Everyone deals with the retention issue differently. Some club owners choose to have a retention person on staff to stay in touch with members, invite them to functions and keep them using the club. Others choose to make retention a part of the salesperson's responsibility.

How do you decide which option works best for you? It's not an easy task, but it starts with looking at compensation.

Compensation for a dedicated retention staff position varies. The most typical way to compensate is an hourly wage or a salary. For example, you could pay this person$12 per hour, roughly $25,000 per year, plus whatever benefits you offer. To decide if this model is the best option, you must then calculate how many members this person must save in order to get a return on your investment. If your membership rate is $50 per month, or $600 per year, then this person needs to prevent 41 members from canceling just to pay for his or her position. This is an option for a lot of clubs.

However, incorporating retention into the job responsibilities of your sales staff might be a better option for some club owners. Let's say that your membership sales department is staffed with three people and they are just hitting sales goals. Chances are that the staff is unable to get anything else done and is not doing consistent, systematic retention or prospecting work. Therefore, the club is losing on the front end and the back end because the department is not structured to fully get and keep members. This is a common mode of operation.

However, if you instead staff your sales department with four people and each of them produces 28 new membership sales per month, the club would be ahead on new sales by 12 more each month. Because you have an additional membership person, the selling schedule would have better coverage, and sales staff could put in time on retention work and prospecting. With this model, the club would increase membership from a new sales perspective and also improve retention because the sales staff could focus on maintaining relationships with all of the members they signed up.

Some club operators hesitate on this option because it means adding more payroll, and sales staff may hesitate because it means decreasing the size of the pie when it comes to prospects. But this is false thinking. When you have four membership sales reps rather than three, their focus expands from simply getting members to getting and keeping members.

Of course, this means compensation also needs to change to add incentives for keeping members. Let's say that every month you give each sales rep 75 cents for each membership they sold if that member is retained. This will continue to build month after month. As a club operator, you will have the ability to keep good sales staff longer because they have a pool of income that continues for as long as their members stay.

By structuring this arrangement well, you can alleviate concerns about promoting lazy salespeople. Simply tie the retention payment to new sales goals. In other words, reps that hit 100 percent of their new sales goal receive 100 percent of their retention commissions. If they do not hit 100 percent of their sales goal, they get a smaller percentage of the retention commissions. The focus always has to be on getting and keeping members. Bookkeeping for this system may seem like a headache, but it's a simple payroll procedure.

This model does not have to be expensive. You would still pay a base salary, commission and bonuses, but the amounts you pay for each could decrease because you are adding another compensation element — the retention commission. However you choose to arrange it, make sure that the sales staff is not going to lose compensation. Ideally, they make the same, if not more, and the club also increases revenue. Membership sales payroll can increase with this plan, but it does not have to. If it does increase, what you have to consider is the increase as a percentage of revenue or how much the revenue has increased. (See the sidebar below for a comparison of three versus four sales representatives and a sample of retention commissions for a membership sales rep.)

The retention effort is a team effort. I typically find that staff members in most clubs are not aware of that fact and do not understand the bigger picture. Instead, they see themselves as responsible for one job or task in the club. All staff members need to know how they affect retention and how to act daily to improve retention.

Next Page: Sidebar: Comparison of Three Reps to Four Reps

Want to use this article? Click here for options!
© 2012 Penton Media Inc.