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Maximizing Recurring Dues Income


Cash in now by using a tool that’s right there — your computer software. You have the technology, now put it to work. Begin with the big thing, managing the dues line. The most successful clubs put 70 percent or more of their members on monthly billing because, in most markets — providing your EFT processor is reliable — you will make 20 to 30 percent more per member for no more effort. Industry statistics also show that most members on monthly billing stay members for 18 to 22 months. Doing this ensures monthly recurring revenue to cover fixed expenses, grows the value of the business and provides a track record of income. This is important to show banks if and when you need it for resale purposes or for new capital financing. It’s also been proven that only about 40 percent of paid-in-full members actually renew each year.

Consider putting as many members as possible onto ACH (Automated Clearing House, checking or statement savings account) billing. This is a big key to success for the low-price model facilities, as it minimizes or eliminates credit card merchant fees. Many sites even reward a prospect when joining for selecting the ACH method of payment. Typical rewards include a free t-shirt or some complimentary guest passes. Another option is to make that selection slightly less in price, i.e. $2 to $5 lower. A less recognized benefit of ACH billing is that most people tend to keep their account for a long time, versus credit cards that change frequently.

If credit card billing is offered, as most sites do, make sure there is no mark up on transaction fees, incorporating other surcharges, or adding to the current interchange rate excessively. Typical overall effective rates should be under 2.7 percent. In addition, see if your billing provider has an Account Updater program to capture new information for members whose card is about to expire or if their bank has been proactive and issued new cards recently. This is a very affordable feature with real cost being less than a quarter per update.

Other ways to maximize recurring revenue is to incorporate billing for items such as personal training packages and add them to the members’ monthly EFT. This can also be done for lockers, childcare, charity donations, massage or tanning packages.

Use club management software to regularly forecast what the next month’s billing will come in at to predict cash flow. This should be a simple and easy procedure to perform, only taking seconds to do. Many owners do it daily as they put new members on billing and remove others who cancel. In addition, run reports for a quick data profile showing exactly how many monthly billing members there are, average dues, the number of prepaid members, short terms, promos, cancelled, and expired members. It should also show how many people are “incomplete,” meaning they’re in the system, but information is missing. These are accounts that could be on billing and just need a voided check or credit card number.

Information is critical for proper budgeting and planning. You can’t predict where you’re going if you don’t know where you’re at.

Carole Oat, a former club owner and operator for 15 years, is the national sales manager for Twin Oaks Software. For more information call 860.829.6000 x 281 or email coat@tosd.com.

Carole Oat

Carole Oat is a national sales manager at Twin Oaks Software and a former club owner and operator for 15 years. She can be reached at coat@tosd.com or 860.829.6000 x 281.

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