By: Michael Scott Scudder

I guess if you’re lucky enough to last in this business for more than a decade, some folks think you’re wise…and they ask you for “predictions.”  So here are some of mine for the New Year.

I have access to over 7 years of my own quarterly and annual fitness-business research…plus spreadsheets on over 20 years of other industry studies.  One thing that persistent surveillance of numbers does is to give not only a history of what has happened, but also a glimpse of what can happen in the very near future.  Here’s some strong possibilities for 2015.

BIG COMPANIES WILL BUY MORE CLUBS AND PUT PRESSURE ON INDEPENDENTS IN HUNDREDS OF MARKETS:

Estimably 9% of clubs in the Top 100 control over 40% of U.S. club memberships.  Anticipate that more regional chains and multi-club operations will be bought up and that large players will control even greater percentages of national memberships.  POSITIVE: Smart independents will “un-standardize” offerings and become much more competitive.

“MEMBERSHIP UNBUNDLING” WILL CONTINUE:

Over 1/3 of U.S. clubs have already either a la carted or unbundled prices.  We’re now seeing it even in higher-price facilities.  More clubs will unbundle in efforts to compete.  POSITIVE: Many clubs will reach wider potential prospect audiences by unbundling.

STUDIO AND NICHE FACILITY GROWTH INCREASES:

Some experts say that there are over 20,000 “under the radar” niche facilities presently existent in the U.S – with annual growth rates at more than 15%.  Studios will challenge established clubs not only for training and program dollars, but also for membership revenues.  POSITIVE: Aware operators will change training offerings and compensation, keeping productive trainers in-house and providing better member-client services.

MEMBERSHIP PRICES WILL DECLINE YET FURTHER:

There has been a consistent decade-long year-by-year drop in membership prices. As more budget clubs arrive in markets – and as unbundling persists – expect that monthly dues will trend downward again in 2015.  POSITIVE: Modern-thinking facilities are concentrating on predictably-profitable ancillary-income production…with many now producing over 40% of monthly income in training, program and other-than-membership sales.

CLUBS WILL USE THEIR TECHNOLOGIES TO GREATER ADVANTAGE:

As on-boarding has become more sophisticated and member-use tracking has become part of weekly operations, clubs have turned to their software applications for business solutions.  2015 will be the year that management-software companies with “dashboarding” draw much attention.  POSITIVE: Independent clubs will operate with much more objectivity, efficiency and effectiveness.

(Michael Scott Scudder is Founder/CEO of Fitness Business Council, the independent club business network.  Michael can be contacted at 575-613-1004 or mss@fitnessbusinesscouncil.com.

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By: Jim Thomas

In many clubs we go into they have everything they need to be successful.  By simply changing the attitude, the process and fundamentals, things can start to change their sales volume right away.

Here are some things to consider:

Telephone Inquiries and Log Sheet.  Be sure every inquiry is logged in.  First, this will tell you exactly what kind of phone response you are getting.  Don’t leave this to guesswork.  Second, monitor the salespersons effectiveness on setting the appointments and show percentages. We find that clubs are getting more phone response that they realize.  This one step alone will improve your performance.

Always, always agree.  You want to eliminate such words as no, not, never, can’t, won’t, don’t from your vocabulary. It’s nearly impossible to get agreement when you have disagreement and so many salespeople sell from a standpoint of disagreement. This doesn’t commit you to anything; it simply means you have the same opinion.  Mary, I understand, I have said the same thing myself from time to time, now, let’s get you started.  Be agreeable at all levels of communications, watch the difference it makes.

Show membership options to every prospect.  Regardless of circumstances, be sure and present membership options to every prospect that enters your club.  If you start to prejudge, you’ll lose sales.  A good rule to follow is to treat all prospects like buyers.

Give the prospect what they came in for.  We see this one a lot.  The club offers a free week trial or a paid trial through Groupon or something similar.  The key here is to give the prospect what they came in for right when they come in.  Don’t give it to them AFTER they decide they don’t want to join.  This will put the prospect at ease and simplify the sales process.

