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When times are tough, all businesses struggle, but service businesses like gyms may find it especially tough. During a recession, people look for ways to cut back on expenses. That may include giving up their gym membership or putting off joining a gym. At the same time, you, the gym owner, have to contend with increased expenses such as electricity, fuel, and rental expenses.
In order to, not only survive, but thrive during a recession, you’ve got to be on top of your game. In this article, I will lay out ten proven strategies that you need to embrace to allow your business to grow in a recession.
Overview
Here’s a quick look at the ten strategies that will be covered in the paragraphs to follow …
- Hire the Right People
- Focus on Established Revenue Sources
- Be Quick to Adapt
- Focus on the Member Experience
- Use Retention Strategies
- Have a new member onboarding process
- Have a communications calendar
- Have a member loyalty program
- Create a member advisory board
- Have a member education program
6. Attend Networking Events
7. Host Local Events
8. Research Your Competition
9. Diversify Your Business Model
10. Stay Away from Long Supplier Contracts
Hire the Right People
It might seem like an obvious piece of advice to hire the right people. Yet, I quite often see gyms that make a fundamental mistake in this area. While it would be nice to be able to employ both front desk and sales staff, not all gyms can afford to do that. Some who may have been able to previously, might even have to cut back on staff during a recession.
Practicality dictates that, often, the sales and front desk roles have to be combined. The problem that too often happens is that the person is hired for a front desk position first and foremost. They are then told that they’ll also have to do some sales work. This is completely back to front. A great front desk person is not automatically a great salesperson. In fact, they may dread the very thought of having to sell memberships.
A gifted salesperson, however, will have a natural ability to engage members at the front desk. That is why you should hire a salesperson and give them front desk duties as a second order of priority.
Use the front desk/sales person example to help you to assess every position in your business. If you need to make cutbacks or combine roles, make sure that you prioritize the skills to maximize the role.
Having hired the right person, it is your responsibility to give them all the tools they need to succeed in their role. Before they go ‘live’ they should have undergone an attentive onboarding process to provide them with both the skills and the confidence to hit the ground running.
Focus on Established Revenue Sources
Membership fees are your core revenue source. Are there ways, even though times are tough, for you to maximize your membership income?
Don’t assume that all your members are struggling to pay for their membership. Even during a recession, you’ll have a decent percentage of members who are doing just fine financially. Some of these people will be willing to pay a premium rate for a premium-level program that provides more services.
At the same time that you offer a premium rate membership option, you should include options at the low end to cater to those people who are genuinely struggling. Provide an alternate day membership along with an off-peak membership that reduces the standard fee by 30-40 percent. Your members will appreciate that you are acknowledging how hard things are out there even if they don’t take up the reduced membership option. Then again, the new options will help to reduce your attrition rate and give your sales team more options when potential members mention price as their stumbling block.
Other options to add membership revenue are a family member add-on and a membership upgrade special. These initiatives can add a few dollars to each member’s monthly spend. Multiply that by several hundred members and you’re looking at a significant monthly revenue boost.
Be Quick to Adapt
During a recession, you cannot afford to carry dead wood. As a result, you need to be able to identify the things that aren’t working while eating up revenue and replace them with something that represents a better use of time and money.
If a training program is proving unpopular, certain group classes are consistently getting low numbers or a sales pipeline isn’t producing results, don’t allow them to just drag along. Be decisive. Change them out for something that will work. Before you introduce that innovation, however, do your research by surveying members about what they want.
A key part of adaptability is being on top of your financial numbers. You need to know exactly what is going on with the financial health of your business. This is more important when times are lean than when you’re raking in the cash. Being on top of the numbers will allow you to know where you have to make cuts and what areas of the business need attention. Do not be the kind of boss who buries their head in the sand during a downturn!
Focus on the Member Experience
As mentioned in the introduction, people react to a recession by looking at their expenses and cutting back on the things that they consider to be dispensable. If your members see their gym membership to be on the same level as their Netflix subscription, you are likely to lose them.
It is your job to elevate the gym membership of the people who frequent your business from dispensable to indispensable. You accomplish that by optimizing the member experience.
How do you know if you are offering the level of member experience that elevates the gym experience from dispensable to indispensable?
Check your monthly attrition rate. This is a figure that you should be intimately acquainted with. If it is above 5 percent, then you have got work to do. A 6 percent attrition rate equates to a loss of 72 percent of your membership base every year. You will seriously struggle to keep your head above water during a recession with those figures!
