A longstanding staple of Non-Dues Revenue (NDR) for gyms has been service-based profit centers: personal training, massage, and nutrition counseling. But true differentiation in a hyper-competitive market now requires that fitness operators expand their offerings to include product-based profit generating additions to their operations. Not only will these value-added options contribute to increased membership enrollment, but will also impact the ability to improve member retention rates.
Deciding what type of revenue center is best for your club depends on the type, demographic, space and overall culture of your organization. Measurement type offerings would be a great fit for facilities that focus on personal training and weight and nutrition management. Whereas, specialty movement and sport-specific products would be ideal for clubs that deal more with athletes and individuals looking to improve athletic performance. Of course, there is no reason not to offer more than one of these centers as each location will want to tailor their strategy to their financial and organizational goals.
So, what type of product-based profit centers are we talking about here? The following three examples are all easily adaptable to virtually any type of fitness business:
- Assessment: Tools providing physiological feedback to members like Fit3D scanners, VO2 Max readers and blood pressure and body fat units are no longer optional for clubs to succeed. As technology takes over the industry, clients (especially millennials) will expect real-time notification of their progress.
- Prevention and Recovery: Members are more educated not only with their training, but also with their recovery efforts. Capitalizing on this means the inclusion of muscle rejuvenation aids, muscle stimulation products and even cryotherapy chambers.
- Sport-Specific: Virtual golf simulators, jump/rebound trainers, reaction training technology surfaces and other sport-specific workouts such as the 3ACT Slide are now consider must-haves in any mid to high-end club.
How to Make Profit Centers Work for You
Determining a fee structure for these new profit centers comes down to a usage-based model versus tiered membership plans.
- You can charge per use: Similar to personal training, usage-based models offer a number of package levels that incentive members to purchase more so as to receive an overall discount per product use.
- Include it as part of the membership: Membership plans would be structured such that product usage sessions would be determined by the pricing tier the client sign ups for. The benefit to both of these plans is that it allows the operator to define how long it would take before the purchase of the unit pays for itself and continues to spin off NDR.
Lets look at an example. The purchase of a $2,045 NormaTec Pulse Leg and Arm Recovery System could be paid off in as a little as four months. Take a club with 1,000 members that signs up 50 new members per month. If five new members (or 10%) sign up for a higher tier membership of $50 more that allows for unlimited usage of the product that adds $250 more in membership revenue for that month. Additionally, if 50 current members (or 5%) purchase a per-usage package of ten sessions at a rate of $100 for a total of $500, at the end of the month, the club has generated $750 from one product-based profit center. In less than three months the unit has paid for itself. This is especially helpful if you used financing services to purchase the equipment. These estimates would need to be adjusted based upon a club’s particular scenario, but the numbers can (and should) easily be manipulated.
How to get Members to Use Your Profit Center
It’s one thing to outline and then implement these centers in your club, it’s quite another to get members to use them. The key is in successful cross-promotion and quality outreach. Personal trainers and massage therapist as well as front desk, sales and group exercise instructors should all be advocating the usage of these new areas. Facility signage typically goes unseen and emails get deleted. Therefore, kick-off parties with full staff buy-in will generate the necessary buzz to get people talking. Throw in a few free trials, maybe some contests and in no time these products should start paying off in more ways than just financial.
Remember, the industry is changing and customers are expecting experiences not just products and services. This is an opportunity to create yet another touch point where member-to-member interaction and member-to-facility/staff interaction further increases the value of a membership. Clubs that analyze their Net Promoter Score (NPS) – a management tool used to gauge the loyalty of club’s customer relationship – should see a marked improvement over previous quarters by employing these products.
Lastly, it’s important not to view these centers as gimmicks. These products are not just another great offering, but are actual opportunities to improve an aspect of your member’s lives outside the club. Golfers will improve their swing. Runners will recover better from their weekend 10K. And, endurance athletes will know their aerobic numbers. Creating these features will develop a stronger relationship between member and facility. Adding these new NDR sources will change the overall business model, increase retention rates and improve the customer experience.
Matthew Cicci is a freelance fitness writer, fitness studio owner and Zogics contributor with more than 18 years of experience in the health and fitness industry. He can be reached at matt@zogics.com.
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