Originally Posted 02/08/10
The copy in this blog is an excerpt from my newest book, tentatively called: Where Did that Member Go? Rediscovering the Lost Art of Customer Service. The book is due out in March and will again be published by Jim Petersen and his team at Healthy Learning, perhaps the most patient people in the publishing business.
My theme of the year in the workshops is that we fail the members by not getting enough people in the clubs enough help and then that mistake punishes us when it comes to low retention in our businesses.
The shear number of competitors should be forcing you to rethink this issue. We need to move away from a culture of failure, where just a few members willing to pay for one-on-one training ever had a chance to succeed, to a culture of success where we can create systems that allow us to help the biggest percentage of members and still make money.
The entire book is really about retention, but the bigger issue lies underneath and that is our inability to help the members get in shape and stay in shape. Start with this brief rant and start to think about how you support the members you have in your club. You will probably find that few truly get the help they want and deserve for the money spent.
Create a Membership System That Has Many Layers and Options Where Everyone Who Wants Help Can Get It at a Price They Can Afford
We exist to change lives and any fitness business should be nothing more than a delivery system designed to change as many lives as possible.
Change lives, and people stay longer and pay longer, which results in more income for the business, usually more profitability, and a chance to change more lives in the future.
The tool that enhances this mission to change as many lives as possible is customer service. Every member who pays us each month to belong to the club in essence trusts us to facilitate this change, and every member who pays deserves some respect from the club and its team. This glowing and somewhat simplistic business idea breaks down, however, when it comes to the direct application in most fitness businesses.
In most clubs, there are usually two distinct classes of members. There are the ones who have the money to purchase one-on-one help, and therefore get the best results from their membership, and then there is everyone else going through the motions practicing self-inflicted fitness.
Everyone else is defined as all the other members still doing their original circuit workout from the day they started, the members carrying sweat stained copies of Men's Health, and the wannabe bodybuilders still carrying around Arnold's 1977 hardcover edition of The Education of a Bodybuilder. All of these people are seekers of a more fit life, but almost all will be failures since the club simply doesn't have a system to help them that isn't restrictive and expensive.
If we want to keep more members staying longer and paying longer, then we have to design a membership system that allows everyone to get help at a rate they can afford.
Doing this requires that you stop copying the traditional one-on-one business model and move to a system that is more inclusive for more members, yet more financially successful for the club due to a much higher percentage of your members paying a fee monthly that is higher than your rate for just a simple access membership.
The Current System Only Serves One Type of Client
The traditional training model only serves one type of client. If you are on the average a middle-aged, fat, white guy and have money, you get a trainer. If you're not, then you are much less likely to seek out the services of the club's training department.
The club loses money, and fails to deliver great service, by limiting its business plan to only a single user group. If you want to generate the highest revenue possible from the most members, and deliver service to the widest range of clients, then you need to expand your model to seek out the other types of clientele who are waiting for you, but are untapped because your model fails to serve them.
Following are all of the categories you could be serving in your business by expanding your current training model and by making it more inclusive.
The deconditioned people
This group, defined by the statistic that about 63 percent of the people in this country are either overweight or obese, really doesn't do well in a mainstream fitness facility. Unless the deconditioned person can come up with money for one-on-one training, he is pretty much underserved by most clubs. These people simply need much more help during their first 30 days than most clubs can afford to give using the one-on-one format.
It is interesting to note that most clubs fail these clients, due to the limits and restrictions of their business model, and not because of the owner's or manager's lack of awareness that these folks need more help or because the club's management doesn't care. The model itself is wrong, and is where the barrier exists, because most owners just can't afford to throw that much one-on-one help at people who need constant attention during their first 30-days.
The traditional one-on-one clients
This is the standard client serviced by the standard model. This is a failing model in most clubs, however, if you look at the numbers. One-on-one training usually only has a penetration rate of about 3 to 6 percent of the club's membership. Penetration rate is again defined as how many people in the club's total membership are involved in a given program. In this example, a club with 1,000 members, and a penetration rate of five percent with one-on-one training, would only have 50 consistent training clients.
Some clubs try to compensate for this by showing a higher rate of training, using $75 per session for example, and then discounting for anyone who buys more sessions, or packages. In this instance, the club might offer five sessions at $250 (now $50 each) or 10 sessions at $400 (now dropped to only $40 each). Besides killing the credibility of your trainers, who started out as $75-per-hour trainers, but are now worth only $40 per hour, you are still limiting your program to only a single type of client.
