There’s much more to making a profit at your club than collecting membership dues, and if you can add value to the overall member experience by offering additional services that are smartly priced and convenient, you’ll not only set yourself up for better retention rates—and the money that follows—but for increased monthly profits.
To make profit centers work for your club, you need to create an executable plan that can be managed and maintained over time. Done well, juice bars, tanning and massage services, as well as personal training and pro shops, can add to your bottom line and keep members happy and loyal to your business, says Eric Casaburi, founder and CEO of Retro Fitness. Successful profit centers are an important part of executing a solid business plan. Most of your members, potential customers for your profit centers, come to your club on a regular basis. A smart businessman or woman sees this as an opportunity and acts, Casaburi explains. “You have a few hundred people a day coming into your place and you aren’t going to try to sell them anything? That’s insane!”
When it comes to providing specialty services like tanning, it’s important to find out what prices are being offered by competing salons nearby, says Pete Chalfin, owner of a Retro Fitness franchise in North Plainfield, N.J. If you make your services affordable enough, members will turn to you for convenience. “Set your prices to benefit members,” he suggests. “You want to offer them these services at a savings, because you want it to be worth their while to spend their money with you.”
Fitness centers with tanning services have the edge over salons because their potential customers already have a relationship with the business, and the overhead for tanning is much lower at a fitness center. This means you can set prices that salons can’t compete with, according to Joe Bommarito, CEO of HEX Tanning & Marketing Concepts. He says HEX offers fitness centers not only all types of tanning equipment, but also planned, time-tested marketing strategies for maximizing tanning revenues. “In the health industry today, 40 percent of your revenue should come from non-dues,” Bommarito says. “There is not an ancillary service you could offer that could earn more money, or has more appeal, than tanning”.
People often seek tanning services for some of the same reasons they join a fitness center, Bommarito adds—people join a fitness center because they want to be healthier and they care about the way they look and feel, and many people join a tanning center because they care about the way they look and feel—they often have a very similar mindset. “Offering tanning at an unbelievable price is a great way to get non-members to come to your fitness center,” Bommarito states. To make sure your tanning equipment is in a location with easy access, he recommends incorporating booths with attached dressing rooms in an open, nicely laid out area where members can see and touch your products (tanning equipment put in private rooms is often out of sight and out of mind). Understanding the potential tanning has to grow retention and membership, by providing branded equipment that is smartly marketed, is the key to maximizing this powerful profit center.
A profitable personal training department is one in which everyone knows his or her specific job responsibilities, is following proven sales strategies and has the appropriate tools to do so, suggests Sean Greeley, CEO of Net Profit Explosion, which provides marketing services, coaching and consulting for clubs’ personal training programs. “With the down economy, and rising competition in the marketplace, profitability margins are getting tighter and tighter,” Greeley says.
Three years ago, training revenue at the high-end Lake Forest Health & Fitness Center in Illinois was a mere trickle, according to Executive Director John Oei. That’s when management decided to hire only formally educated trainers and improved the quality of its programming. Instead of discounting its new services, the club raised prices 20 percent, so the program would not be undervalued. Members responded and, in just nine months, Lake Forest saw its revenue increase by 300 percent. “Our club is located in one of the most affluent communities in the country, catering to a clientele that demands quality,” Oei explains. Therefore our selling tactic is rarely that of a sale or discount, but of value in an exceptional service.”
Educated trainers who provide quality, results-driven workouts can build profit, says Barry McGlumphy, program director of Exercise Science and Health Promotion at California University of Pennsylvania, which offers fitness-related degrees. “Our degree programs focus on education in leadership, management and the business of fitness, so our students are prepared to increase profits via many fitness programs at health clubs.”
Personal Training Resources:
California University of Pennsylvania
Net Profit Explosion
Selling merchandise in your club can be another point of profit, and it helps brand your club, adding an element of exclusivity to your memberships, Chalfin says. His Retro Fitness location’s pro shop enjoys popularity from customers who are excited to wear the brand. “Members of Retro actually begin to love the brand. They really want to wear things that have the Retro Fitness logo on it—it’s just such a fun place to be that they want to take it with them outside the gym.”
The pro shop is a sales opportunity for most clubs, agrees Oei. It creates a visual presence in your club that could invite members to spend. “The pro shop can (mean) more than a simple sale of a shirt or headphones,” he adds. “It can help create a ‘selling environment’ in your club.” Members may be more receptive to other services, and non-members may consider joining if they’ve come into your club for a sales event. While sales can be a good way to boost profit, make sure you aren’t slashing prices so deeply that you don’t see a return on your investment, cautions Oei.
Although most fitness classes are included with the price of membership, programming can still be a profit center at your club. In addition to offering class-only memberships, or fee-based classes to non-members, your club can create small group training sessions that are cheaper than traditional one-on-one training and open to more members at once. That, and group-fitness related events, should increase retention and new membership rates while decreasing your group fitness costs, explains Steve Renata, international sales director for Les Mills International, which provides group fitness programming and instruction for clubs worldwide.