The Second Sale.  This will be one of the easiest sales you will ever make.  Once the new member has joined, be sure you are offering such things as personal training, apparel, nutrition, etc.  Most sales people never do this. Additional purchases will also help solidify the membership sale.

Volunteer to handle all complaints.  Successfully handling a member complaint is the highest level of service you can provide and great opportunity to make another sale.  Upgrades, add ons, personal training or whatever you club has to offer.  There are sales to be made every day from this valuable source.

Now, go close a sale!

Jim Thomas is the founder and president of Fitness Management USA Inc., a management consulting and turnaround firm specializing in the fitness and health club industry. With more than 25 years of experience owning, operating and managing clubs of all sizes, Thomas lectures and delivers seminars and workshops across the country on the practical skills required to successfully build teamwork and market fitness programs and products. Learn more here: Jim Thomas On Demand

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Click here to read part 1.

Every club owner and executive by and large think they make pretty good business decisions.  Yet when they are examined in the harsh light of a peer business review, their shortcomings are revealed.  We know because REX Roundtables regularly conducts these reviews for its members.

So how do you avoid bad, ineffective and costly decision disasters when you don’t have such a review at your disposal? 

LEARN HOW TO RECOGNIZE THE COMMON DECISION FALLACIES

There are eight business decision fallacies that are so prevalent in the common sense of business, that they have been researched in several business schools.  I have reported on these in the previous REX article for ABC.  Read about them.  Read business disaster stories in places like the Wall St Journal.  Learn to recognize these critters before they creep into a decision.  For once they have moved in, executives tend to think they are domesticated, while in fact they are still wild animals that will eat you and your cash and your reputation alive.  Learn how to identify them at a distance!

BEWARE OF YOUR EXPERIENCE

For all the emphasis in the business world on numbers and hard-nosed facts, extensive research points out again and again that close to 90% of executive decisions are made largely through an unconscious or intuitive process. After the decision is made, we marshal the facts to support. This makes for quick, effective decisions in most cases, but important factors can undermine intuitive or experienced decision making – 1-your past experience, 2-your emotional attachments and 3-your self-interest.  Here is an example of how past experience undermines decisions.

Matthew Broderick had worked in operation centers in Vietnam and other military settings.  He had led homeland security operations centers during hurricanes. All of these experiences taught him that early reports surrounding a potential disaster are often faulty, and that it is better to wait for the “ground truth” to surface before taking action.  Unfortunately he had no experience with a hurricane hitting a city built below sea level-Katrina.  This is an example of how misleading memories and experience can lead to a bad decision.  Our experience that seems relevant and comparable is not, and it leads to decisions that are exactly wrong and at times disastrous.  In this case the broken levees were not officially identified for 12-18 hours after they began breeching.  Basing decision on the wrong experience is a factor in poor decisions.

EMOTIONAL CONNECTIONS CAN DAMAGE DECISIONS

Here is an example of how emotional attachments undermine decisions. In the 1980’s, Wang Laboratories was an important Boston high tech company and the leader in the word processing industry.  Wang recognized his company would be challenged by the rise of the personal computer and built a machine to compete.  He chose to create his own operating system software despite the fact that the competing IBM PC was becoming the dominant standard in word processing.  The operating system IBM had chosen was Microsoft. Early in his career, Wang believed he had been cheated by IBM over technology he had invented.  This led to a strong dislike of IBM and the avoidance of anything used by IBM even though the software itself had been developed by Microsoft.  This serious blunder contributed to the rapid decline of Wang Laboratories within a few years.  When you have an emotional connection to people, places or things, your decisions are in jeopardy.  Such emotional attachment is often a factor when you are making a choice about filling a new position with an in-house promotion or an external hire. 

BEWARE OF SELF INTEREST

The third factor that leads to poor decisions is inappropriate self-interest.  All leaders are aware that self-interest should not be a significant factor in decision making, yet even well trained and well intentioned professionals such as doctors, auditors and engineers are unable to prevent self-interest from biasing their judgment.  A prominent surgeon continued to tout the benefits of a hip replacement module as evidence mounted on its widespread early failure. Not publicizing this sooner led to significant legal penalties, disastrous public relations and much personal embarrassment.

