Maximizing Your Referral Promotions

By Casey Conrad
May 10, 2006

Casey Conrad is president of Communications Consultants, a Wakefield, RI-based company that provides sales and communications seminars and is a 16-year veteran of the health club industry. She can be reached at 800-725-6147.

For anyone in the health club business, referrals are a critically important component to sales success and can even account for as much as 60 percent of a club’s new membership sales, according to some industry reports. As a result, it is imperative that every club operator use systems and strategies for maximizing referral promotions. Here’s a checklist for referral success.

Referral Systems The first checklist item is asking yourself, “Do we have referral systems in place for both point of sale referrals and ongoing member referrals?” Point of sale referrals are obtained during the new member paperwork process. The systems in the health club industry that are used to drive point of sale referrals are either a separate referral form that is given during the paperwork process or a referral application that is found somewhere on the back of the membership contract. Typically the new member is given special guest passes or an incentive gift to provide the names right at the point of sale. In order to achieve referral success at the point of sale, in addition to a form that captures the referral names, it is important that clubs have attractive, very professional looking passes that are exclusive to the point of sale process. For example, if the club normally gives away one day passes to anyone who asks, the point of sale passes should be for at least three days. This gives the program value. Further, these special passes should be available only during the paperwork process; this creates urgency. Finally, salespeople need to be well versed in the presentation and able to communicate their script in an upbeat and exciting way. That script might sound like this:

Bob, I’d like to take a minute to go over your new member guest privileges. As a new member I’m sure there will be times when you’ll want to bring in friends, family members and co-workers to the club. You can do that and our guest fee is $15 per visit. However, at the time you enroll, which is today, you are eligible to receive five, thee-day guest passes, allowing five different friends of yours to come in and use the facility absolutely free of charge, just as if they were a member. These are valued at $30 a piece, giving you a total value of $150 today. What I need you to do right now is fill this form out with the names and contact numbers (or e-mails) of the people you would like to give these passes to and I’ll get them registered. (Then you put the form in front of the new member and busy yourself with doing the rest of their contract paperwork.)

The second referral system every club should have in place is for ongoing referrals. Ongoing referral programs are designed to capture referrals from the entire membership base throughout the course of each year. This is typically accomplished by having the club do some sort of incentive program. For example, for referring a friend who enrolls, the member will receive a sweatshirt, a gym bag, a gift certificate or perhaps even cash. Another common incentive is one month’s free dues. A more complex ongoing referral program could happen over multiple months and have a single grand prize winner. For example, a club might purchase a big screen television worth $1,000 and, at the end of three months, the person who referred the most members who joined wins the TV. A different twist on this type of referral promotion is to give members raffle entries for the various stages of the referral process: provide a name, get one entry into the draw; the friend comes in for a workout, get two entries; the friend enrolls, get five entries, etc. This format can help to keep a “big-gift” referral program more attainable for every member and prevents a break-away leader from de-motivating the rest of the membership base from participating after the first month. Of course, dozens of variations on how to run these types of referral contests can be created. The benefit of any ongoing referral program is that, when done properly, a club has hundreds of members simultaneously working on generating referral traffic. As a result, the club literally creates an army of recruiters out of new members.

Referral Strategies. Once your club has the systems in place for both point of sale and ongoing referral programs, make sure the concepts of creating value, scarcity and urgency are used. Value is created not only by offering special guest passes at the point of sale but also by printing the actual value on the pass. Scarcity is created by placing a limit on the number of passes that are given away, and urgency is created by mandating and enforcing that these special passes are really only given to new members during the enrollment process. In addition, identifying strategies for reaching out to referrals as well as following up with new members who did not give names at the point of sale.

With ongoing referral programs, clubs need to use five key strategies. First, when launching a new program, it is important to make the investment and send a letter with several professionally printed guest passes to each member. This ensures that every member (not just those using the club) is informed of the promotion and has passes in their possession. I also suggest modifying the letter and sending out at least one guest pass to all former members, as these individuals are high quality prospects. Second, it is critical to hold some sort of all-staff meeting to launch the referral campaign. This meeting is designed to educate all employees on the program, answer any questions but also create excitement. Further, if a club wants to really motivate the staff, find a way to create a competition and/or incentive program with the employees. Third, be certain to spend the little extra in money and have professional signs and posters made that can be placed throughout the club. Print Shop and homemade signs just won’t do if you are trying to create value. Fourth, when the campaign is finished, it is good practice to publicly recognize the winner or winners. This can be done with some sort of ceremony or even with posters and signs throughout the club, depending upon the circumstances. Doing this, however, accomplishes a couple of things. First of all, it generates excitement at the club. Secondly, it creates a level of social proof because members get to see there really was a winner. The fifth strategy has to do with the timing of referral campaigns. One aspect of timing has to do with how long you run the campaign for while the other has to do with how many campaigns you run each year. Experience shows that a campaign should be no shorter than six weeks but no longer than 12 weeks. Staying somewhere in the middle of these time frames gives enough time to get the campaign rolling but ensures it doesn’t go on too long and lose momentum.

Referrals are the lifeblood of the health club business. By taking the time to check up on your clubs systems and strategies, you can maximize referrals and sell more memberships.