It’s one of the first big milestones of your health club’s career — your one-year anniversary. You just got finished with your morning workout and you’re sitting at your desk going through your monthly reports. You start to see members that are going into the auto renewal stage of their membership that allows them to cancel at anytime with a 30-day notice. You start to ask yourself, “Should I call these members and ask them to resign again or just let them roll over and go month to month?” This is a debated topic in our industry. This is one question that we get a lot from club owners on what is the correct thing to do. The answer to the question is that it depends. Both have pro’s and con’s.
Letting the membership Rollover
In some cases, it really is better to just let memberships roll over. The first scenario: When your members signed up, did you tell them that one of the benefits of joining your gym was that after their initial term they would go month to month with a guarantee not to raise their rate as long as they continue to be a member of your club? If you sold your members memberships this way, and then approach your members a year later and ask them to resign to guarantee their rate, you will have some backlash. You cannot go back on what you told them when they joined. The health club industry does not have a good reputation with always being honest with its customers, and you don’t want your club to become one of those clubs that promises one thing and does another.
The next scenario in which you’ll want to let a membership rollover, is what we call “waking the sleeping giant.” If you have done a poor job of keeping your members active in the club, and have not followed up with non-users each month, then you probably don’t want to call and remind them that their membership term is almost over. They’re likely just going to ask to cancel right then and there.
Let’s face it. Our clubs are dependent on people who don’t use the club. Do you want to raise the red flag for your members, reminding them they can cancel at any time? These members are best to let rollover, and wait for the day that they come in to cancel. Then you can ask them why they haven’t been using the club and offer them three free training sessions and one month free if they continue their membership. If you think you want to try anyway, do a beta test. Call 25 of your members and see what type of response you get from them. If a large percentage request to be cancelled, then forget about calling the rest. Let them rollover. The window for follow up is long over and you’ll be better off securing a few month’s dues from them until they remember to cancel.
Ask for early renewals
Early renewals are a better solution to simply allowing memberships to roll into a month-to-month status; but, only if you’ve done a good job of keeping people active in the club, and have reached out to members who haven’t been in the gym for some time. Some gym owners don’t like to offer incentives for getting members to renew. You might wonder why you should give away free months if there might be a good chance they will just renew anyway. Well, in my opinion, “might” and “good chance” just aren’t good enough for me. I’ll gladly give away a couple months in exchange for 12 more guaranteed payments.
If you are asking them to sign up for another year or two years, don’t be afraid to give them something special. Your package can range from things like free months of membership, pro shop gift certificates, two free personal training sessions, five guest passes for them to bring a guest (in town or out of town) in to work out, water bottles, t-shirts, a free month of tanning or other add-on services. Whatever it takes to get them to commit to you again, do it. I’ve always liked the idea of tiered renewals. Meaning if they renew two months before their term is up, they get double the gifts, one month before, they miss out on some gifts, wait until the last day and they receive only a small incentive. This should get people renewing earlier rather than later, helping you normalize and forecast your receivable income.
I am also a big proponent for allowing all members to renew their membership if you have recently acquired the business. Many times, simply because of new ownership, members are more likely to commit again because they are confident you are going to work hard to make the gym better. I would make sure to offer these members their “grandfathered” rate — but, only if they commit to a new term. Otherwise, if they wait until the end of their term, they will have to pay the new current rates.
Let the current members know that you will be raising rates for any new members coming through the door, simply because the memberships have been underpriced for so long. BUT, if they renew their membership now, they are guaranteed their current rate. Don’t be afraid to throw in some incentives as well. People love free stuff and you want to make sure they like you right from the beginning.
No one likes to hear the answer “it depends.” But, in this case, you can see it really does depend. If you are consistent in your communication efforts with your members, this whole thing becomes moot. Unfortunately, many club owners feel their business is a “set-it and forget-it” business. Those club owners tend to be the ones who continue to hover around the breakeven point their entire career because they always have to chase down new money. Through communication you will find your members will be happy to commit to you for a long time.
Curtis Mock is the host of FITBIZ.TV, the TV show for fitness entrepreneurs. He is also the executive director of gymsuccess.com. Curtis can be reached at curtis@clubsolutionsmagazine.com.