Most one-on-one training clients like the pampering and the status that comes with having a personal trainer. These people seek this out because of the results they get, the guidance they receive, but as equally important to many of them is that fact that they can afford it and the other members can't. It is elitist, it has status for some, and this type of training was always designed to be that way. The trainers themselves perpetuate this by fighting for bragging rights on who can get the most per hour, therefore, continually seeking to drive up the training rates in the market.
These elite clients have a place in the club, and if a member drives up in a Bentley and wants to train, take a lot of his money and give him the training. But there are other types of clients, in much larger numbers, who are not being serviced by this model you need to chase as well.
The social dynamic/group dynamic category
These are the clients that prefer to do things in groups and who seek the energy and fun from doing things they like with a lot of other people pursuing the same activity and goals.
The business concept behind attracting these people is that they can share the cost of the trainer. People need access to more information to make change in fitness, because most people just can't figure it out by themselves. Training in a group allows a wider range of people, who understand they need help, to get this information at a reduced rate by going through the process with others and sharing the cost of that education.
People grow up doing things in groups. If you were an athlete, you grew up on a team. Even if you were an individual-pursuit athlete, such as a track person or played golf, you were still part of a team and trained and travelled together. If you weren't into sports, you might have been a Boy Scout, Girl Scout, in the chess club, or somehow involved in doing something with a group of people. Even the guys in the computer clubs still get together to exchange tips and combine expertise.
We have killed the group dynamic in most clubs. Training is done one-on-one, the cardio equipment has personal televisions, and we encourage members to bring their mp3 players. We not only limit the personal connection, we strongly discourage it in most clubs. Except for clubs who have vital group-exercise programs, there is nowhere in most facilities to meet and interact with other members, especially since many clubs don't have stretching areas or any type of socialization node, such as a sports bar.
Training in a group is more fun, you will get better results because of the peer pressure, and you can save money if you share the cost of the trainer. The club also benefits more by being able to generate a higher return-per-session. For example, if your best trainer can get $75 per hour, then that is your ceiling for her for every hour she works. You simply can't get more than the proven maximum of $75. But if you think about creating the group dynamic experience, you can now raise your return-per-hour. For example, you might charge $75 for one person, but you can charge $40 per workout for four different people in a semi-private environment; therefore, generating $160 for the same length of time.
It is important to understand that you can add this layer without cannibalizing your one-on-one business. The people who do one-on-one are not the same people who seek the group experience, and the majority of your existing one-on-one clients will prefer to just keep doing what they are doing if you do add the semi-private option to your training business. Most semi-private training would be done in groups of two to four people, but experienced trainers can sometimes manage groups as big as six people.
One of the false assumptions that prevent many club owners from trying this model is that they believe--usually through the influence of the trainers--that everyone has to have their own individualized workout. Unless the person is injured, or needs sports-specific training, such as someone getting ready to do a marathon, then the rest of the members can do things in groups, sharing a common workout. For example, the head trainer might post the workout of the day for the semi-private clients listing kettlebell swings, clean and presses, squats, pull-ups, and dead lifts. An experienced trainer might have a member who has been training for a while do two minutes of swings with a 53-pound bell and the new guy might do 30 seconds with a 35-pounder. Everyone can get individual help and guidance that suits that member within the confines of the group, but everyone still does the same basic workout.
The Challenge Seekers (those who simply can't find a hard enough challenge in most mainstream fitness businesses)
This is the group most clubs never see and wouldn't know how to service if they did appear. These people are in the 25- to 45-year-old age group and are the ones who are doing radical training in their garages, doing the cult workout of the year. These are also the same people who would be bored to tears working with a traditional trainer by themselves. This group wants a challenge, wants to do the training that their favorite athletes are doing, and are concerned not only with looking good, but with functioning well as a skier, bike rider, hiker, kayaker, or any other weekend lifestyle sport. These people almost always train in groups, because the peer pressure drives the results and helps take every workout to the next higher level.