BUILD A TEAM OF EQUALS-WHO WILL CHALLENGE YOU THINKING.

In order to avoid making poor decisions, you need a deliberate and structured ways to identify your likely biases and a procedure for improving the quality of your decisions.  The simplest solution is to involve others, at least one other, who has no appropriate attachments or self-interest.  This is the value of an outsider who has little experience with the situation and thus, is more objective.  Step two is to create an environment where this group can challenge your thinking and force you to review your logic and consider other opinions.  Without a culture of challenge and without a team of equals to further the debate which explicitly confronts your biases you are apt to make expensive and poor decisions.

Again and again, research into poor business decisions made by executive teams and by the boards of the largest businesses such as Enron, Tyco, Lehman Brothers, UBS, Bear Sterns, etc. point out two factors.  First the members of the executive team or board were highly qualified and experienced. Second, decisions by the leader were never challenged or seriously examined.  Often individual members had concerns, but the elephant in the room was never named.  As Peter Drucker famously said the purpose of an executive team is to foster conflict.  Meaning conflict that challenged everyone’s thinking to produce higher quality decisions.  This sort of challenging does not occur unless the trust level is very high.

Trust is the foundation of all human interaction.  It could be called a measure of the bandwidth that exists between those who are communicating.  Low bandwidth gives a slow and inefficient communication.  Low trust is like adding friction to the organization which means energy is consumed overcoming the friction, and that energy is not available to operate and drive the business.  Energy consumed in friction is converted to frustration.  See The Five Dysfunctions of a Team by Patrick Lencioni for a solid explication of why even a modest and a low trust climate undermines commitment, accountability and results. The book reviewed at http://www.rexonline.org/showreviews.php?action=fivedysf2 .

Here are a set of statements which can assess the level of trust on your executive team.

1– My experience is that my team members intend to care for me.

2– Team members know my goals and interests.

3– Team members understand how we are linked and how our behavior can affect one another’s work.

4– Team members consider my interests in their decisions and behavior.

5– Team members stand up for me when I am not present.

6– Team members admit their mistakes.

7– Team members admit their weaknesses to one another.

8– Team members ask for help from one another without hesitation.

9– Team members acknowledge and tap one another’s skills and expertise.

10– Team members willingly apologize to one another.

11– Team members are unguarded and genuine with one another.

12– Team members ask for other members input regardless of their areas of responsibility.

Using this assessment with your executive team can identify the areas to improve and protect your business from poor decisions.

AVOIDING DECISION DISASTERS

There are five more specific ways to largely avoid the seven decision fallacies and the poor decisions they produce. If you would like information on them contact the author.

Will Philips is the founder of REX Roundtables serving 150 of the world’s best clubs with 5,000 sites and 30,000,000 members.  Improving performance of their clubs and the quality of the leader’s lives.  You can reach Will@rexroundtables.com.

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LITTLE ROCK, AR., (December 17, 2014) – ABC Financial (ABC), the leading software and payment processing provider to the health and fitness industry, participated in Hour of Code last week in Central Arkansas.  ABC employees spoke to students about the availability of software careers in Central Arkansas, as well as, donated a Samsung Galaxy Tablet 4 for a grand prize drawing.

Over one hundred students at Bryant High School participated in Hour of Code; double the number of participants from last year.  They practiced sequencing, looping, and branching, solving simple geometry problems in a Frozen-themed environment hosted by code.org.

“The ability to interact with students and see them get excited about learning and what the future can hold for them is beneficial to both the children and the field of technology,” stated Steve Ayers, Chief Revenue Officer at ABC Financial.  “To think some of these students can be future employees of ABC is really exciting.”

“This learning opportunity would not have been a success without companies like ABC Financial,” stated Daniel Moix, Business Teacher at Bryant High School.  “Thank you for sending the message to the students of Central Arkansas that Computer Science education is valuable, that there are careers waiting for them in this area, and that you support them.”

