Collections Shouldn’t Be One-Size-Fits-All
With more than 4,000 debt collection agencies in the U.S., finding a company to handle your past-due accounts isn’t the hard part — the hard part is finding one who “gets it” and can get in-step with your business and customer service model.
It sounds like an easy ask, but even with the sheer volume of collections services available, most have concrete marching orders their agents follow no matter the customer, business or industry. It’s a one-size-fits-all model that, too often, gym and studio owners simply accept out of necessity. They need someone dialing for past-due dollars and, until now, collections agencies have all been more or less the same.
Bringing a niche approach to collections.
Sticking with the collections status quo isn’t the only option. More and more agencies are popping up, offering targeted services and support for specific industries and business niches.
From agencies servicing small businesses to medical and dental-specific agents to past-due rent collectors to fitness-focused collections, the marketplace is becoming increasingly diverse. This ensures companies have targeted options to choose from — professional collections teams who understand the unique needs of these industries and businesses, and tailor their approaches to maximize success.
For gyms and other fitness businesses, the benefits of an industry-specific collections agency are clear. Chief among them: targeted account servicing that better engages members and, in some cases, can even help get lapsed customers back on draft.
General collections agencies are used to dealing with specific industries — specifically not fitness. According to ACA International, nearly 40% of debt in collections is healthcare-related, and 25% is tied to student loans. Rounding out the mix: 13% of debt in collections is financial services — mostly credit cards — and 10% is government or tax-related. That’s close to $9 of every $10 in collections.
Benefits of targeted collections.
Given the breakdown, it’s no surprise collections agents focus on these industries first, then apply that model directly to fitness calls. A bigger concern, though? Whether these agencies — when tasked with individual debts in the thousands or even tens of thousands of dollars — will be as focused on fitness debts, which often fall in the hundreds range.
That’s an important question to ask a collections agency before signing on. Time is crucial to recovering past-due payments — for every week that passes post-due date, the likelihood of a write-off increases by more than 1%. If your collections agency is prioritizing large debts — which, for them, yield larger profits — your calls could fall to the bottom of the pile, lessening your chances of recouping anything.
Keep in mind, average collections rates aren’t all that impressive — by some estimates, less than 20% is recovered. And if an agency does recover your debt? They’ll likely hang on to 25% to 60%. On a $200 past-due member, you’ll be getting back as little as $80.
Another key benefit: fitness-specific agencies understand it’s not just about getting money back — it’s about re-engaging former members and, in some cases, even getting them back on draft. This not only helps you recoup past-due dollars, but also gives you added membership revenue now and in the future.
Finding the right fitness-specific collections agency.
As you’re exploring your collections options, be sure to ask the right questions — questions that ensure you’re dealing with a fitness-first agency:
Do you work with gym and studio owners exclusively?
What is your success rate?
How are your agents specifically equipped to engage past-due gym and studio members?
What are your policies for getting lapsed members back?
Where are your call centers based and where is my data stored?
By getting to a fitness-specific collections agency and not a one-size-fits-all agent, you’ll be better positioned to drive past-due revenue while better engaging former members. It’s a one-two punch that will not only boost your bottom line today, but fuel your organization tomorrow.