Can Your Gym Become an Essential Business?

This fall, Planet Fitness made news when four locations in California owned by the same franchisee reopened under the designation of an “essential” business. Their tactic? Pay for a membership in the Medical Fitness Association and follow its phased reopening guidelines, while directly contacting local health officials for permission to open. 

The gyms petitioned their Public Health Services department citing adherence to reopening guidelines published by MFA and vetted through the CDC. The MFA guidelines, in some cases, are stricter than the CDC’s published work: expanding social distancing recommendations based on a population’s health risk and the type of exercise. 

The effort worked for Planet Fitness and, since then, more than 500 gyms have sought membership in the North Carolina-based nonprofit, according to their membership experience director Jayson Aslanian.

The former PGA professional expressed awe at the surge of interest but wants to clarify a specific point: Membership in the MFA does not guarantee your business will be deemed essential by your local government. 

Fortunately or unfortunately, that decision is made by local and state officials, and each state varies widely on which businesses are considered “essential.” 

The 29-year-old organization, instead, provides a wealth of ongoing educational programs, conferences and seminars to individuals in the fitness industry, is the leading certification agency for organizations wishing to become accredited within the medical fitness arena, and provides access to industry research and trends. 

Membership in the MFA delivers education and resources to health club owners but does not convey certification. Certification by the MFA as a medical fitness facility is a costly multi-year process that formally recognizes your center’s actions incorporating exercise-based therapies into client recovery programs. The accreditation comprehensively reviews your gym’s adherence to expected standards for medical fitness centers, including active physician oversight and licensed staff. However, even a full MFA certification does not automatically categorize your gym as “essential.”

There are over 940 medically integrated facilities nationwide, according to MFA’s research, but only 45 MFA-certified facilities in the United States. For more information on building relationships within the healthcare community, see our August blog, “Healthcare & Health Clubs.”

What’s Next on the Road to Becoming Essential?

Lobby and prepare, from the information out there. Every state is at a different point in opening, and the continued uncertainty swirling around increases in COVID-19 cases makes decisions difficult to pin down. However, a good offense is the best defense. By implementing the MFA’s guidelines and keeping up with the CDC your gym will be ready when your state flips the switch. If there seems to be wiggle room in your community, go to the local public health services department and keep asking questions until you find the person with the best answer. 

Arm yourself with relevant state and local rules that apply to each of your business’s physical locations. Review them and determine if your business falls within any exceptions to the industry shutdown. If there is any question as to whether you are an essential business, prove to the county you’re a community resource with a dedicated group of clients who need and rely on you for their physical wellbeing. Or ask an attorney to do the talking for you.

Keep your chin up and your hands clean, and soon your company will be stronger, better informed, and ready to run burpees around the competition.

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Turning Gym Cancellations into Cash

What if I told you there was $500 in monthly gym memberships sitting in your computer? As an owner of a studio, would you search for it? Well, it’s right there — in the cancelled customer column. Let’s look at how we can bring these old friends back into the fold.  

Make a Plan to Contact 

Everyone knows turnover is high in the gym business, and lately that number’s crawled upwards. However cancelled and frozen accounts are a golden opportunity. These customers signed up once. They know your club. Now it’s up to you and your sales team to rekindle their interest. 

By challenging your sales team and giving them generous parameters within which to re-sign customers, you’ll bring in money without having to expend precious marketing dollars. After all, even if they sign at 50 percent off the monthly rate, that’s still cash in the drawer. 

Rally Your Sales Reps

1. Engage the sales team by exerting controlled pressure: Ask them to call in at least once a day with total gross sales and EFT’s sold. The accountability will get them off social media and thinking about how they can report a number.

2. Give them monthly sales goals broken into daily targets. One method to determine goals is to fix the number at their highest historic sales plus 20 percent. 

3. Provide access to the cancellation list — which should include membership terms and pricing — and ask the sales rep to make a specific number of calls per hour.  Work this figure out based on the sales representative’s other responsibilities. 

4. Instruct sales reps to keep notes on each conversation.

Build a Strategy

Statistical research says about 46 percent of gym members quit due to price. However, nearly 50 percent stay at a gym because of location. Mingled in the middle are all the other reasons people quit. By asking sales reps to call former customers, you can get to the bottom of this mystery while offering them an outstanding deal to re-sign today.

• Devise short-term re-sign offers, and give your reps the freedom to make deals based on guidelines. Even 50 reactivated accounts at $10 each is $500 in the till.

• Group text message your cancellations with super low reactivation offers.

• Get creative. If a customer says they only use the gym a couple of times of month, offer a Loyalty Membership that restricts visits. That way, they’ll payless per month but still have the chance to visit as often as they would normally. Give away a one-month Loyalty Membership with a membership re-sign — the right gym tour might sell their friend, too.

• Evaluate the terms your company encourages. Prepaid memberships are a cancer to gyms. Why re-sell the same customer over and over? However, month-to-month fees with no-notice cancellation policies are popular with many clients who profess to prefer cash. This is a great strategy, but require a credit card on file, just in case they’re running late one month. This way, control of the account is in their hands, but you’re protected from an automatic, end-of-the-month cancellation. 