What are you doing to maximize the customer experience? When a person joins your gym, you should position yourself as a problem solver for them. Treat them as someone special so that when they come through your doors, they are uplifted.
We live in a world where people don’t even look each other in the eye, let alone acknowledge them. Imagine the feeling, then, that your members will experience when they enter your gym and are greeted by a genuinely friendly greeting that includes their name. Then, on the way out they’re approached by an instructor who asks how their workouts are progressing and if there’s anything that the instructor can do to help get them to their goals faster.
If you do not have staff who are engaging, proactive, and super friendly, you need to start training them to be all of those things now. Above all else, it is the personal acknowledgment from gym staff that helps members to develop a sense of belonging.
You can enhance the member’s experience by having regular membership parties, good cause events, and other entertainment events to develop a sense of camaraderie. Why not find a Guinness Book of World Records record that involves some physical challenge and organize a weekend event about trying to break it? You’ll be able to get some local media coverage while also giving your members and community an exciting free weekend event to look forward to during the recession.
Make it your goal, and train your staff, to offer country club level service at a health club level price. Every time a staff member interacts with a gym member they should be thinking about providing a higher level of service than the member was expecting.
Here are three more ways to enhance the member experience during a recession:
- Social media engagement through such platforms as Facebook Groups, Instagram, and Twitter provides great opportunities for you to engage, educate and motivate your members. Take full advantage of them. Use social media to promote the culture of the gym.
- Email Newsletters are a great way to educate your members and establish yourself as their fitness expert. Even better is to provide targeted email newsletters that focus on the specific needs and goals of member groups. After all, members who are focused on losing weight will probably not want to read about ‘5 ways to Add an Inch to your Biceps’. Provide real, in-depth information that delivers an actionable takeaway. If your members come away from every email newsletter with at least one ‘aha’ moment then you will be doing your job.
You should also use email to send personal messages to your members. All members should receive a congratulatory email when they join the gym. Seven days later they send out a one-week anniversary message that reaffirms their decision and reiterates the benefits of a gym membership. A week later, they should get a message that specifically addresses their training goal with at least a half dozen usable tips. From then onward, the members will be entered into the email group that aligns with their training goal.
- Member feedback is the best way to find out what your members want and expect. Make use of regular (short) surveys to find out what you are doing right and what you could be doing better. Invite your members to tell you what they think by making use of the following:
- A suggestion box
- Signs that say something like “Got a suggestion? Let us know.”
- Staff who know how to listen and ask open-ended questions
When you get customer feedback, use it as the basis for your next staff training session to explore ways to better meet customer needs.
Use Retention Strategies
Most gyms lose more members during a recession. By using the strategies in the last section to enhance the member experience, you will be able to minimize that loss. Here are 5 more strategies you can use to keep your attrition rate as low as possible …
Have a New Member Onboarding Process
Many gyms simply sign up new members and let them loose on the gym floor. You need to offer more than that. Your goal should be to stay connected after the sales are made rather than losing the newcomer in a sea of members. Provide them with a welcome letter that spells out their next steps. Make use of new member nurturing programs that incentivize, motivate, and educate. As a guideline, you should aim for the new member to use the gym at least 20 times in the first 60 days of membership. Those that do are far more likely to stay with you long-term.
Have a Communications Calendar
A communications calendar is a written document that spells out what is happening at the gym over the next month. This can be a one-page sheet that your members can take home and pin to the fridge.
As a side-note here, a communications calendar is a great opportunity to sell advertising space to local businesses. If you’ve got several hundred members who have that piece of paper on their fridge, it’s bound to be attractive to the local butchery or health food retailer.
Have a Member Loyalty Program
Gyms that run some sort of member loyalty program have significantly better retention rates than those that don’t. The costs of running such a program greatly outweigh what it costs to replace lost members.
You might come up with a reward program where members can earn a free gift, a service, or a free personal training session after achieving a certain milestone.
You should also celebrate member anniversary dates. If your gym sells protein shakes, you could provide a free shake to members when they hit an anniversary. For new members, that could be when they reach a one-month anniversary. Then, every member can be offered a free shake on their annual membership anniversary. If you are going to do this, make sure that you have excellent communication between your staff. You want the customer experience to be completely seamless.
