Alex Wolf, the vice president of customer success at Swift Financial Services, shares how clubs can reimagine their collections process.
Consider this: a 5% increase in customer retention can increase your revenue by 25%-95%. The flip side? According to the Statistic Brain Research Institute, 63% of gym memberships are never used and 22% of new members stop going to the gym six months post-enrollment — that translates to non-paying members.
While lapsed and non-paying members are par for the industry course, on the heels of COVID-19 it’s becoming an issue. With just 50 non-paying members you could be losing $40,000 per year or more in revenue.
As more gyms and fitness studios reopen their doors these numbers have been under the microscope — and that’s shined the spotlight on cash flow recovery.
Understanding cash flow recovery
Part third-party collections, part revenue cycle management (RCM), cash flow recovery tightens the reins on gyms’ enrollment and ACH processes while collecting past due payments and getting lapsed members back on draft. This three-prong approach ensures a robust revenue stream now and in the future.
Traditionally this process was handled by a gym’s front-end team. Now, teams are leaner than ever, with greater time spent on maintenance and safety. If in-house teams are focused on making those calls, then they aren’t focused on those critical members services that ensure future growth.
Collections agencies tend to focus on traditional debts
Because cash flow recovery is such a front-of-mind issue for gyms, many reach out to a third-party collections agency for assistance. What they don’t realize is that these collections agencies have experience in credit card and loan defaults, not cash flow recovery — and that’s too one-dimensional.
To ensure you’re working with a true cash flow recovery agency and not just a third-party collections agency, be sure to ask a potential partner these questions:
Will members realize they’re “in collections?”
While it’s important members understand what’s past due, you want a cash flow recovery partner focused on the big picture — what’s owed, what your forgiveness plan looks like, and how to get that member back in the door and back on draft.
Many collections agencies just focus on the debt, and that can make members feel uncomfortable, defensive, or anxious — that’s not what you want. Instead, focus on finding a true cash flow recovery partner that will act as an extension of your team, and engage and activate members just like you would if you had the time.
Where are your call centers located?
To that end, if you’re a U.S.-based gym, you want teams located in North America. You want a cash recovery partner that’s an extension of your in-house team.
Do you work exclusively with fitness-related businesses?
Be sure you’re working with a cash flow recovery agency that only works with gyms and studios — they understand more than just the dollars and cents of it all.
What are your gym and fitness studio success stories?
Ask for real numbers from real gym owners — and if they don’t have them, they probably aren’t the right partner for your business.
By focusing on cash flow recovery and not just collections — and by asking these critical questions — you’ll be better positioned to engage the right partner, and drive greater success for your business in a post-pandemic landscape.