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CBI Magazine Read the lastest issue of CBI Magazine.  
Monday
Aug032009

The Benefits of Selling Month-to-Month

Q: "I've been in the industry for over 13yrs. I don't understand this new wave of no-contracts. How does a club stay afloat on month to month membership basis? I know its the wave of the future but how does it work financially for the club? What is the benefit to offering no contracts? And should we make the transition as it seems most clubs are?"

A: Todays potential and existing Club members prefer the month to month option over the longterm commitment associated with a one, two or three year contract.

Given the fact that 25% of members are inactive 6 months after joining and that rises to 50% being inactive after one year, one of the black eyes to our industry has been the reputation we have earned from binding inactive members to long term retail installment contracts.

By shifting our industry to a month to month model, one club at a time, we will become a business that focuses on member retention AS WELL as new member acquisition.

If our members are free to leave with written notice at any time we will be much more cognizant of their satisfaction with our service, programs and facility upkeep.

Can this model prove as profitable as a contract sales model?

Yes...absolutely!

First, we will attract more members.

Second, our reputation as a service provider will improve.

Granted members will leave at a faster pace but with more joining the outcome will still result in a net gain for each of us.

Geoff Dyer, Founder
Lifestyle Family Fitness
gdyer@lff.com
www.lff.com

A: No contracts (month to month agreements) have actually been around for some time, especially for higher priced facilities. The main challenge is obviously proving your value on a month to month basis, but I believe that is what elevates and promotes a higher level of club service... it influences your entire staff culture to focus on member retention. The other challenge is that it places a lot of pressure on your sales process. If you don't have members locked into a contract, you have higher potential to lose them, which means you need to be selling at the same rate or higher than your losses.

The benefit to offering no contracts is that a large percentage of those interested in a club membership can be turned off by the long term commitment. Therefore, knowing that they (the prospect) can leave at any time is a comforting decision, especially in this economy. We offer two options: a one-year contract which allows a new member to join for a $25 processing fee or a month to month option offered at a $250-$500 initiation fee. The contract member has a buyout option to pay the full initiation (or pro-rated) if they wish to leave the club before the year expires.

Offering these two options during challenging economic times are working for us and yes, I would recommend the same for others. Please let me know if you need further assistance.

Jarod Cogswell, General Manager
ClubSport Oregon
jcogswell@clubsports.com
www.clubsports.com/oregon

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