About Code.org

Code.org is a public 501c3 non-profit. Founded by twins Ali and Hadi Partovi, Code.org’s vision is that every student in every school should have the opportunity to learn to code. http://code.org

About ABC Financial

Launched in 1981, ABC Financial has revolutionized software and payment processing for the health and fitness industry.   Headquartered in the Little Rock, Ark. area, ABC Financial serves approximately 5,200 clubs with approximately 4.5 million members throughout the United States, Canada and Puerto Rico. The company’s innovative club management software, DataTrak, is the most complete web-based software in the health and fitness industry. www.abcfinancial.com

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With the New Year just around the corner, gym owners are gearing up for the post-holiday rush – after all, the first week of January is to health clubs and fitness facilities what Black Friday is to retail stores!

New members will be looking for a facility where they can fulfill their New Year’s resolution to lose weight, exercise more or take up a new sport, while existing members will be eager to work off all those holiday treats!

Here’s some quick tips on how you can prep your gym for the post-holiday, New Year’s resolution rush:

All Hands On Deck

January is definitely the busiest time of the year at fitness facilities, so be sure to have lots of staff on hand to sign up new members, conduct tours and ensure everything runs smoothly. Prevent conflicts between members over equipment usage by maintaining a strong staff presence on the gym floor, and make sure your facility rules are clearly posted, including any time limits on cardio machines.

Keep It Spotless

With the inevitable influx of members, your equipment will be getting quite the workout! Keep everything spotless (including the washrooms and showers) by doubling-up on your maintenance schedule for January and ordering extra disinfectant and paper supplies now. Remember that January isn’t just New Year’s resolution season, it’s cold and flu season too!

Differentiate Yourself From The Competition

The fitness industry is highly competitive – in some markets there are dozens of gyms battling to earn new membership dollars, so it’s important to offer both new and prospective members a reason to pick your facility. What sets your gym apart? Consider offering a unique product, service or ‘perk’ that appeals to members, such as cutting-edge classes, specialized equipment or ‘extras’ like a juice bar.

Go Paperless With Electronic Membership Agreements & Automatic Billing

Here at ABC Financial, we make new member recruitment easy with our paperless electronic membership agreements that save you time and money, while ABC’s comprehensive fitness club management software and payment processing services can help your gym collect more revenue from more members.

To learn more about how ABC can deliver real-world membership and financial services for your facility, contact us today!

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According to the annual Worldwide Survey of Fitness Trends for 2015, there are 20 fitness trends predicted to drive the market next year; this list includes the Top 5. The results of this annual survey help experts in the health and fitness industry to make informative investment decisions when utilizing gym software.

Results also help club owners to possibly incorporate and establish new trends into their clubs that may potentially increase club revenues. Remember, tracking new club trends incorporated into your health club is easy with gym software. When considering the results of this survey, it’s important to distinguish the difference between a trend and a fad. A trend is based on present behavior whereas a fad is an interest in something new for a very brief period of time.

Top 5 Predicted Fitness Trends for 2015

1. Body Weight Training: This trend made its first appearance in 2013 and is taking the lead as the top predicted trend for next year. Body weight training is a worldwide growing trend offering gym enthusiasts the option of working out using minimal gym equipment combined with exercises such as pull-ups, push-ups, and more.

2. High-Intensity Interval Training (HIIT): HIIT training was in the top spot last year and has fallen to the number two spot this year. This type of training involves high-intensity workouts combined with brief periods of recovery and rest. The high-intensity portion of this type of workout is generally short and the entire routine takes about 30 minutes or less.

3. Increased Interest in Certification: With an increase in accreditation offers, this is a trend that continues to grow. Due to the increase in industry growth and an overcrowded fitness professional market, more-and-more fitness professionals are seeking accreditation from third-party accrediting agencies.

4. Strength Training: This type of training dropped to the top four spot last year and remains there this year. Strength Training is a workout that exclusively utilizes weight throughout the entire workout. It continues to be a strong trend and favorite amongst gym enthusiasts with many new younger clients.

5. Personal Training: With an increased interest in fitness professionals becoming certified, there continues to be an increased interest in personal training as well. Personal training has made the top 10 list of trends for nine consecutive years. Personal trainers are available through many fitness organizations and in many different settings with many being self-employed.