Create a Member Advisory Board
A member advisory board is a great way to show your members that you are constantly working to integrate services to meet their needs. Ideally, the advisory board should be led by a doctor or other medical professional. It should have two or three gym members on it also. These members should represent the gym community, bringing ideas on what the members want and what they feel is lacking. It can lead to the creation of gym enhancement programs that will entice members to hang around.
Have a Member Education Program
You and your staff should be always looking for opportunities to educate your members. Train them how to use equipment properly, how often to do cardio and which form is best for their goals, and how often they should do weight training. Educate them, too, about the benefits of group exercise and show them how to incorporate it into their program.
Attend Networking Events
Networking with other local businesses is more important than ever during a recession. You’re all in the same boat, so why not work together to get through? A good website to help connect with other businesses in your area is www.meetup.com. There you will find networking events that you and your staff members can attend. Most of these meetings will have 25 to 50 people in attendance. Each of them can become an ambassador for your business.
You should also approach businesses in your local area that are complementary to yours with the idea of cross-promotion. For example, if there is a hair salon in the same shopping strip as your gym, can you work with them on a cross-over promotional deal? One successful promotion that I once did with a hair salon was that new members would receive a free $50 hair salon session after completing their first month’s worth of workouts. Even though I paid $20 to the hair salon for each member who achieved the target, I got a lot of new members from that promotion – and nearly all of them got through that critical first month. That allowed the gym to entrench them as solid members.
Host Local Events
It is always good policy to get involved in what is happening in your local community. During a recession, it’s more important than ever. By hosting local events, you can get your name out there at minimum cost. You’ll also have a constant flow of potential members coming through your doors while establishing yourself as the local fitness expert.
An example of an ideal local event that you could host is a 5 or 10K race. In the weeks leading up to the event, offer training programs to get people prepared for the run. On the day, set up warm-up stations with foam rollers and massage guns, provide free massage services, and hold a clinic on the benefits of incorporating strength training in a running program.
Hold a membership special on the day, or week, of the event. Be sure, too, to have a membership prize draw that allows you to collect the name and contact details of everyone who enters.
Research Your Competition
Never forget that your members have a choice. When times are tough, you need to be offering more than the gym down the road or you are going to lose members hand over foot. To do it better than the competition, you need to know just what they are doing.
Your goal is to differentiate yourself from the competition. You need to establish a point of difference that is compelling enough to get your members to stay with you and to convince new members that your gym is a better option than the competition.
By researching the competition you will be able to find opportunities in the marketplace. You’ll be able to see what’s not being provided in the market. You can then direct your marketing efforts toward that uncontested market niche.
Diversify Your Business Model
During a recession, the smart business operator will look for opportunities to diversify their income stream. As a gym operator, your core income comes from gym memberships. We’ve already talked about ways to maximize your membership revenue.
Can you make better use of the gym facilities during your off-peak times? Most gyms are relatively quiet between the hours of 10 am and 3 pm. Are you able to rent space out to course providers? Can you leverage your fitness and health expertise as a public speaker? How about selling digital products alone? Well-written training courses and nutritional guidelines can provide a substantial income stream. They also have a worldwide reach, opening your income potential beyond your local community.
Stay Away from Long Supplier Contracts
If you sense a recession on the horizon, avoid entering into long-term supplier contracts. When you’re being squeezed financially, you may have to stop stocking refreshments or workout gear that isn’t moving. The last thing you want is to be tied into contracts that oblige you to keep buying the stock that you can’t sell.
Negotiate shorter terms on your supply contracts or, at the very least, include a clause that allows you to get out of the deal if things get really tight.
Summary
Your gym doesn’t have to spiral into the financial doldrums in a recession. By planning for and implementing strategies to keep your business healthy you can sail through the stormy waters and come out the other side in robust condition. Here’s a reminder of the 10 strategies we’ve covered …
- Hire the Right People
- Focus on Established Revenue Sources
- Be Quick to Adapt
- Focus on the Member Experience
- Use Retention Strategies
- Have a new member onboarding process
- Have a communications calendar
- Have a member loyalty program
- Create a member advisory board
- Have a member education program
- Attend Networking Events
- Host Local Events
- Research Your Competition
- Diversify Your Business Model
- Stay Away from Long Supplier Contracts
The time to implement these strategies is well ahead of a recession. That way your business will be pumping along so well that you won’t even notice the turbulence that is happening to the outside world.
