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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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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By Erin Anthony

A new report is now available in CRS! We recently released the “Daily Revenue and Deposit Reconciliation” report. This report maintains the functionality of the monthly Revenue and Deposit Reconciliation report with the added benefit of putting up-to-date daily data at your fingertips.

Use the report for cash basis accounting and to assist in cash reconciliations. You can view summary-level or transaction-level details on daily revenue, deductions, and deposits. Running month-to-date totals are also provided to give context to daily figures.

For additional details on the “Daily Revenue and Deposit Reconciliation” and all it has to offer, click HERE!

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Recent United States demographic information has startled business owners across the country…not the least of which are health club operators.  A massive age-population shift is right around the corner.  Will your club be prepared for it?

• Latest government statistics say that – on January 1, 2015 – 45% of the 315 million Americans will be age 50 or over!
• By 2017 – less than 3 years away – 1 of every 2 U.S. citizens will be over age 50.
• Every Baby Boomer is now over age 50.
• Industry statistics indicate that – within less than 2 ½ years – 50% of national health club members will be over age 50.

So what’s the big deal?  Well, the big deal is that most club and gym advertising, marketing, and exercise programming is geared to age 35 and under!  In other words, fitness facilities are acting as though their own member demographics haven’t changed in 20 years.

Add two other facts to this mix.

• 75% of all U.S. wealth and discretionary spending is controlled by consumers over age 55.
• The average 50-plusser has 6 times the discretionary buying power of the average 30-year-old.

What these numbers mean to you.

Club Owner – is that you will very soon have either a massive opportunity in your competitive marketplace or you will suffer a colossal bummer!  The choice will be yours.

For those who seriously want to engage with the best-potential-buyer market we have seen in over 35 years in our industry, you will have to quickly get on the ball with several segments of your business.

• ADVERTISING: You’ll have to go where they are (and it isn’t newspapers, direct mail, radio or TV).  You’ll need to learn “interactive smart site” marketing, email strategizing, and app/social media campaigning.
• SALES: They don’t like high pressure, “buy now deals,” and club tours.  You’ll have to get smart with “interview selling” and “personalization” approaches.  This group doesn’t like “locked in contracts” – they like no commitments until they’re customer-satisfied.
• EXERCISE TRAINING AND COACHING: Give them your run-of-the-mill orientation of two trainings on equipment and they’re gone.  You’re going to have to learn “outcomes management” if you’re going to keep this group coming back and referring their friends.
• PROGRAMMING: Think “group, group, group” – from on-boarding these new 50+ members into GEX classes to Small Group Training sessions to “clubs within the club” which may include social programs, nutrition counseling groups, investment clubs, and a lot of other “lifestyle-type” events which will add value to membership.

The track record of small training studios – whose principal clientele is Baby Boomers – proves that this group will spend a lot of additional dollars for experiences that they value.

Now your job becomes creating the value.

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.

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We have seen many frustrated gym owners, managers and salespeople; many of whom are working hard and can’t understand why they are not more successful.  They are doing all the things they know to do, but the results are not there.

Before we start to look at the sales process and fundamental, and before we consider any operational issues, we should first consider the following;

1. Obscurity. This is problem number one.  No one knows the gym even exists and if they do, they aren’t thinking about it.  As a gym owner, not only are you competing with other fitness options for your customer, but you’re also competing against all the noise your customer hears each day.  Most gym owners significantly underestimate what it will take to attract attention to their business….and then when they try to attract attention, if they get a complaint or criticism, or if it doesn’t work like they think it should, they stop.  That’s the one time we can guarantee results. The answer is to take massive, determined action.  How do you know if you are taking massive action?  You create a new set of problems.  Commit to everything.  Look for ways to say yes.
2. Uncertainty. This works both ways as a challenge for the gym owner. Your customer is uncertain.  Will they stick with it?  Will they fit in? Can they afford it?  More than information, this is what your customer really wants.  Certainty. Same for the gym salesperson.  They are not always sold themselves which creates uncertainty in the sales process.  This is where training and staff development is crucial.
3. Persistence. We don’t follow up on leads like we should.  That person that inquired 6 months ago – are we still in contact with them? We have found that clubs can increase their business by a minimum of 15% if they simply handle their lead follow-up properly.  We don’t ask for the sale and we become discouraged and stop our outreach program. Being persistent will also help you earn trust. Here’s what happens: you get an objection, you get a complaint or you get criticism and you stop. You must have the determination to continue to push forward.  You must understand there will be obstacles, have a plan B ready to go and don’t quit.  When is the last time someone commented on the strength of your follow-up?

Do this and you will be well on your way to success, but you must first commit.  The first thing I hear when we discuss this is…”I don’t have time to do all that.”  Sure you do, just commit to it.

Want to be the best?  Go for it!

Now, go overcome your gym’s biggest challenges!

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. Visit his Web site at: www.fmconsulting.net.

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