These are also the people who usually know a lot about training since they read all the hot fitness publications, explore fitness online, and read the training books. We usually call this group the "badass” fitness group, because they are seeking the badass, make-it-hard, challenge-me-as-much-as-you-can workout, and have no interest in traditional fixed-equipment circuits or body-split bodybuilding workouts done 1972-style.
This group thrives in group personal training/coaching with groups of a trainer and up to 10 members. The group training sessions should be very aggressive and would be structured consisting of a program that is usually done for a full month before being changed. This should not be called a class, because that term forces a comparison between the club's group personal training and its group exercise program.
Group exercise is generally included as part of a simple access membership to the club, but you want to charge for group personal training. There is a sample pricing structure later in this chapter.
The key point is that there are really four types of clients that need, or who are seeking, help beyond the most basic information that most clubs offer, but most clubs merely offer help to the traditional one-on-one client. By limiting your help to just the 3 to 6 percent of the people who can afford training, or like that type of training relationship, you are in effect neglecting the other 94 to 97 percent of the members who can't afford, or who simply don't like, that type of working out.
The interesting thing to note is that when asked directly, most owners cite that almost everybody coming through the door, which stated statistically might be as high as 95 percent in most clubs, needs help of some type and can't get started on their own. Even the folks from other gyms and who have been working out are often doing homemade or dated workouts that are ineffective or dangerous.
Yet knowing this hasn't led to any changes in the training model for most clubs. The clubs simply don't change, or can't afford to change, the current model that limits help and service to the majority of their members.
Building a Price Model That Can Service a Deeper Penetration Rate in Your Membership
Following is a sample model that is designed to touch the largest number of members in any given club. When you add layers, you are really adding a variety of different price points that will appeal to a wider range of clients. This model is also based upon the assumption that the one-on-one training model is not effective in most clubs. The traditional model only generates restricted income from the entire membership base and also restricts the return-per-hour the club can obtain.
Done correctly, most clubs should only have about 10 percent of its training revenue come from the traditional model. Most clubs could in fact benefit from charging more for one-on-one training and making it more elite for its membership and for its image in the marketplace. Setting a higher standard with your one-on-one price would also guide more members toward the semi-private and group models where the club can reap a higher profit margin and serve more members.
Important note: Do not panic by trying to force your existing members into a new system. If you use this model, you would do it for new members forward. Most owners balk at using a newer model, because they always relate change back to the members they already have in the program: "I know Joe, and Joe won't do any of this new stuff, and he sure won't pay more.” Leave Joe alone. Don't mess with your current members in the model you are using. If they want to keep buying sessions, then sell them the sessions, but stop failing to grow your business because you are afraid of a bunch of members holding you hostage. Honor the deals you have made, but move forward from there.
This model is also based upon the assumption that you will at some point stop selling sessions and packages and move to an EFT model (members are drafted monthly for their training directly from a credit-card or bank account). Sessions and packages are weak tools, because the cash flow is so inconsistent. You sell a package, get the cash today, which is nice, but then you have to service the person for several more months without any matching influx of money.
Your goal in this more advanced business model is to:
• Offer a system that allows a wider range of members, as defined by workout type and price sensitivity, to become active in your business.
• Stabilize your cash flow by switching away from short-term packages and sessions to 12-month training programs based upon a monthly EFT.
The training clubs have long suffered from having all of their membership based upon short-term tools, such as packages, and the mainstream fitness clubs have based their memberships upon longer tools, such as a 12-month term.
Both businesses could benefit from combining these memberships into one model. The training clubs could develop a large receivable base, which is the combined total of all their members paying monthly for their training. This eliminates the inconsistent cash flow that is so detrimental to these small businesses.
The mainstream people should strive to get the highest number of members possible into a larger monthly payment and include the membership to the club as part of the training membership.
One of the biggest changes in the industry during the first decade of the new century, and maybe one of the biggest changes in the last 30 years or so in the business, was the necessity to show the lowest entry point/membership price possible in order to get as many members as possible into the club, and then work hard to drive up the average EFT sale.
In the past, clubs have been able to hold the line and not drop their single-person rate, but the combination of the economy, the maturing of the marketplace with more competitors than ever before, the advent of the lower priced club model, and a more astute clientele looking for more options is forcing everyone else to change. This change will drastically affect all mainstream fitness clubs for the next decade, and all owners and managers need to tweak their current price models before falling sales and declining revenues force you to change what you are currently doing.