Pat Rigsby is the co-owner of several businesses in the fitness industry, including the Fitness Consulting Group. He also serves as an industry consultant focusing on the development of profitable personal training departments. To learn how you can improve your club’s retention, referrals and profitability, sign up for Rigsby’s free newsletter and get his three free business building reports at www.fitnessmarketingmachine.com. Rigsby can be reached at pat@fitnessconsultingroup.com.

Understanding something called the Health Club Master Success Formula is critical to building your club. The formula, although known by very few people, is potentially the difference between struggles and success.

This formula is the quickest way to boost profits 100 percent to 500 percent or more, especially if you have an existing member base. If you read some of the books available on business, it’s easy to get confused by all the complicated ideas and theories. But when you boil all those fancy ideas down, there are really only three ways to build your club.

1. Get more members.
2. Get more purchases from each member (increase your retention rate).
3. Get bigger purchases from each member (increase your member’s average purchase).

These are the three pillars of the formula.

You’re probably thinking, “That’s too simple!” It is simple, but watch how it can impact your club. Most health club owners spend most of their time, money and energy on ineffective advertising to try to only attract new members.

What would happen if you spent equal amounts of time, money and energy on not only getting more new members but also increasing member retention and the amount each member spends in your facility each month? If you did that, you would experience a quantum leap in income.

For example, let’s say that you currently have 1,000 members who stay with your club for 20 months and spend $40 per month for their membership. Using the formula, we can calculate how much money you made. Your total revenues would be $800,000.

Let’s say that after reading this, you decide to place more emphasis on your retention rate, and you are also able to increase your monthly revenues per member by adding more value to your club or more offerings, as well as continuing to work hard to generate new members. Let’s be conservative and say you only see a 20 percent improvement in the number of new members you bring in over the course of a year for these changes. So instead of 1,000 members, you have 1,200. That’s only four new members a week. Let’s again be conservative and say you only increase your retention percentage by 20 percent. In other words, you get your members to stay with your club for 24 months instead of 20 months. Finally, let’s assume that you increase your monthly revenues per member by only 20 percent, so instead of $40 per month, your members now spend $48 per month.

You’ve made only 20 percent improvements in each of the three categories of the Health Club Master Success Formula. How much has your business grown? Your revenues went from $800,000 to $1,382,240.

You’ve almost doubled your revenues, and you haven’t done anything too difficult. You’ve just changed the way you look at your business and how you allocate your efforts and resources. So when you develop your plan for club growth, place equal focus on all three aspects of the formula, and watch your business explode.

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© 2012 Penton Media Inc.

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