Want Your Gym to Meet Its Financial Goals? Try This Strategy

How to know your OKRs from your KPIs, and why it matters.

Developing a financial strategy based on your key performance indicators (KPIs) is standard operating procedure for health clubs. KPIs help you set goals, measure your performance, and tell you if your objectives are being met.

Or do they? As the ground continues to shift in standard business models, clubs are finding that their goals are a moving target. Part of this is the amount of data on hand—in other words, there’s a lot of clutter and noise in the numbers you need to analyze. Then there are the pressures from market disruptions and volatile consumer behavior. Today’s KPIs can be tomorrow’s obsolete objectives.

“Today’s KPIs can be tomorrow’s obsolete objectives.”

Another problem for club operators is communicating these KPIs and financial goals to your staff. Giving your team the tools and direction they need isn’t as clear-cut as it used to be. And with frequent turnover a problem in the industry, keeping your staff engaged and focused is a challenge.

Whatever your goals—more PT sales, increased membership, improved retention, etc.—there’s a way to measure what matters, so you can lay out a fail-safe roadmap to success. It just so happens a great guide to achieving this is in a book titled, Measure What Matters, written by John Doerr.

Measure What Matters lays out a strategy that Doerr brought to Google in 1999. If you know your internet history, in the late ‘90s Google had yet to become the dominant force in search engines that eventually left all other competitors in the digital dust (if you don’t believe us, Ask Jeeves). The core of Doerr’s principles is driven by OKRs (Objectives and Key Results.)

Doerr, who has a masters degree in electrical engineering and graduated from Harvard Business School, ended up in Silicon Valley in the 1980s, where he became a principal player at Intel. While there, he developed his system, which synthesizes some of the guiding theories from business legends Peter Drucker and Andy Grove. It was Grove who first devised OKRs, but Doerr developed them into a system that helped supercharge Google’s growth and have produced successful outcomes for other organizations.

Doerr didn’t just help Google, he did all right for himself. His net worth is estimated to be $7.7 billion, making him No. 215 on Forbes’ list of billionaires.

Aspirational and Measurable

While Doerr’s book remains the definitive distillation of his theories, a cottage industry has grown out of the core text. You can find a number of templates and examples of how OKRs work in organizations from a number of sources online.

At its base, Doerr’s formula comes down to this simple phrase: “I will (the objectives/s) measured by (set of key results).”

OKRs are your top strategic priorities and tend to be ambitious but measurable. They can be committed or aspirational. The key results can change as you progress in your objective. As Doerr says: “Where an objective can be long-lived, rolled over for a year or longer, key results evolve as the work progresses.” You should limit your KRs to three or four for each objective.

Doerr provides this example, a customer service OKR adopted by a pizza company called Zume.

O: Delight customers. Ensure that our customers are so happy with our service and product that they have no choice but to order more pizza and to rave about the experience with their friends.

  • KR1: Net promoter score (NPS) of 42 or better.
  • KR2: Order rating of 4.6/5.0 or better.
  • KR3: 75% of customers prefer Zume to the competitor in a blind taste test.

OKRs are “transparent throughout an organization,” according to Doerr’s website, and cascade throughout the company. This increases employee engagement and decreases siloing of departments. OKR’s can also expose those who aren’t focused on key company goals. As Laszlo Bock, Google’s former Head of People Operations explains, because OKRs are so visible, “Teams that are grossly out of alignment stand out.”

KPIs are different than OKRs but not separate. They’re part of the same broad picture. You can think of KPIs as measuring performance on projects that already exist or are ongoing concerns. KPIs aren’t aspirational or broadly defined. As explained by consultant and futurist Bernard Marr: “OKRs help you define your top strategic goals and identify how you will achieve them, while KPIs help you measure performance against your goals.”

Putting OKRs Into Practice

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ASF Payment Solutions staff at IHRSA 2019.

This is just a rough summary of Doerr’s theories, but you can see how the OKR strategy is a better fit for today’s health clubs than simply relying on KPIs. OKRs allow you to be more nimble and expansive in your goal setting. As Marr notes: “Better to aim high than play it safe.”

In other words, 70% of incredible is better than reaching 100% of ordinary. In an era of category killers and constant market disruption, you need to think big.

To achieve and measure your OKRs, you need a reliable set of datapoints throughout your organization. You need a reporting system that's dynamic enough to measure each key result without noise or clutter. And this data needs to be accessible and organized in a way that clarifies your progress.

“In other words, 70% of incredible is better than reaching 100% of ordinary.”

ASF Payment Solutions is club management software perfectly designed for organizations that operate with OKRs and other cutting-edge strategic initiatives.

ASF digital reporting system gives you a clear picture of your organizational performance, anatomized down to the most critical datapoints. ASF’s My Club Business Software Suite allows you to produced custom reports that’s scalable to any situation, while providing an intuitive dashboard interface that keeps your entire team on point and pulling in the same direction.

ASF has provided financial management support to health clubs since 1973, so they know how to adapt quickly to market changes. They understand the key metrics driving the industry, and their real-time precision reporting gives you the tools you need to confidently set your OKRs.

Their Reports app tracks all active contracts, attrition trends, payment status, and other service notes to recognize member trends and behavior. ASF’s Point of Sale and Inventory Management apps can help you control costs and tabulate revenue. These and other software products organize complex data in easy-to-understand formats that save time and clarify your entire operation, top-to-bottom. And you can access them from anywhere.

Today’s health clubs need digital tools that help them apply management and performance techniques that have been proven to work for today’s forward-thinking companies. Don’t get left behind.

To learn how ASF can help you upgrade your digital operations or to ask for a demo, visit their website or call 800-227-3859.

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Jim Schmaltz

Jim Schmaltz is a contributor to IHRSA.org