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Geoff Hampton

 

Shifting the Sales Dynamics!

 

Club owners have unwittingly become  accustomed to an 'attrition model'. If you help your members to truly achieve their 'personal goals', in the context of the '5 stages of change', you will enjoy far more natural retention.

By: Geoff Hampton

This is the first of three columns entitled, "Shifting the Sales Dynamics!" that will that will demonstrate sound methodology that more effectively approaches the following four critical revenue streams:
  1. Membership sales
  2. Membership retention
  3. Corporate sales
  4. Program sales - including personal training
Our health & wellness industry has evolved over the years through the replication of age-old systems and procedures that were originally designed for high volume sales in primarily smaller clubs. These clubs were focused exclusively on the sale of new memberships. That business model is known today as attrition driven. In other words, their primary goal is to make the sale in a never-ending frenzy of sales intensity. This type of operation can be profitable, but it in no way serves any purpose in helping the people joining to be successful in their quest for lifestyle change.

Sales Dynamics Additionally, this model expresses no concern as to whether or not the newly enrolled member even returns to the club once they have made their initial investment and signed on the dotted line. It's all show. It tends to create a staff team dynamic that is completely self-serving. As a result the team goals that can be applied are very limited in scope.

 


"That business model is known today as attrition driven…"
At the other end of the spectrum, yet utilizing the same basic business model is the type of club that purports to be service driven. This means that while the sale remains important so does keeping the member and having them use the club once they join.

The outcome for both of these business models are similar. In general, both are marked by controllable attrition rates that can certainly be improved upon. Through the service driven model there is a much better opportunity to develop a total staff team that can truly share a vision of effective inter-departmental values and cooperation. This dynamic also creates an environment whereby goal setting can become much more elaborate and the potential results much greater.

The reality is that both business models fail to effectively serve the large majority of members who tend to become inactive once they join the club. These inactive members continue to pay for their membership even though they aren't using the club. The attrition driven club views this as a good thing. The service driven operator thinks that it is a bad thing, but the clubs operational actions seem to disavow this thinking.

 

The New Service Driven Model

For the attrition driven operator, the high rates of attrition and failure to use the facility by paying members are simply viewed as part of doing business and there is no real effort to create change. For the service driven operator the higher than desired attrition levels and poor member participation have created a bottom-line awareness that has led toward an increasingly more stable business operational thought process.

This new and improved thought process moves outside the antiquated systems and procedures created so long ago. It creates an environment whereby new members will truly be assisted in getting started and continuing an exercise regimen designed to improve their quality of life. The real truth is that it is much healthier to work hard (and smart) to create an active membership that stays with the club and not get caught up in the frantic sales cycle every month.

Increasingly it seems that there is a big buzz out there promoting low priced memberships. This is the old model in its truest and most pathetic form. Stable long-term success will never come about through the sale of low priced memberships. It will always be a niche, but never the optimal solution to making money and serving your clients at the same time. If a comparison is to be drawn to another industry, use the country club business. There are cheap country clubs and everyone who plays golf knows it.

Please notice the term inexpensive was not used. The term cheap was applied and with good reason. There is a niche for cheap country clubs. If you know golf, you also know that the cheap country club does not cause the traditional private country club to change their way of doing business. If a cheap operator is hurting your business then you should consider it a wakeup call to improve your business model. Don't throw in the towel and think that cheapening your membership is the answer. The answer is to improve immediately.

Quick Look - Retention:

What is your current annual attrition rate? ____________

What portion of this attrition rate have you determined was controllable (other than moving, catastrophic illness, disability and death)? ____________


Quick Look - Member Activity Level

How many members do you have? ___________

How many are currently active? ____________

If ____________ are active, how many are inactive? ____________


Conclusion:

Would you conclude that you could and should do more for your members to help them in accomplishing their goals, or would you discover that your club really resembles an attrition driven club?

Shifting the Sales Dynamics in Membership Sales and Retention

Membership sales and retention has been going through a series of professional improvements over that past few years. However, far too many clubs still cling to the notion that hard-core sales and lip service is still the answer to maximizing sales performance.

If your business purpose is to create an illusion of success then cling to the old. If your club truly wants to differentiate its self from the attrition driven business model then its time for some serious changes.

Change # 1

Creating, implementing and effectively managing a 100% quantifiable sales and marketing tracking system:

Most clubs do not have a 100% quantifiable sales and tracking performance system. Some think that this is representative of high-pressure sales. Nothing could be further from the truth. It is a method of maximizing sales and marketing efficiency, but also enables the club to better serve their membership prospects.

Many clubs inaccurately believe that letting a prospect leave on the first visit is logical and customer friendly. The belief is that the prospect will think it over and return to join later. Not true in the vast majority of cases. In fact, for most clubs only 15 - 20% of prospects ever return to join after the first visit. This means that 80 - 80% do not return. Worse yet, what if the prospect then visits an attrition driven clubs, gets pressured into buying a membership and the sales person effectively created an illusion of the club wanting to help them accomplish their goals. No spontaneous event occurred. The prospect didn't suddenly become an exerciser. But, they will become an inactive paying member who just wasted their money.

Or, they will go home to think about it and slip back into the non-motivated lifestyle they were living before they came into your club in response to some passing impulse. Then, you will have missed an excellent opportunity to help a person make a lifestyle change that they told you they wanted to make. You will also lose that sale and any referrals that you have gained from the member once you got them active. You both lost.

Argument:

That's not true at my club. Most people come back to join later.

Question:

If you believe that, how did you ascertain that information? Most clubs use a combination system of guesswork and misinformation to draw a conclusion like that. If you truly believe that most prospects come back to your club to join later and you do not have a 100% quantifiable system in place, the odds are great that you are way off.

