Dave McGarry earned a bachelor’s degree from the University of Florida in exercise science and an MBA from the University of Texas, Dallas. Along with his degrees, McGarry is certified through the NSCA as a certified strength and conditioning specialist and is the current assistant general manager for the Cooper Fitness Center at Craig Ranch. His experience consists of more than 12 years as a personal trainer and fitness manager. McGarry also is actively involved with the community as a public speaker and presenter to corporations for health and wellness. His most recent accomplishment is a self-published book for fitness professionals and personal trainers called “Anatomy of Sales.” If you would like to learn more or read his blog, visit www.davemcgarry.com.
As the economy continues to struggle, club operators are looking for ways to increase their revenues. Ancillary programs provide a good source for increased revenue. Following are three ideas you should consider implementing:
1. Focus on profit margins not revenue. Too often, I hear managers talk about how much they increased revenues for the year. They might have done so, but when looking deeper at the numbers, they might discover that their overall profit margins were flat or lower in some cases.
It is easy to get caught up in growing your revenue numbers year over year, but you need to begin focusing on profits instead. To do so, first look at cost of services. As with most businesses, products and services have fixed and variable costs. Most of the time, you can’t do anything about your fixed costs. However, you can do something about one of your biggest variable costs: payroll.
Take, for example, personal training. Most clubs do a 50/50 split with the trainer. You could lower your payout by setting up a tier-level system for your trainers in which you would pay out different levels of commission. When you bring on a new trainer, put them at an entry-level rate (whatever you decide that to be) until they work up to the 50 percent level. Not only will you lower your percentage payout cost, but you also can use the tier-level system to create an incentive for your trainers to move up the tier by reaching certain sales numbers or other objectives. The tier system can be applied to all employees who perform commission-based services.
Another example of focusing on profits is to look at the profit margins for the products you sell. Sometimes, the product might be something that everyone wants, but when you consider salaries, shelf space, etc., you might actually be losing money.
Another way to increase your profits is to outsource. No, I don’t believe in outsourcing your customer service, but it might make sense to outsource your bookkeeping or your laundry service. Every situation is different, but it might be worth it in the long run to outsource something to save money and increase your overall profits for the club.
2. Up-sell. McDonald’s pretty much rules the roost when it comes to the up-sell, although they’ve had to stop that since the release of the movie “Super Size Me” and because of the health impact that tactic appeared to have.
Despite that, McDonald’s understood something important: If you offer someone a larger quantity of something for a relatively small increase in price, they will often say “yes.” For instance, if you have a café in your facility and sell smoothies, you should always try to up-sell extra protein or another supplement to add to the drink. Just adding an incremental amount to the original ticket purchase can add to your bottom line. If you sell vitamins, you could offer a buy-three-and-get-the-fourth-free promotion.
This strategy is not new, but few club operators implement it. By having your members buy in bulk, you increase your overall profits because of the higher overall ticket purchase. The main takeaway here is that you can increase profits for your business by using the up-sell tactic in all the services and products that you offer.
3. Niche services. Creating niche services can help increase profits, but you have to have the right audience. Certain groups are more willing to spend money than others. Almost any avid golfer would sign up on the spot for a program that would help increase their drive by 15 to 20 yards. You could create a Pilates class geared toward golfers and market it by noting that strong core muscles and flexibility will help improve their game. Other audiences that will pay money for special services include pre- and post-natal women and post-rehab patients.
The point is, you need to create niche services geared toward people who will pay. Oh, and don’t tell me that this will not work in your club. If there is a need and you fill that need, people will pay.
Start using the three methods above, and you will begin to see your profits grow.