The equation is simple – more members equal more sales and profits. Since most fitness club customers buy from the first or second club they visit, you want to be at the top of the list. So, why isn’t a waived initiation fee delivering those customers?
“It’s just plain unexciting to your customers and exactly the same as your competitors,” says Oran Thomas, CEO of Mpell Solutions. “So, if you’re discounting to drive traffic, you’re throwing away money.”
Here are a few tips to help increase the effectiveness and reduce the costs of your advertising and promotions:
1. Identify a compelling promotion. A free month of membership isn’t compelling; consumers almost expect it. If you’re trying to get your customers’ attention, you need to connect with them on an emotional level. Offer them something they don’t expect, something they want, and something that complements your product. Tying into a fitness theme, there are many choices that cost less than traditional promotions and deliver better results – including iPods, mountain bikes, portable DVD players, and even gift cards to popular retailers like Target, Starbucks, and iTunes.
2. Increase advertising response rates. An advertisement without a compelling call-to-action is a wasted opportunity to grab a potential customer’s attention. A unique and valuable incentive triggers the behaviors that lead to a purchase. Whether it’s getting an advertisement noticed; motivating potential members to visit your club, or encouraging them to refer a friend, a compelling promotion can provide your club with a competitive advantage. A mere 1% increase in advertising response rates can deliver a 100% increase in prospective customers.
3. Target your promotion. Ideally, you would never offer an incentive to a customer who doesn’t need one. Practically, this is difficult to do, but several approaches get pretty close. Targeted promotions enable you to focus your dollars on the most valuable customers. For example, up-sell incentives for premium accounts can generate great returns on investment. Promotions that appeal to specific demographics – e.g., video games to men aged 18-30 – can create strong emotional appeal. Offering an unadvertised impulse incentive (“Buy Now!”) to wishy-washy buyers can also deliver immediate returns.
4. Reduce your costs. Using a mail-in redemption model to claim gifts can cut your costs by 50% or more. The reason is that more than 50% of customers fail to redeem (mail-in) their certificates. Only those customers who truly care about the offer will redeem the certificate. So, you don’t spend money on those that don’t care about the promotion and it self-targets to those who value it. With certificates, the perceived value of the promotion can be up to 10 times your actual cost, which enables you to either offer a much higher value promotion, reduce your promotional costs, or both.
5. Stay focused on your core business. Promotion programs are like advertising or accounting – there is a skill and scale necessary to do it well. For most businesses, this is not a core competency and it ends up being an unnecessary distraction. By outsourcing your club’s promotional program, you can eliminate inventory issues for your business while enabling your club to rapidly change promotions with virtually no implementation effort.
Mpell Solutions is a major provider of outsourced gift-withpurchase programs for the communications, entertainment, fi nancial, fi tness, auto, and home industries. Visit the company website at www.mpellsolutions.com, or email the VP of Marketing at tim@mpellsolutions.com.
