Health Club and Fitness industry revenue is expected to reach $32.9 billion by 2020. Although the industry is trending towards growth, many health club owners still struggle to make a profit. Payment issues, member and employee churn, and reliance on inadequate health club management technology are just a few challenges gym owners typically face. Less than 50% of new fitness clubs expect to survive beyond the first five years in business. With that in mind, it is important for modern health clubs to understand the industry and how to operate efficiently to reduce costs and monitor sales and profitability. This Guide covers ways to improve efficiency and profitability in your health club.
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Companies in the health club industry operate fitness and recreational sports facilities that offer exercise equipment and recreational sport activities for consumers. The industry can include health clubs, fitness centers, gyms, studios, wellness centers, athletic centers. Some health clubs cater to consumers on the basis of convenience by offering low-cost memberships with full operational hours. Comparatively, niche studios have appealed to consumers by offering classes with specific workouts or environments .
According to IHRSA (International Health, Racquet & Sportsclub Association) the global number of health club members increased 33.60% from 2008 – 2017, with the health club industry, in general, comprising $87.2 Billion in revenue in 2017. You can learn more details by purchasing the IHRSA 2018 Global Report: The State of the Health Club Industry.
While the health club business is booming there is also a lot of competition and many variables that impact clubs financial success. Having a health club does not mean you will instantly be able to make it profitable. That takes a lot of hard work and knowledge. Operating a profitable health club is about balancing what generates revenue while controlling what costs money. Check out the blog post 7 Keys to a Profitable Health Club Operations blog post for more detailed information on these key points for success.
To take advantage of this growth, it is wise for health club owners to be aware of Health Club Industry Trends. Some of the trends we identified in a recent blog article 3 Health Club Industry Trends to Guide Your Fitness Business Strategy include:
Health Club Industry Disruption – In addition, disruption in the Health Club Industry is causing new realities for health club operators that they need to address. Learn what the Health Club Operators should focus on to be successful in this article 5 Strategies to Guide Health Club Operators in Health Club Industry Disruption:
Health Club Technology – Health club, fitness, and wellness businesses and entrepreneurs are rushing in to take advantage of growth opportunities while juggling a lot of uncertainty in an evolving and hyper-competitive marketplace being impacted by increasing technological change. The implications of technology on the health club, fitness and wellness industries cannot be understated. Evaluating technologies for your fitness business is important as an owner or operator. Check out this guide 5 Criteria to Evaluate New Health Club Technology for more information.
As a health club operator, it is important to take the time create and continually update your health club business plan to guide your operation and to communicate value to your members and staff. Defining processes to support the successful implementation of the plan is also important. Review this information to guide you in your planning process 5 Tips for a Successful Business Plan
Owning a successful health club gym requires a certain level of focus and dedication to the underlying statistics which drive revenue-focused business decisions. These metrics provide owners valuable insights to understand and identify trends, gauge satisfaction rates, and highlight problems as they emerge in order to enact swift resolution. Below are the crucial metrics and every club owner must understand:
1. Health Club Membership Retention
It costs on average 10 times more to gain a new member than to retain an existing one; this makes your current group of members the most important audience to please. You can track overall retention by measuring:
It can also be helpful for owners to track metrics which can help forecast retention, like a member satisfaction score. The most common way to measure member satisfaction is the “Net Promoter Score,” a metric which scores how likely your members are to refer friends to the facility. Tracking this metric over time can help you identify member churn events before they occur. For example, let’s say your facility had multiple equipment malfunctions and significant delays in getting repairs. You would likely see a significant drop in your Net Promoter Score which can indicate that members are at risk of cancelling. View more tips and strategies to increase health club member retention: Member Retention Strategies for Health Clubs
2. Health Club Sales, Prospects & Pipeline
Prospects are the people who have called, emailed, filled out a form on your website, or entered into your gym to gather more information regarding membership. In order to forecast revenue correctly, it’s critical to have a keen eye focused on how many prospects make up your gym’s sales pipeline month-over-month, the dollar value of said pipeline, and what your average close rate is. Be sure to also track Prospect Status. This metric will tell you the results of your sales efforts by tracking the conversions of those who showed interest in your facility. Are they still a prospect? Have they converted to a Member? Or, did you mark them “Dead?”
Tracking revenue per member, membership usage, member churn, and average membership length will also provide you with valuable data. If you cannot measure If you are using gym management software, it, you cannot improve it. Setting realistic financial goals you can use this tool to manage your and tracking them monthly, weekly, and even daily will pipeline and set up automated email help you achieve a level of granularity that will expose outreach to increase membership sales. leaks in your revenue generation efforts.
