Richard Feynman, an American theoretical physicist, explained it best — “You can know the name of a bird in all the languages of the world, but when you’re finished, you’ll know absolutely nothing whatsoever about the bird. So let’s look at the bird and see what it’s doing — that’s what counts. I learned very early the difference between knowing the name of something and knowing something.”
Most health club management software has reports and information-compiling capabilities that provide empirical data on your membership numbers and accounts receivable. What exactly does that mean? Club owners may get confused as to how to translate a software’s capabilities into workable knowledge that provides them with the true power of understanding their business.
In 2007 when I opened my second club, I quickly learned that I had to delegate a lot of responsibilities at both facilities. As a self-admitted micro manager, I knew this wasn’t going to be easy. I had to relinquish some control to my managers and increase my reliance on the data-reporting capabilities of my software. I quickly learned the difference between looking at numbers, and knowing what they mean.
I had given my manager the task of growing our core membership and even went as far as promising to give him a generous bonus for increasing the club’s membership tally. Our membership numbers were great — the club was always busy and my manager was happy as a fat rat in a cheese factory. Unfortunately, revenue was not growing and my equipment repair expenses were.
My software adviser explained to me that I had to understand my reports and not just look at them. He showed me that there was a lot more to the Membership Profile Report than just how many members the club currently had. The average dues per membership column showed me that the average EFT member was only paying around $29 per month. This was alarming because my price point was $36 per month. After digging a little deeper I found out that my manager had been selling new memberships for less than our published rates, which increased our membership numbers, his bonus and the equipment’s usage, but not our revenues.
I experimented with offering short-term memberships to my health club. I surmised that my competition only offered month-to-month memberships, and that offering a three-month membership might entice new members who didn’t want to fully commit to a year. I thought I had hit a home run — we sold more than a hundred memberships in the first quarter and my numbers looked good. But as my software advisor said, “Beware the numbers.”
Again, the lesson I learned was that numbers don’t tell the whole story — understanding their significance does. After two years and hundreds of three-month memberships sold, I went to my Membership Profile Report and analyzed the average tenure column. It detailed that the average three-month member only stayed at the club for 6.8 months. In other words, we got them and we lost them. With a limited number of possible members in our area, a retention rate under 35 percent was nothing more than a slow death.
Obviously, numbers don’t lie — they just don’t tell the whole story. Health club management software needs to be more than a compilation of numbers. It needs to provide those numbers in a useful and meaningful manner. There are so many variables in our business that generic data reports are about as useful as an ejection seat in a helicopter. Analytical data needs to be detailed enough to get through the many different layers of your business and malleable enough to be exclusive to your club and to your unique situation.
Eric Claman owned two clubs in Torrington, Connecticut, before selling both and accepting a consulting job at Twin Oaks Software Development in 2011. He can be reached at 866.278.6750 or at firstname.lastname@example.org, or visit healthclubsoftware.com.