 

How can you find the truth? Track it!

How can you find the truth? Track it! Other important information to track through a 100% quantifiable system:

 

  1. Incoming membership telephone inquiries to appointments ratio (goal - 80%)
  2. Appointment to show ratio (goal - 70%)
  3. First-time closing ratio (goal - 70%)
  4. Point of sales referral ratio (1 good lead to each new sale)
  5. Lead source
  6. New member program attendance (fitness evaluation, etc.) show ratio (goal - 90%)
  7. New member usage - first 30 days

Change # 2

As an industry most sales departments and marketing campaigns are designed in a "one size fits all" approach. The problem is that not all prospects are the same.

The easiest way to clearly understanding this factor is to utilize Dr. James Prochaska's ( www.uri.edu/research/cprc/Faculty/JProchaska.htm) Transtheoretical Model of Change (www.uri.edu/research/cprc/transtheoretical.htm ), specifically applying the five stages of change (www.uri.edu/research/cprc/TTM/StagesOfChange.htm ). In this case, we apply the model to someone who wants to change their lifestyle to a healthier level.

For us, that is by creating a relationship with a club (notice I didn't say buy a membership - more on that a little later) where they hope to begin to exercise and improve their quality of life. For many, this is a major decision and it is very important to them. Almost everybody is thinking about or wishing that they could look better, feel better, not worry so much about being stricken by a terminal or catastrophic illness or even premature death.

According to Prochaska:

"Five stages of change have been conceptualized for a variety of problem behaviors. The five stages of change are:
  1. Precontemplation
  2. Contemplation
  3. Preparation
  4. Action
  5. Maintenance
Precontemplation is the stage at which there is no intention to change behavior in the foreseeable future. Many individuals in this stage are unaware or underaware of their problems.

Contemplation is the stage in which people are aware that a problem exists and are seriously thinking about overcoming it but have not yet made a commitment to take action.

Preparation is a stage that combines intention and behavioral criteria. Individuals in this stage are intending to take action in the next month and have unsuccessfully taken action in the past year.

Action is the stage in which individuals modify their behavior, experiences, or environment in order to overcome their problems. Action involves the most overt behavioral changes and requires considerable commitment of time and energy.

Maintenance is the stage in which people work to prevent relapse and consolidate the gains attained during action. For addictive behaviors this stage extends from six months to an indeterminate period past the initial action."

Step Class This model is critical for membership sales, retention, programming and personal training practical application and design. The only stage that the club doesn't need to have a multi-level, multi-dimensional approach for is the Maintenance stage. All the rest (including precontemplative - who can be favorably impacted by a friend, family member or co-worker who successfully gets involved in lifestyle change - also important - they can be negatively influenced by the same person who tries…but fails) need to be approached much more methodically than has heretofore been attempted. Low price may bait these folks, but the low cost precludes the club being able to practically design retention programs that will help this new member become active.

Now take a look at the prospect types that your membership sales staff sees on a regular basis.

 

  1. Never belonged to a club before
  2. Used to belong to your club
  3. Used to belong to another club in town
  4. Used to belong to another club in another area and moved to yours
  5. Still belongs to another club
Failure cycles have probably plagued prospects of the contemplative, preparation and even the action groups. One of the important recognitions for a true service driven club is that for sales, retention and programming, these failure cycles have created a mind set based in failure for the person. It is important not only to understand this, but to dig a little to identify the person's failure cycles and help them discover solutions that will help them stay on task for the lifestyle change that they seek.




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by Erik Mason Fitness Counselor
Excellent insight
This article offers excellent insight into the consumer-driven fitness industry. Gone are the days of slamming customers that pay and never return.
by Jack M.
A Fresh approach
Wow, this is a very interesting approach to thinking about how and why people join health clubs. We are too used to the old way of thinking about the old model that somehow, it's new years and they got a bug up their butt to get in shape. Not much thought, just do it. But Geoff's research points out that there's a whole psychological process going on. The more, we as club owners realize this, th
by Cary L. Adler
Geoff Hampton Hits The Mark
Geoff Hampton has many years of experience in the industry both managing and consulting for many different types of clubs. We have had a very successful consulting relationship with Geoff. His articles tends to crystalize what many owners thought all along (in this case sales driven vs. retention driven clubs), and he offers practical steps club owners can take to alter or modify their approach.
by Sandy Temple
Review of Shifting The Sales Dynamics
I really enjoyed this article and it is "right on the money", I believe, in respect to the need and the desire of individuals having a relationship with a health club. For a person to succeed at making healthy lifestyle changes and sticking to them they need positive reinforcement at all levels. From the membership department(I, too, prefer the word program in place of membership) to t
by Alec Holt
Great Article
This is a great article, very informative. Geoff hit the nail on the head.
by Andy Parker
CEO, AP Fitness, LLC
Conceptually correct and his model should be the one more club owners should take. However, this model takes more effort, but potentially more lucrative. Remember, owning a health club should be about helping your members to be healthy and not just about making money.
by Justin Frey
More should shift
Geoff has a very unique way of organizing this argument so that you can't help but to buy in and begin to "shift" your own life immediately. More club owners,(or anyone who may be taked with the "care" of people making an attempt at a healthy lifestyle)should read this article. Geoff makes the attempt to pass the tourch of responsibilty on those who claim to have the most inter
by Mike Dupuis
Fail to plan, plan to fail
Geoff does a very good job with systems and makes the point that you should inspect what you expect. Keep in mind your market and remember that you are only as good as your team. Hire personality and train skills (Geoff's systems, etc...).

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