or more information if you want).
Many clubs use this technology for online guest passes. A prospect visits the website, clicks the ‘Free pass’ link and gives their information in exchange for a pass which is emailed to them. That person’s information is then sent to an online database, which uses auto-responders to systematically follow up in a timed sequence. This creates a proactive approach to lead management that also acts as a safety net in the event that proper ‘human’ follow up doesn’t occur.
Your club should be using this technology with all your prospecting activities – not just membership sales. For members interested in starting a new group exercise program, club signage should direct them to a specific website URL to sign up for the trial. If you are offering a special on a club service like personal training or massage, the coupon should be placed on your site where it can be accessed in return for the individual’s name and email address. Any offer, event or happening – for both members and non-members – should use this process as the primary method for access.
This process allows you to easily identify those who are interested and then target them with follow-up communications. Every such offer will garner many more opt-ins than people who actually take action, meaning that you can also build a valuable database of interested prospects for the next time you make a similar offer.
Other aspects of technology to consider evaluating include:
- Use of social media marketing with both members and non-members
- Facebook ads
- Online retention programs
- YouTube accounts for training and development of staff.
A mentor of mine, Jay Abraham, says, ‘incremental improvements in the various categories of revenue generating don’t just add up – they become exponential.’ This means that if you use technology to generate 10 per cent more prospects (for new sales and current member sales), add eight per cent more membership sales because of creative referral programs and use up-sells to increase purchases by five per cent, you don’t just get 23 per cent more in revenue; you get much more, because once you increase the number of new customers it has a multiplying effect on the rest of your in-club revenue!
Every club has many opportunities to generate more revenue. If only management and the sales departments are focused on doing so, you are losing potential revenue every day. Engage your entire staff, teach them the value of the role they play in the success of the club and then motivate and incentivise them to produce results. By doing to, you’ll be able to look back this time next year and see lots of new profits.
Gain the benefit of Casey’s extensive fitness business experience at FILEX 2012 where she will be presenting:
For more information on Casey’s sessions see pages 18 and 20 of the printed brochure with your Summer Network magazine, or check out the fully interactive site at www.filex.com.au where you can also register for the convention or the all-inclusive Business Gold Pass package.
Casey Conrad, BA, JD
Casey has been in the health and fitness industry for 26 years. She has created and/or published over 25 sales, marketing and management training products for the industry, speaks worldwide and writes for numerous international industry publications. Her website is www.caseyconrad.com and she can be reached at email@example.com.