If you are responsible for the marketing at your club, you are always searching for the newest technique, idea or strategy that will result in more membership sales. And, although more sales are the goal, any good marketer knows that the first thing that must happen is a response rate to an ad. If you don't have prospects in front of you, there won't be a sales presentation.
One way to increase the response rate of an ad is to lower the barrier — make it easier for the consumer to take action toward buying. The fitness industry has attempted to make buying easier for consumers by offering incentives like a reduced enrollment fee, no enrollment fee or a two-for-one special. Another method is to offer trial memberships that allow the prospect to try the facility before joining. Such trials may be for one day or one week, but can be as long as 30 days. The theory is that the free offer entices the prospect to come in and after using the facility once will realize the value of membership and feel more comfortable about joining. Although there are two schools of thought as to the long-term effectiveness of trial memberships, they have consistently proven to get a response rate and are particularly useful during times of the year when walk-in traffic is slow.
TRIAL WITH A TWIST
Although the promotion isn't new, one type of trial membership that uses a twist is the fitness study. This promotion gained popularity about five years ago and has been successful at attracting new-to-exercise prospects by offering them the ability to participate in a free fitness study for four weeks. Participants' fitness levels are measured at the beginning of the study and then again at the end after exercising three times per week for the study period. Of course, all participants receive a proper induction to the club, along with a high level of contact during their stay with the expectation that they may eventually decide to join.
Interestingly enough, clubs have been able to market the free fitness study with direct mail, flyers, inserts and newspaper ads with similar response rates, indicating that it is the promotion and not the medium that compels consumers to respond. And, so long as the effort is organized and staffing is adequate to provide a high level of service, these promotions average a 30 percent conversion rate of turning participants into club members. This is a substantially lower closing percentage than a sales situation where a prospect visits a club with the intention of talking to someone in membership, but when you run the numbers it can be worthwhile. For instance, assume you spend $600 on a newspaper ad in which 50 people respond to participate; at the end of 30 days, with just a 30 percent conversion, that means 15 new members. That's a $40 customer acquisition cost on the hard marketing dollars, which is great.
THE OTHER SIDE OF FREE
Although I have been an advocate of the free fitness study, the one thing I questioned was the “free” aspect. My concern was that “free” might devalue the offer and it might result in a high number of less than serious or unqualified respondents. This concern stemmed from my experience that constant price offers and discounts don't result in more sales long term, but create a “discount-minded” consumer who won't pay what a club is worth. So, rather than discounting, I always try to find ways to market value and maintain price integrity. This approach seems to ensure long-term success in an ever-increasing competitive marketplace.
Applying the “selling on value” belief to the fitness study made me question whether giving it away was the best approach. Unfortunately, because the study was working, none of my clients wanted to sway from the equation. As a result, I never got the chance to test my theory.
THE BASIC CASE STUDY
In April, however, the free fitness study concept resurfaced in the wake of below-budget numbers for March, combined with the uncertainty of the war in Iraq. Our management team decided we needed a low-barrier promotion to get people walking through the doors and we agreed to give the free fitness study concept a try at our HEALTHY INSPIRATIONS Weight Loss & Lifestyle Centers in Rhode Island.
Like the earlier fitness study concept, individuals needed to commit to three times per week for the duration of the program (six weeks in ours) and be subject to fitness testing on the front and back end of the study. Participants' names would be confidential, but the results of the study could be used and published.
We changed a few things to better suit the program to HEALTHY INSPIRATIONS and our focus on weight loss. For one, we changed the title to a “Free Fitness & Weight Loss Study.” Second, we required that participants not be currently exercising. Third, we asked for individuals who needed to lose 20 pounds or more. Because so many Americans don't exercise and 64.5 percent of them need to lose 20 pounds or more, we felt these changes in the criteria were minor and the barrier to responding remained very low.
THE $20 DIFFERENCE
The one change we did make and place in the ad was requiring a $20 refundable deposit from each participant. That requirement was stated as follows: “$20 deposit required (deposit is refundable upon completion of study).” As you will see from the results, it appears that the $20 may have had a bigger impact than you would expect.