“Increasing attendance reduces the average cost of providing the class to each participant,” Renata offers. You can create direct profit through group programming by offering guest referral passes and charging a booking fee for classes, like spinning, which are limited by equipment. Les Mills Auckland in New Zealand charges a $5 fee per class and has more than 1,500 visits each week, Renata says.
In order to maximize usage of your group classes, set goals for participation each month and actively recruit members to try new classes and bring their friends.
Successful group programming should contribute to consistently high retention rates and should account for a good percentage of total club visits, Renata shares. Group fitness events should also bring a steady flow of new members into your club each quarter, he adds.
Group Fitness Resources:
A large part of whether a member reaches a fitness goal depends on proper nutrition. Having a nutritional component at your club will help members associate your services with positive results. A juice bar or café creates a social atmosphere among members and staff, but it can also help educate members about proper nutrition, says Dan Young, president of Performance Food Centers, which helps clubs plan, design, build and market juice bars. “We teach folks why and how to get their diets correct to achieve their goals, and then we provide only healthy food products to achieve success.”
At Western Athletic Club locations throughout California, friendly, well-trained staff members serve up healthy, quick dining options in a full-service cafe that makes the club even more valuable to young families on the go, explains Vice President of Fitness Jennifer Beaton. “Convenience is a big factor in the success of these programs,” she adds. To ensure profitability, it’s important to consistently promote the benefits of your nutrition programming, says Josh Harwood, senior vice president of Operations for Titan Fitness, the largest Gold’s Gym franchisees in the nation. “Integrate this into your sales process, member introduction process and customer relationship programs,” Harwood adds.
Nutrition/Juice Bar Resources:
MET Rx Engineered Nutrition
Performance Food Centers
It may not be practical for most clubs to offer a full-service spa, but with planning you can set yourself up to profit from offering massage services without investing too much space and upfront costs. Charging members an additional $10 or $20 each month for unlimited access is a powerful incentive, says Kevin Conaway, marketing director for Florida-based HydroMassage, which makes dry, self-contained and operated beds that use water pressure to massage muscles. “Not only do people like massage; they’ve also shown they’ll pay for it again and again,” Conaway says. “One in five Americans already get massages each year—(it’s) an $11 billion dollar industry.”
Clubs who use HydroMassage units can see 50 or more customers in the first two days of operation, which means regular monthly profits for the clubs, Conaway adds. A well-run massage component will also communicate to your clientele that you care about the experience they have at your club, Beaton explains. “These (centers) provide the relaxation and beauty services members demand,” she adds. “If we did not offer them, they would seek them elsewhere.”
Clubs with massage services do not need a full staff to run the profit center. Many self-contained units, like Aqua Massage, a heated dry massage system that shoots 36 jets of water pressure from the feet to the neck area, lets members control their own experience, says Sales Manager Dow Cote.
Relatively low overhead can make massage and spa services more affordable to members and more profitable to clubs. “Even smaller fitness centers need to sign up 200 automated massage members to earn an additional $3,000 per month,” Cote adds. Starting costs as low as $15 per month will appeal to many different members. Clubs with automated massage units can also charge per use for non-members or for gift certificates. Special discounts for older members can entice even more people to buy memberships and spread the word about what you’re offering.
If you’re considering adding profit centers to your club or updating the services you already provide, it’s important to listen to members and employees about where improvements can be made and what your clients really expect from their membership. They’ll tell you exactly what you need to do to be successful, advises Quammen. “Show me a good listener, and I’ll show you someone who makes informed decisions—and that’s what good business is all about.” – CS
Pleasure In Profit: Practical Pointers For Setting Up Your Profit Centers For Success!
• Give them a taste. Whether it’s a juice bar, tanning services or pro-shop gear, let members sample just a bit of what your club has to offer. Smoothie samples announce the arrival of new flavors, and nothing will get customers more interested in a massage than a free five-minute session.
• Train staff to cross-sell, suggests Eric Casaburi, founder of Retro Fitness. This way, a juice bar employee can get members talking about fitness goals and refer them to your club’s trainers, or trainers can suggest a post-workout smoothie tailored to their own needs. “We have a complete operations manual on cross-selling,” Casaburi adds. “Even the cleaning person knows how to make a shake.”
• Reward with your wares. Make your services and products prizes in a contest for best customer comment or a referral program. This gives members an incentive to participate and also exposes them to your profit centers.
• Find the right price points. Consider members will use your profit centers for convenience, advises Jeff Quammen of Urban Active Fitness, so it’s important you offer competitive pricing and be aware of what nearby competitors, like juice shops and tanning salons, are up to.
• Bundle up. Packaging two or more of the services you provide may work for clubs, says Josh Harwood of Titan Fitness. A coupon for a free smoothie after a workout or tan may work, or a discount on massage services for personal training clients could encourage both profit centers.
• Consider premium memberships. Allowing members to upgrade their accounts, for an additional price, to include steam room and sauna packages, tanning and/or massage gives them access to more of your ancillary services. This boosts not only your profits but the chance they will refer friends and family to your club.