Our industry has a steady stream of members coming through our doors each day, but some operators seem to believe that just having the members come through the door and pay dues is good enough. Well, as the saying goes, good is the enemy of great.
If all we do is sell a membership rather than get the member involved in our programs, then we are not doing a good job of ensuring that they get the results they thought they purchased. If we leave it up to members to use the facility instead of systematically funneling them into our programs, then they are missing out on getting their desired results — and we are missing out on non-dues revenue and retention opportunities.
According to the International Health, Racquet and Sportsclub Association, members who spend more money at a club tend to stay at the club longer than those who don't. By spending money at the club, these members are consistently reinforcing in their minds the value of their membership. This is particularly true of clubs whose non-dues revenue (NDR) is 25 percent or more of gross revenues. NDR is produced from anything other than monthly dues or the pre-payment of membership. It includes, but is not limited to, gift certificates, spa services, personal training sessions, tennis lessons, program fees, pro shop items, in-club advertising, food and beverage, events, and parties.
Most clubs tend to focus on new membership sales rather than creating a balance between new membership sales and non-dues sales to existing members. A recent survey shows that the average club in the United States produces 30 percent of its gross revenues from NDR. That means some operators produce much less in NDR. However, a few astute operators have built in attractive revenue streams and market protection by achieving 50 percent of gross revenues in NDR.
There are more clubs, more competition and fewer people walking through your doors today. Doesn't it make sense to generate more revenue from the people who are already committed to you, as in the ones who are in the club two to five times per week?
What if you could bring in an additional $5 per member per month from sources other than dues increases? If your club has 3,000 members, you would have $15,000 more in monthly revenue or $180,000 per year. If you got 100 members involved in various programs or services throughout the club and they each spent only $75 more, that would be an additional $7,500 per month or $90,000 annually. Once most members are involved in a program or service, they will continue to use that program or service, so building a strong NDR stream has a positive impact on results, retention and revenue.
How can you build NDR effectively? Ask yourself these questions: Does your club have a systematic way to get new members involved in NDR programs as they join the club? Does your club have a goal for new members getting involved in NDR programs? Is each NDR program or department run like a business with a business plan, sales plan, marketing plan, daily goals and accountability measures to ensure that goals are met? Is the staff that is responsible for selling these programs or services professionally trained to sell them? Are your programs and services market/member driven?
Kudos to you if you can objectively and knowingly answer yes to these questions. You are more than likely producing a strong NDR stream. If you cannot answer yes to these questions, then now is a good time to assess what changes need to be made to positively impact your results, retention and revenue.
Karen Woodard-Chavez is president of Premium Performance Training, Boulder, CO, and Ixtapa, Mexico. Woodard consults and trains clubs throughout the world. She can be reached at 303-417-0653 or at karen@karenwoodard.com.