Is Your Gym Taking Full Advantage of Automatic Billing?

If you only use automatic billing for membership dues, you’re missing opportunities to optimize your gym’s revenue streams.

When you run a health club, there are two basic ways to boost profitability: decrease costs and increase revenue. But cutting costs alone—“saving” your way to financial growth—isn’t a sustainable strategy for boosting the bottom line. You have to look for ways to maximize what you already offer, then consider adding other services and revenue streams.

It starts by doing your homework, according to Kevin Hughes, COO of The Atlantic Club in New Jersey. “Health clubs can determine the best growth areas for their club by doing research,” he says. “This analysis includes networking with other clubs in the IHRSA network, as well as surveying the members as to what they would like to see.”

He offers four recommendations:

  1. Create a culture where the staff becomes focused on creating new revenue streams
  2. Drill down into the club’s ancillary income streams in order to create new ancillary income streams within the current income streams
  3. Explore where there are gaps in the club's business
  4. Study other best practices and adapting them to the individual club’s business

“Remember that membership dues is the club’s number one priority. Ancillary income can be more fun and take time away from the core business,” he says.

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Training at The Atlantic Club

Membership Dues and Automatic Billing

Membership dues is the foundation of a club’s revenue for obvious reasons. It’s also predictable and reliable because members are automatically billed. Automatic billing simplifies revenue projections. Club owners can feel confident that the money will be there every month.

There was a time when members weren’t always comfortable with automatic billing. But today, the majority of financial transactions occur through electronic delivery, usually deductions from bank accounts and credit/debit cards.

Researchers at Duke University found that “consumption rises with automated bill payment.” And recent data has found that more than half of Americans pay their bills online. Not surprisingly, more millennials and younger demographics were more comfortable using online and automated payment systems.

The question club owners should be asking is: If I can use automatic billing for membership, why can’t I use it for other services?

The Benefits of Expanding Automatic Billing

When Kate Golden took over fitness operations at Newtown Athletic Club in Pennsylvania, she asked herself that same question. Newtown is a huge 250,000 square-feet complex, consisting of recreation, health, and wellness centers. In charge of running the personal training group, Golden saw that the club offered tiered packages of training sessions. She decided to try a different approach: automatic billing for training services.

“We automatically bill you every month for your personal training sessions and you have to use them within that month,” she says.

It’s been a huge success for the club. Not only has it streamlined the billing process, it’s created a consistent revenue stream—and members didn’t balk at the change.

“We automatically bill you every month for your personal training sessions and you have to use them within that month.”

Kate Golden, Director of People and Fitness Operations

Newtown Athletic Club - Pennsylvania

You can probably think of other services that could fit under an automatic billing procedure. If you have spa services, racquet courts, food services, group training—all of it could be part of a general services fee that’s prepaid every month as part of annual fees, enhancements, maintenance fees, or personal training. Of course, you want to be upfront about costs and fees—added unexplained fees are a reason many people hate their cable television company—but in many cases, members will like the convenience of not engaging in a separate financial transaction for every service they want.

An automatic billing system for services may help offset costs of introducing new club features. Spa services are a good example. Kevin Caldabaugh, the president of the Club Spa and Fitness Association, says that millennials have helped make spa services a growth area. “Today, clubs are designing award-winning spa facilities, providing their members with a desirable and valuable amenity, and seeing dramatic increases in their non-dues revenue.”

Spa services may not be appropriate for your club. But other potential revenue streams may be perfect for your membership and cost structure. Just as you’d do an assessment of cost efficiencies to save money, you should analyze places where you can boost revenue.

The money’s there. You just need to know where to look for it.

Make Your Club Software Provider Your Revenue Partner

When it comes to auditing your club’s payment processes and other efficiencies, you rely on your club management software to give you a breakdown of costs and revenue. But your software provider should be doing much more than organizing billing and itemizing costs. They should be your partner in profitability, looking for ways to build revenue streams that you may have missed.

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Since 1991, Twin Oaks Software has been doing just that. Created by former club owners who know the challenges of the gym business, Twin Oaks gets in the trenches with individual club operators to determine what services make sense for automatic billing, while improving efficiencies in operational costs. Twin Oaks can help you:

  • Set up a prepaid credit system for goods and services
  • Create a rewards and gift certificate program that will incentivize current members to add new members and enhance retention
  • Identify in-house ancillary charges that your club may be overlooking
  • Optimize your social media, email, and overall marketing outreach

Out of the gate, Twin Oaks can save you money on everyday financial commitments. With Twin Oaks software, club operators earn 20% more recurring transactions and save upwards of 11% on credit card processing fees. But their commitment goes beyond these savings.

Carole Oat, national sales manager of Twin Oaks, says that the company is dedicated to maximizing the profit potential of every club. “We think of ourselves as our client’s profitability partner,” she says. “We’re here to teach them how to take advantage of our software tools to be as profitable as possible.”

Twin Oaks software has a customizable user interface, and has clients who have a single independent gym as well as those with multiple clubs. Oat says that each situation offers numerous opportunities that often get overlooked.

“We’ve identified dozens of ways to build profits centers that can be billed automatically on a monthly basis,” she says. “From low-end to high-end facilities, there are ways to create revenue streams that can make a huge difference. And that’s revenue you can count on every month.”

If the money’s there, Twin Oaks will help you find it.

For more information, visit the Twin Oaks website or send them an email.

Jim Schmaltz

Jim Schmaltz is a contributor to IHRSA.org