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Every two interactions a member has with fitness staff in a given month results in one extra visit from that member the following month. It is essential to understand the correlation between employee turnover and member retention. Members value engagement from staff, and the staff values happy members.
Retaining and engaging employees is as important as retaining members. Many costs are associated with hiring and training new employees, so keeping the high performers in order to minimize hiring and onboarding costs can save your facility serious money and a lot of headaches. Here are some tips to keep employees engaged while boosting your facility’s efficiency:
Supply employees with all information needed to prepare for the job: introduce them to the tools and team they will work with, and orient them to the facility. This process should be standardized, making it repeatable and reliable. When new employees are trained at the discretion of whoever is working that day, significant details could be left out. Helping everyone stay on the same page builds trust among your employees while relieving you of actually training new people yourself.
Similarly to the onboarding process, weekly staff meetings—as well as training sessions on gym equipment, software, and POS systems—keep everyone aligned in terms of club goals and how to use technology. Employees should also be familiar with new workout routines and techniques so they can help any member that might need assistance. The ability to recommend specific classes or trainers based on desired goals gives employees a greater sense of knowledge and credibility to members. This education creates more inherent value in whatever role that employee has and also instills a greater sense of trust between the member and employee. Members should feel confident that most questions they have can be answered by the staff at hand.
Reward employees when they do a great job. This incentivizes them to continue striving above and beyond and demonstrates that you recognize this behavior. How you measure the benchmarks for rewards is up to you. Consider things like the number of new members signed up or positive reviews left online or in a suggestion box. If this is clearly spelled out to employees, you offer them a clear line to rewards. These prizes should not be given out randomly, but rather enshrined in a well-defined and circulated document. You’ll be able to tell if this works by analyzing the metrics that the awards are based off. If your employees truly feel incentivized, you’ll achieve those goals much faster. Also, if this ends up costing your gym more than it produces, consider revisiting how you reward employees. Cash is always nice, but free membership packages or gift cards to local restaurants might prove more sustainable.
Quiz employees regularly to ensure they understand all processes and procedures thoroughly. This can be done through multiple choice quizzes or in-person roundtable discussions. Give them the opportunity to ask questions in weekly meetings and provide their feedback for overall facility improvement. Sometimes a shy employee might not bring up what he does not know for fear of losing his job or your trust. Encouraging a welcoming environment of learning without stigma will eventually create an educated workforce unafraid to ask a question or speak up when something is not clearly explained. You can also reward employees for their knowledge of your gym, as mentioned before. Be sure to keep tabs on the people trying to learn the most. The more your staff knows, the more helpful they can be to members.
Adopting a member focused approach, offering different experiences, products, and services to different customers based on their individual needs, is a key ingredient and philosophy for success in the health club industry today. This approach puts customers at the center of business strategy, places an emphasis on customer service training, and aims to maximize the lifetime value of health club members. The lifetime value of members being one of THE most important key performance indicators in the health club industry today. Do you want to get your staff to adopt a more member-centric approach in your health club business? Learn how to implement a member focus approach in this article 6 Member Focus Strategies For Health Club Staff.
Consumers in general along with gym and health club members expect personalized communications and services tailored to their individual preferences. Personalization in the health club, gym and fitness industry c needs to go beyond basic tactics like addressing customers by their first name in emails or providing one size fits all workout or exercise programming. Creating new fitness solutions and messaging using technology helps to Hyper-Personalize Health Club marketing and services. Explore some of the factors and technology influencing health club personalization and how it improves sales and retention with great member experiences in Why Member Experience and Health Club Personalization Matter.
Health club management software allows you to create effective sales and marketing strategies with the data provided through detailed reports. Surveying members and guests is a great way to collect useful data to use in your sales and marketing plan. Use data from these surveys for advertising, branding and giveaways. Email marketing is another great tool to use to keep your members engaged, as higher member engagement can lead to extra up-selling opportunities.
Increased revenue is the ultimate goal for any owner, and using management software as a sales and marketing tool will lead to this. As members have the ability to sign up for automated payments, you’ll see a more consistent revenue flow while creating a more enjoyable user experience. Positive member experiences keep them coming back, giving your gym the powerful marketing tool of word-of-mouth. Encouraging your current members to share their great experiences via social media is a great way to increase member growth. Health club management software allows you to send marketing emails to your current members encouraging them to share these positive experiences.
