How to Differentiate and Evolve to Increase Profit

The fierce competition in the health club industry has grown more intense. Many clubs are being forced to lower their dues, or increase services to stay competitive. How do you differentiate your fitness center from the rapidly expanding $10-per-month chains?

Let’s start with some of the obvious basics that have been around for years. Clubs needs to be clean, equipment maintained and working. Employees should be friendly and outgoing. Décor must be bright and lively. Your business is to promote and improve well-being, socialization and health. Retention and usage are paramount.

We are seeing some unique and different business models pop up onto the health club scene. It used to be that multiple layers of management and staffing were in place to service customers and run the business, protecting even the smallest dollar values.

Many owners are now going to the opposite extreme. They are operating with 24/7-remote access for most operating hours, and only staffing with a membership sales and front desk attendant from 3 p.m. to 8 p.m. Membership is purchased online or during the staffed business hours. This eliminates the traditional organizational model of a general manager, office manager, membership sales representatives and most of the front desk staff. The hundreds of thousands of dollars that can be saved in compensation are deemed to more than offset the errors and inefficiencies that can occur as a result.

Owners that decide to run their business exceptionally well are adding many additional profit streams, and are using industry resources to develop means of increasing revenue and cutting expenses. Some of the biggest revenue enhancements are related to online memberships, personal training, group fitness classes and per-visit purchases. Many times, these are emotional decisions that need to be tied into customers’ feelings and state of mind. The ability to make a spur-of-the-moment buying decision eliminates many people procrastinating or never taking action.

Another significant way to increase membership is to document all prospects, former members, expiring members and low-usage members. Dramatic increases in sales have been attributed to sending e-mail blasts with specific offers to these people on a regular basis. Many clubs also track their marketing demographics to determine the best use of advertising expenses. Another option is to send professionally-developed e-mail blasts to all households within a seven-mile radius that have an average income over a certain dollar value. It is important to have a software module that tracks the follow up on these leads as well as closing percentages for the sales staff.

Reducing expenses is another way to increase the bottom line. Online joining modules result in less membership time directed to the sale. This redirects energy and effort towards customers and increases retention. This requires a reformatting of the commission structure to prioritize retention versus the initial sale. An online member dashboard also allows payments, informational changes and health care reimbursement forms to be made by the member from home. This is less costly for the club and eliminates a negative emotional experience for the member.

Many clubs are sending e-mail blasts to customers offering a free half-hour fitness assessment if the member changes their billing method from credit card to checking. This reduces merchant costs and provides an opportunity to sell personal training. A new trend is to offer lower-priced online memberships for those members that decide to bill through their checking accounts for monthly billing.

The industry is evolving so rapidly. There are many more examples of owners increasing revenue or reducing expenses that are being used successfully every day. This is why it is so important to be teamed up with a management software company that provides an industry experienced, dedicated account manager that can highlight all of the possibilities.

The key as a business owner is to be presented with an exhaustive list of successful new developments — and to be shown the resulting pros and cons of implementation. The bottom line is a business must evolve rapidly, and with intelligence, to stay ahead of the fierce competition in the fitness industry.

David Porter has been a sales consultant at Twin Oaks Software Development for many years. Previously he ran several businesses, including Suburban Athletic Club outside of Boston, which he co-owned and operated for 10 years. He can be reached at 860.829.6000 or dporter@tosd.com.