Know What You Don’t Know

Many gym owners suffer from sign-up fever — they are constantly running after new business without truly understanding where their gym is failing. If you can’t identify the leak, how can you plug the hole? They see the cancellations, but they haven’t accessed the information to understand just why and how clients are leaving. In many cases, their gym management software simply does not provide the details needed for a studio owner to really see which areas need improvement.

With Gym Insight software, owners view all their sales information in real time. Its Location Performance report provides comprehensive, up-to-date metrics on every facet of your company, from total accounts, new accounts, and cancelled accounts, to such granular data as retention rates, dues breakdowns, and month-to-day comparisons. Shown across any selection of months and years, you can track and evaluate your gym’s progress, developing a full picture of your company’s strengths and weaknesses. 

Easy-to-use management software that puts the power back in your hands is available for as little as $175 per-month – with no hidden fees or charges. For an interesting podcast on how one owner used our Location Performance Report to recharge his business, go to https://www.youtube.com/watch?v=4tDLSK8fHNk. The software looks different since this 2016 video but the ease-of-use has gotten even better!

41 New Fitness & Gym Membership Statistics for 2020 [Infographic]

https://www.ihrsa.org/about/media-center/press-releases/the-2020-ihrsa-global-report-clubs-post-record-numbers-in-2019

Fitness Market Size, Demographics & Revenue 2020 [+ Research Report]

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How to make Money with a Digital Business Model

Within a year, online fitness has become an industry staple for nearly every gym, boutique, or trainer. The question, of course, is can you make money at virtual fitness and, if so, how do you recoup the investment?

Online classes are, by their nature, a volume business. You’re going to have to sell more classes or train more people to make the same money as you would with an in-person experience. Why? Because you’re now promoting a lower-cost service while investing in new tools and novel marketing techniques.

And, unlike selling a physical product, your concept is vulnerable to market whims and perceived value. How much worth can be ascribed to your staff’s professionalism, industry expertise, or your own time? Those are hard ideas to wrap a number around. 

So how much can you charge for virtual memberships and services? The fees vary considerably based on the quality of the offerings and a gym’s target clientele. 

Making a Profit

A quick Internet search* suggests pricing ranges from $35 per month to as low as $10 per month. In all these cases, digital classes were stand-alone business models supplementing either an IRL studio or a fully online company. 

To determine the right pricing strategy for your business, take a few tips from the experts.

First of All – Know How Much to Charge — Pricing 101

Step One – Use cost-plus pricing to analyze your investment. This standard method compiles all the direct, indirect, and fixed costs associated with providing the service, and then adds a desired profit point to secure a final number. These costs include materials, labor, and overhead. 

Step Two – Research competitors’ pricing.  Although it is not often a good idea to compete on price alone, it is best to know competitors’ charges for similar services to a comparable customer base. Once you know this number, it is also important to understand the professed value of your service to the end user, as here is where pricing becomes an art form — that little wiggle space between too expensive and not expensive enough. 

Step Three – Determine a fair market profit. You need to make money, but you can’t overcharge either, especially in a down market or one as prospectively saturated as online fitness. Experts suggest looking at industry resources for net profit margins. Digital fitness companies have exploded in the COVID-19 era but the concept went live a few years ago – long enough to establish a track record. Anecdotal online articles suggest the estimated gross profit margin for virtual classes hovers at 40%.

Payment Models

There are innumerable ways to charge customers for your services but here are the most common methods. 

1. Cost included in the membership fee. In this method, customers select from a tiered payment model based on their personal needs, and can choose the option that includes online classes. Frequently, this fee increases their monthly charge by about $10. Some companies include app access in base pricing and even showcase free classes on social media. 

2. Add-on options. This a-la-carte selection style averages 5%–10% of a membership fee and works well within marketing plans. Common promotions give away two weeks or a month’s access to classes, then switch users to are recurring payment plan. This approach allows exercise enthusiasts to build or maintain relationships with favored instructors while training on their schedule from home.

3. Fully remote memberships. Pricing for this type of serviceis estimated at 1/3 the cost of a regular membership. These plans strive to keep clients who have moved, become injured, or for some reason do not feel comfortable at a gym. 

4. Remote live streaming membership. Pricing for this type of class depends heavily on the quality of the content. The better a product you can provide, the more you can charge. Current industry averages are 1/3 to 1/2 of an average membership. 

5. Remote private training.  This number varies. Pricing ranges from 25%–50% of an average hourly rate. Flat fees per client vary between $50–$100 per month. 6. Remote boot camps. These virtual group sessions typically charge 25%–40% of an in-person class. 

Online fitness introduces more people to healthy lifestyle choices. That’s got to be a good thing for the industry and for your business. It’s an exploding market that complements a traditionally brick-and-mortar industry perfectly. With a careful balance of price to investment, you should come out ahead. 

Virtual Personal Training – Bringing Your Fitness Business Online

https://www.forbes.com/sites/yolarobert1/2020/04/29/is-the-online-fitness-boom-here-to-stay/#634b2b2e7080

http://members.tabatabootcamp.com/sites/default/files/nutrition-guide/Pricing%20Your%20Virtual%20Bootcamps.pdf

https://www.inc.com/guides/price-your-services.html

• Companies researched included Crunch, Planet Fitness, CampTampa2go,  Melissa Wood Health, Alo Moves, P.volve, The Sculpt Society

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