Every health club club manager knows the dilemma: gym membership sales surge in January with the ambitious New Year’s Resolution, but most of these new gym members fail to remain dedicated throughout the year and many will even cancel their memberships. For many health clubs and fitness centers, increasing sales consistently throughout the year can be a challenge, but with some strategic planning, the right tools, and ongoing member engagement, this revenue inconsistency can be mitigated. Review these articles for guidance on increasing sales:
Today the most competitive health club business models and brands understand that they are operating in a digitally driven world made up of consumers who now have more choices and options regarding how they achieve their fitness, health, and well-being. They also know those customers are spending more and more time on digital channels making it more important to use the right data to help you market your health club effectively. Learn more about how to use health club data in this in-depth review: 5 Ways to Use Data For More Effective Health Club Marketing.
Learn how to use data to differentiate from competitors in How To Create Health Club Differentiation Strategies With Data. Many health club operators in the fitness industry are drowning in data and unsure about how to use it. This is understandable since much of that data is unstructured; it takes many forms from documents, content, check-ins, payment methods, workouts, member demographics, along with a lot of other information that usually doesn’t reside in conventional databases and can’t be parsed by algorithms or machine analysis. The intelligent use of data is going to significantly impact every business and industry in the years ahead. Learning how to use data to differentiate from competitors will provide an advantage.
Developing a marketing strategy for your health club is a daunting task, but it is necessary for acquiring new customers. However, this challenge can be significantly reduced by utilizing a regional marketing strategy and leveraging the capabilities of your gym software to attract new customers. Regional marketing is targeting your marketing efforts towards a specific geographic region that makes sense for your business, which can save you time and money. These gains in efficiency are amplified when regional marketing is combined with the power of health club management software and data. Check out the 5 Regional Marketing Methods Leveraging Health Club Software.
“Now we’re in a place where just getting [information] into a database really is not a big deal anymore. Now, it’s what are you going to do with that information.” — Adam Stokar
Learn more about how Health clubs and fitness businesses can better leverage technology in these resources:
If there were a proven way to increase online membership sign-ups for your health club, wouldn’t you incorporate that into your recruitment campaigns? A social media strategy is a tool providing valuable results. Take advantage of these new social media trends:
A gym’s website is a virtual front door. Just as a potential member would walk in to observe a clean facility and be greeted with friendly smiles, you want to ensure your website has the same ambiance. In today’s market, a well-designed website attracts new members and increases your profit margins. When someone considers joining a gym, they research it beforehand and make their own assumptions, regardless of what your gym actually is like. Therefore, every website must include the Who, What, Where, When, and—most importantly—the WHY of your business. The website should clearly explain the following in detail:
When looking to keep overhead costs low and achieve profitability, automate everything. As membership numbers increase, so does the number of membership dues that need to be collected. Tracking down members for payment becomes a time consuming, difficult, and repetitious task, slowing down efficiency and hurting your profits if employees do not follow up correctly. Review more about health club payment processing and security in the Guide To Health Club Payment Processing & Security. Avoid these problems, by implementing a payment processing service to automate those monthly payments. Here are a few revenue-related benefits of implementing a payment processing solution:
How Payment Processing Works
Once a member has signed up for a membership through gym management software, they have the option to connect their bank account or credit card for automatic recurring payments. The agreement they signed determines the frequency of the payment, which is typically monthly, but could be quarterly or annually.
On the days the member’s payment is due, the billing system automatically sends the payment information to processing companies. For payment made by debit cards and direct debits, the member’s bank account will be charged. For payment made with credit cards, the member’s credit card account will be will used. Money will move from the member’s debit, credit, or bank accounts and deposited to the club’s bank account, net of processing fees.
Owning a gym can be time consuming if you don’t have automation in place to help increase the efficiency of daily administrative tasks. By implementing gym management software and payment processing services, gym owners eliminate time consuming administrative tasks like member check-in and communication, personal training scheduling, and booking group exercise classes. It also empowers members to stay on top of any account needs.
See this blog post to learn more details about What is Health Club Management Software
Key features of health club management software should include:
However you decide to maintain or achieve profitability, keep in mind our five methods. The technology exists to help you understand every single aspect of how your gym creates and loses money, from employee management to automated due collections. Now it’s up to you to implement that technology and use it smartly.
ABC Financial is the nation’s leading club management software and payment processing provider. The club management software tool, DataTrak, and payment processing services can help run an efficient and profitable fitness club by offering the following features:
Want to take a look at what health club management software and payment processing can help you run an efficient and profitable health club, fitness center or gym? Sign up for a demo today!