As fitness trends continue to come and go, ABC Financial gym software is here to stay and will continue to help your business grow and thrive year-after-year!

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Recent research points out that the common mental shortcuts (called heuristics) that we use in making decisions lead to faulty decisions.  Of even greater concern is the research that shows the faults can be amplified in a group, and spiral into an even worse decision than an individual would make.  The real challenge is that even the best and brightest CEOs cannot see these weaknesses. They self-report that they have excellent decision making skills. Here are the executive heuristics that have been researched and reported in a recent Harvard Business Review Article.

The planning fallacy leads us to always underestimate how much time something will take and how much money it will cost.  One executive in a company that made dozens of acquisitions each year said that they knew about the planning fallacy so after they did their due diligence on the acquisition they multiplied key factors by three, yet they still always found it took longer and cost more.

The overconfidence fallacy leads us to believe our forecasts are more accurate and precise than they are.

The availability fallacy leads us to seize on whatever springs most readily to your mind as a solution either because it’s memorable we recently experienced it.  Doctors tend to diagnose what they have been seeing recently so that the same signs and symptoms get widely different diagnoses.

The egocentric fallacy leads us to exaggerate the extent which our tastes and preferences and insights are typical.  This explains why so many new products/services and businesses fail.  The leader thinks he or she knows what the customer wants.

The sunk cost fallacy leads us to stick with hopeless projects because we have already invested so much and if we quit now we will lose that investment.

The framing fallacy where decisions are affected by how the options are presented. People are more likely to agree to an operation if they are told that 90% of the people are alive after five years than if they are told that 10% of the people are dead after five years.

All the above fallacies are in play when a leader makes a decision.  They operate in the back ground of the mind so the thinker is rarely aware of their influence.  When the leader is aware of them, he or she experiences them as ‘my intuition’ or ‘my experience’ coming into play to help me make a good decision.

Business thinking for the last few decades has encouraged leaders to make decisions with their teams to improve the quality of the decision and the engagement of the managers.  Engagement usually occurs, but improved decisions do not.

The above six individual fallacies are exacerbated in a management team setting.  We ‘go a long to get along’ because we want to be liked, so we agree regardless of whether it makes sense.

In the 1970s an experiment would have seven people sitting in a U-shaped table. Perceptual illusions were shown on a screen. They were all told to answer the opposite of what they thought was true. At this point the last participant entered, and was not briefed on answering the opposite.  Again and again the un-briefed member caved in close to 95% of the time and agreed with an answer that fit the group but did not make sense to them.  Most of us care so much what others think that it is very difficult for us to be truly honest in the face of disapproval.  This phenomenon was labeled Group Think.

The loyalty fallacy occurs naturally in ever hierarchy.  Good employees want to be loyal to the boss at best and are fearful of stepping out of line at worst.  Everyone is thoughtful about making waves and going against the grain.  The recent spate of millions of car recalls by GM was caused by the ‘loyalty’ fallacy and the ‘go along to get along’ fallacy.  A culture of niceness which has persisted for over three decades at GM.

There are five specific ways to largely avoid these fallacies and the poor decisions they produce.  REX trains all of its Roundtable chairs in these tools. We will cover them in future articles.

Will Philips is the founder of REX Roundtables serving 150 of the world’s best clubs with 5,000 sites and 30,000,000 members.  Improving performance of their clubs and the quality of the leader’s lives.

Click here to read part 2

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If your answer to the above is: 1) the one that sells the most memberships; 2) the one that retains the most memberships; or 3) the one that sells and retains the most memberships…in all three cases – SORRY CHARLIE!!!!

Increasing statistical evidence from Fitness Business Council independent-club quarterly and annual surveys points to the fact that the most profitable health clubs are consistently:

• THOSE THAT PRODUCE THE HIGHEST PERCENTAGE OF ANCILLARY REVENUES TO TOTAL REVENUES (otherwise known as AR2TR).

A glance at FBC’s last six (6) quarterly reports and the 2013 end-of-year report shows that clubs which regularly produce more than 24% ancillary revenues also regularly produce double-digit net profit margins (total revenues-total expenses/total revenues).

