By Bob Esquerre and Kim Pace
January 17, 2006
Bob Esquerre, MA, MES, NSCA-CPT, NASM-CPT, ACE-CES is a fitness consultant and owner of the Esquerre Fitness Group. He is recognized by IHRSA as a subject-matter-expert in personal training, customer relationship management and membership retention. When all else fails, clubs tend to bring his group in to correct various situations.
Kim Pace, MS, ACSM-HFI, NASM-PES is a fitness consultant and owner of Kimberlie Pace, Inc. She is a programming specialist and professional coach with an extensive background in group exercise and personal training. Contact Kim at 561-756-7237 or e-mail kim_pace@bellsouth.net.
One of the trends for 2006 will continue to be group training, but how can you get it to optimally work? From our perspective, group training works if your club can develop the return-on-investment (ROI) that is summarized in chart A.
CHART A
1. Increase in revenue growth, in general.
2. Increase in revenue growth in fee-based programming services.
3. Increase in net membership growth.
4. Increase in rate of membership retention.
5. Increase in revenue per member.
6. Increase in non dues revenue/percentage of total revenue.
7. Increase in revenue/indoor square feet.
8. Decrease in salary, wages & benefits (SWB) performance.
9. Increase in EBIDTA performance/total revenues.
The International Health, Racquet and Sportsclub Association (IHRSA) has consistently found, through its various membership retention studies, that clubs with unacceptably high attrition rates tend to have a weak customer-connection process. This means that the club does not have a cost-effective, member-centric focus or plan to keep their members after they join. As an enticement to close the sale, these clubs tend to over promise and under deliver. Once that new member comes through the front door, there is no formal mechanism or structure in place to keep them from leaving through the back door. If anything, the club tends to react only after it receives the membership cancellation notification. If you have worked in one of these clubs, group training can potentially be an option that can support your membership retention program.
The reasons why individuals drop out of clubs have been summarized in chart B. Depending on the dynamics of your group training programming option and the skill sets of your instructors, group training can potentially plug your attrition spigot by extending the club’s programming reach to more members.
CHART B: BARRIERS TO MEMBER INTEGRATION
PHYSIOLOGICAL
PSYCHOLOGICAL
The group-training model must be structured around what we call a 3-Tier Winning System™. Members win by gaining confidence in their new-found abilities, by building supportive relationships with other club members and, more importantly, by getting results by accessing the experience of professional coaching and guidance from the club’s fitness team. This team includes both group exercise instructors and personal trainers. The fitness team wins because they are able to touch and empower more members, and expand their business platforms, which increase their income potential. If members “win” by achieving the benefits outlined in table A, then the club “wins” as shown, once again, in chart A.
TABLE “A”POTENTIAL GROUP-TRAINING OUTCOMES
HEALTH MARKERS/OUTCOME
How do you start? Programming success can be established if we plan our group-training program under the following planning assumptions:
1. Create group training team leaders. These professionals must be able to create the kinds of dynamics that would happen in a group exercise environment and blend it with the individual attention, professional coaching and guidance that is normally associated with a five-star personal training experience.
Because of the skill sets that are needed to manage the dynamics of the group, the instructors who are selected for this position should be promoted into it. In addition to their hourly payout, their additional upside is to drive their personal training income and to reinforce the foundations of their career paths.
2. Identify where you will conduct your group-training program. This decision is critical. You have three choices. Each choice has an upside and a downside.
Choice No. 1: Use an existing group exercise studio. If you use a studio, you will be “hard-pressed” to distinguish between a normal group exercise class and a fee-based program that is held in the same space. This is a difficult case to make since group exercise classes have become more equipment-based and are normally included as part of the monthly club membership dues. Another down side is that non-participants will not see the dynamics of group training because it may be separated in a non-visible studio.
Choice No. 2: Build a separate studio/room with its own group training-specific equipment. While this shows a strong commitment from the club for this programming option, the ROI, will take a long time to achieve. It is difficult to justify the capital investment required to build and equip the space without a clear guarantee on the return on this investment. In addition, this option leaves equipment idle when group training is not occurring. Also, as in choice No. 1, the other members cannot see the dynamics of this programming option because it is secluded in a separate room.
Choice No. 3: Use existing fitness floor space and existing equipment. This option presupposes that your club, as most clubs do, has multiple lines of equipment that have been positioned in circuit configurations. The upside: no additional capital equipment is required, no additional construction expense is required and the group training is highly visible because the training is out in the open where it can be seen. The potential downside, depending on when and how the group is structured, is that it could potentially restrict/limit equipment use for other non-group members. However, this issue can be managed.
3. Develop the right group training option(s). Group training can be broken into at least two viable options: semi-private group training with three to six members and team training with seven to 10 members. Anything higher than 10 members is clearly a traditional group exercise class. Obviously, the larger the group, the higher the income. However, the bigger the group, the greater the demand for a fitness professional with a higher skill set.
4. Choose the right pricing strategy. Your pricing strategy should be structured to support your growth objectives in both gross and net income. The group-training price point for semi-private group training should be at least between 50 percent and 60 percent of a non-discounted, single personal training session. Obviously, for team group training with seven to 10 members the price point should be between 30 percent and 40 percent of a non-discounted, single personal training session, since the instructor/member ratio is higher. If you want to reduce the high instructor/member ratio, you can add an additional instructor; however, if you take this course, you should adjust the individual fees upward to reflect the added staff support. Clubs tend not to maximize their income potential because they “give away” an excessive amount of their gross income as a payout to the program’s staff, and they also do not take into account any equipment/supplies that are purchased to support the group-training programs.
Food-For-Thought Summary: The Four Whys for Group Training
Do you have a group training programming option that is positively affecting your total business model as summarized in chart A? If you are successful……great job! If not, our question is why not? Which of these four points are giving you a problem? Are you paying attention to one component at the expense of other viable considerations?
Key Reason No. 1: Your members benefit by receiving professional coaching and guidance that offers them affordable options under the umbrella of personal training. They build relationships with their professional coach and fellow participants. This facilitates the member integration process which will minimize/offset the club’s attrition rate. The considerations here are what does it cost you to recruit a new member and, what does it cost you to lose a member?
Key Reason No. 2: This benefits the fitness professional, your employee. When group training is positioned as a promoted position, the club’s most talented, educated and skilled trainers and instructors will apply. As a professional coach, this allows your employees to expand their business platforms and increase their income potential while they empower more of your members to reach their goals.
If both primetime and non-primetime slots are allocated for group training, you can build a lasting relationship between the member and your fitness professionals. We call this Personal Touch™ programming because the club’s most trusted and talented fitness professionals are professionally influencing and empowering the club’s members.
Key Reason No. 3: The successful implementation of a viable group-training program can potentially support the development of a programming synergy between group exercise and personal training. If done correctly, this synergy enables a club to reinforce the value of the club’s brand vis-à-vis membership recruitment and membership retention.
Key Reason No. 4: The club’s ROI. At a minimum, group training can potentially generate between $30,000 to $80,000 a year with an average of six to seven classes a week with four to six participants per class. If more members are involved, income potential can increase. If the program is structured correctly, your club could potentially achieve a net income return of 30 percent after salary and non-capital expenses and become your untapped revenue source for 2006.