Getting Billing Back on Track
For many gym operators, the shutdowns resulting from the COVID-19 pandemic have wreaked havoc on their billing and collections processes. After all, these systems were never built to be put “on pause” for months at a time, or turned on and off again. Throw annual fees into the mix and you have a bit of a mess.
“The biggest lesson learned has been there are a number of complexities and variances which occur after a billing system has been ‘turned off’ for 60 to 120 days,” said Craig Cote, the CEO of Mountainside Fitness in Arizona. “In our situation, and likely similar to other operators, we did not bill for April through August. Our billing in September, and successive months, required insightful decisions such as how to calculate and manage 90-day past due/write-offs, recurring annual fees — some of which skipped closed months — and other membership accounts which were ‘missed’ from the billing system upon reactivation.”
With these weird circumstances in mind, here are tips and tricks for navigating billing and collections processes in the current times, including how to ensure billing accuracy post-shutdown, tips for getting members off of freezes and why it’s vital to have a great billing partner.
Ensuring Billing Accuracy
Due to the aforementioned “turn off” and “turn on” nature of the past year, Cote said it’s vital clubs have an increased focus on billing to ensure accuracy.
“Pre- and post-billing audits should include the basic query, ‘Which members are not billing and why?’” said Cote. “In the past, we worked to clean-up billing files to ensure canceled/frozen members did not bill. However, the new mindset is to ensure cancels/freezes are the only reason for non-billing, as there could be any number of mistakes within the system which may lead to a member in good standing to be inadvertently removed from that billing file.”
For Cote’s team, what has worked best is to segment all declines into four to five various categories in order to better manage correspondence and collection efforts such as:
- Dollar Amount Past Due
- Age of Past Due
- Reason for Decline
- Recent Check-in Activity
- Type of Product Associated with the Decline
“This segmentation allows for our billing team to take a more effective strategy as they attempt to reengage the member and remedy the past-due or non-billing,” said Cote.
Additional things to look for in reviews of the declined/collections file include “do not honor,” which occurs when a member tells their bank to stop billing, a card expires, or there is a generic decline and a member has insufficient funds. You can then tailor a strategy for remedying each circumstance.
Getting Members Off Freeze
Another challenging aspect of billing and collections in the current times is the amount of members still on freeze. Many operators are seeking strategies to get members to return and get back to monthly billing.
According to Doug Elkins, the founder and CEO of Woodmoor Advisors, clubs should not focus on “defrosting” memberships but rather strategies for reengaging members in new, relevant services.
“An accelerated lesson is for owners to begin thinking about their business not as a ‘location with services,’ but as ‘services with locations,’” said Elkins. “Thinking about service-first helps expand business growth opportunities outside the physical facility and its limited capacity.”
To find out what products or services your members are most interested in returning to — and paying for — Elkins said you simply have to listen.
“Listening to your members and reacting accordingly is key to surviving the current times,” explained Elkins. “Most members want to see their clubs survive and are eager to participate in finding ways to make that happen.”
According to Cote, there are a multitude of strategies for getting members off of freeze, from individual phone calls and in-club challenges to incentives. “I believe all of them will have some level of success,” he added.
Regardless of what strategy you use, it’s vital to keep abreast of your “freeze” landscape.
“We believe in the adage, ‘You get what you measure,’ and we have consistently tracked freezes since reopening,” said Cote. “Our marketing team has provided monthly correspondence to freezes in order to keep them informed about recent additions. Equally important is that our billing team and technology partner review the ‘status’ of freeze accounts and their expiration dates, as this is likely a significant contributor to the number of accounts on freeze status which would otherwise transition to reactivation.”
The Importance of the Right Partner
The current billing challenges — such as high numbers of freezes — have highlighted how important it is for operators to have a billing partner that not only executes the functions of billing and collections, but also acts as a true partner in the process.
“The most successful clubs do what they do best and outsource other business functions,” said Elkins. “Billing, or more comprehensively put revenue management, is no exception. Owners that were of the opinion recurring billing was easy now appreciate the complexities involved. Intricate and flexible freeze algorithms are just one example of the value outsourced revenue management platforms can provide. A provider offering only ‘best practices’ is unlikely to support unique business rules needed for a given club model.”
As a result, Elkins advised clubs to look for a billing partner with solutions that can integrate seamlessly into your existing operations and technology.
“Revenue management technology works best when it is integrated through the business ecosystem — it is a thread that runs through each part of the operation and thus requires dedicated efforts,” said Elkins. “Treating revenue management as a separate, non-integrated business unit fails to maximize revenue generation.”
According to Elkins, robust revenue maximization technology should go beyond simply allowing you to bill for membership dues.
“Among other concerns, it requires very close data and service integrations with other technology platforms, allowing club owners to seamlessly select best-of-breed solutions,” Elkins added. “Integrations that only share data deliver only partial value.”
For Cote, the most important aspect when seeking a billing partner is finding one that understands the importance of the process and doesn’t just view it as an “add on” to other software services.
“It is important that a billing technology partner continues to have billing at the forefront of their business model and that they provide a consistent support team well versed in the billing process,” said Cote. “It is difficult to fully vet this process at the front-end and prior to any actual billing. However, if the technology company strongly emphasizes their pre-billing procedures and can provide the support team at the front-end of the relationship, then most clubs should be able to rely on them as a partner.”
All in all, the one billing lesson Elkins and Cote agree on is it’s important to be flexible when it comes to billing and collections in the current times.
“The main theme successful owners and operators have adopted in dealing with the fallout of the pandemic is flexibility — with the primary goal to retain member relationships for the long run,” said Elkins. “In many cases, the strict terms of any standing member agreement must be adapted to address relationships and membership retention.”