While there remains one exception to the above rule…that being the low-price “fitness-only” clubs like Planet Fitness TM or clones…which generally offer no services other than a workout in a well-equipped but minimally-staffed facility – even those facilities are beginning to see gradual diminishing of profit margins, often due to the fact that they produce extremely low annual ancillary income.

The converse is also statistically true (as any 20-year-plus industry veteran can tell you): those clubs which predictably produce lower-than-20% AR2TR are the most likely to fail.  At the end of our country’s last severe economic pullback (the recession of 1991-1994), 9% of existing health clubs had closed their doors.  Of that number, greater than ¾ of the clubs that closed produced less than 18% ancillary revenues (inflation-adjusted for 2014: 22%).

Why is ancillary revenue so important to a club’s success?  The answer here is rather simple: with the exception of the afore-mentioned low-price, relatively-low-payroll operators, the vast majority of clubs make absolutely no profit in the first year on membership sales!  Add to that fact the alarming news that annualized Member Retention is once again trending downwards (at last look, only 62% versus a less-than-2-years-ago-high of 68%)…and even a casual observer recognizes the need for what has been aptly named “the monetization of members.”

Recent polls support the premise that the higher-the-price club, the greater the percentage of ancillary revenues produced by that club.  Interestingly, third-quarter 2014 data shows that clubs priced under $50 monthly (for single membership) not only have the highest annual member attrition (well over 40%) but also produce less AR2TR in direct relationship to lower prices!  (The weakest ancillary revenue percentage – 15% – is reported by the $20-$29 membership price range.)

Time to re-think your business’ long-term strategy?  Should you concentrate not solely on membership sales…but also on selling those members additional services once they’re inside your doors?

(Michael Scott Scudder is Founder/CEO of Fitness Business Council, the independent club business network.  Michael can be contacted at 575-751-1212 or mss@fitnessbusinesscouncil.com.  For your PDF copy of the 3^rd Quarter FBC Business Results Report, click Michael’s secure Dropbox link.

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You just never know when things will change.  You get transferred to another club.  You have a new boss.  Your company is sold.  Even if things just seem to be going crazy in the gym you have worked at for years. Things change, but the expectation of sales production remains.

Here are some tips to help you make the membership sale no matter what the circumstances;

1. Attitude is everything.  The key to remember here is that it’s more important how you feel about your prospect than how they feel about you. You can’t let crazy circumstances change you. The positive expectancy to win.    The will to make it happen.  No negatives, attitude is paramount.  If this is not in place, you can’t even get started.
2. Have commitment in your posture and voice. You want to be using words like great!  Fantastic!  Terrific! Show confidence!
3. Have enthusiasm that conveys conviction and belief. It’s been said many times that the definition of sales is a transfer of feelings or a transfer of enthusiasm. It really goes beyond just enthusiasm; it’s your passion, your belief and your conviction for what you do that means you can’t be swayed otherwise.
4. You must be sold. You must be sold that your company is the best.  You have the best product and best service.  You’re the best person to help them get the results they want.  You’re sold on the value you bring to your customer. You are unreasonable to the point that nothing can be said that will change how you think.
5. Always agree first with your prospect. This is senior to everything you do in the sales process. Always be agreeable. Don’t defend your position.  Certainly don’t tell your customer they’re wrong.  Be agreeable.  Mary, I understand.  Mary, I agree with you.  Even if your customer says they didn’t come to join today, you say, “Mary, I understand, most of our guests don’t come to join when they first come in.”  Then follow your sales process.
6. Be sure you are getting daily training. Be sure you are getting daily training.  If your club is providing this great, if not, be sure to get it on your own.  Daily training will add a sale a day to your production.

Now, go close a sale!

Jim Thomas is the founder and president of Fitness Management USA Inc., a management consulting and turnaround firm specializing in the fitness and health club industry. With more than 25 years of experience owning, operating and managing clubs of all sizes, Thomas lectures and delivers seminars and workshops across the country on the practical skills required to successfully build teamwork and market fitness programs and products. Learn more here: Jim Thomas On Demand

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