Looking at the results achieved from our free study, a number of different variables should be evaluated.
- Response rate
As was mentioned earlier, the typical fitness study enjoyed successful marketing regardless of the medium. Responses to ads enjoyed higher than average response rates. The ad size that was used to market the HEALTHY INSPIRATIONS study was no different than the normal ad size run the rest of the year. The biggest difference was placement — it went into the TV program section, not the health section where we normally advertise. The center received more telephone calls from this ad than any other we had run in the previous 12 months. We booked all 40 available spots and even took names for a waiting list.
- Dropout rate
In the previous fitness studies, if 50 participants began, an average of 10 would have dropped out half way through the study. That's a 20 percent dropout rate. Although some may find that high, if you compare that to the rate at which new, paying members stop using the club, 20 percent isn't shocking.
Out of the 40 who started with the HEALTHY INSPIRATIONS study two had to stop in the middle of the program for medical reasons. Medical reasons or otherwise, that's a low 5 percent dropout ratio.
- Completion rate
The completion rate for the typical fitness study was lower than the initial dropout rate, with an average of 65 percent of the people maintaining two times per week attendance throughout. Although twice weekly attendance was less than the requirement, this group was at least still coming with some regularity.
With the HEALTHY INSPIRATIONS study the completion rate was 90 percent, representing individuals who averaged two times per week, each week throughout the study.
- Conversion rate
As was mentioned earlier, about 35 percent of the people on the typical fitness study converted into some form of regular membership. With the HEALTHY INSPIRATIONS study the conversion rate is around 42 percent, but the study was just finished and the sales staff has not been able to present each participant with membership options. This leads me to believe that the conversion rate will exceed 50 percent.
What all this means is that across the board, this study met or exceeded the results achieved on prior fitness studies where no money had been taken.
This marketing study didn't follow scientific guidelines and should be retested where two studies happen simultaneously, in similar markets, with one collecting the $20 deposit and the other not. Even without perfect comparison conditions some theories can be deduced.
First, it is possible that by having an upfront fee — albeit refundable — a greater sense of value was created in the consumer's mind. This could have two effects. One, it might have resulted in a higher response rate. Two, if participants placed a higher value on the study it might have impacted their compliance with attendance. Twenty dollars isn't much, but it isn't free. Therefore, someone who didn't think they wanted to participate wouldn't waste their money.
Second, the $20 acted as a filter to deter individuals who weren't serious. This would account for the substantial decrease in dropout rate, as well as the higher completion and conversion rate. It is analogous to sales presentations: start with a higher qualified prospect and you'll always have a higher closing rate.
Until more testing is done to confirm or refute these initial findings, we'll never know how much of a difference $20 made in the success of the study. I would argue, however, that anything that establishes value is going to result in greater success. A number of studies support this argument, showing that the more someone pays for a membership the longer they stay a member. Unfortunately, to anyone in the industry, it is no secret that club operators are still addicted to advertising and devalue all fitness clubs by relying on discounts. Certainly, as single club operators we may not be able to do anything to stop others from discounting, but are there other ways in which we can control our marketing efforts that will create more value in everything we do?
Whether you agree with these theories, I leave you with one challenge. With all the free trial membership options our industry has tried, why not do some creative testing as it relates to creating value? What would happen if you enforced your guest fees unless the prospect does have a valid pass? Maybe this would require you to lower your guest fee initially to help soften the transition. Or, perhaps you begin offering one-week memberships at a reasonable rate so if someone was interested in joining they could try it without any pressure. This doesn't abandon the sales process, just that if someone didn't want to buy after the membership presentation your salespeople have a solid, no BS alternative close to offer.
There are many areas in which you could experiment with creating value. Adding $20 is just one example. With a little creativity and a lot of courage to do the abnormal, you may stumble upon another marketing insight that will change the way you drive prospects through your doors.