For most clubs, the first quarter of every year is a time when expectations are high and clubs are anxiously anticipating the arrival of the time tested refrain of strong new membership sales, strong retention and strong program sales. January is usually the catalyst month that sets the pace for the rest of this typically strong quarter. Well…cue the dirge or take pre-emptive actions, because the first quarter of 2009 is rolling in like a perfect storm for the underprepared!
Health & Wellness Business Perfect Storm Warning Posted for the first quarter of 2009
The Economy:
Whether one accepts the fact or not, the economy has created an air of uncertainty and bridled caution in the mind of far too many consumers. In the third quarter 2008 new membership sales were down dramatically over the same period in 2007.
Retention Related To The Economy: As well, retention was not as strong as it was in the same period in 2007. For members who are regular exercisers, many are opting to cancel their memberships and exercise at home. For members who are not regular exercisers, the prevailing response is that since they aren't using the club regularly, the cost is an unneeded burden and they are cancelling their memberships at an increasing rate.
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"With all the gloom and doom being touted by the economic "experts," many folks are closely examining any and all potential expenditures."
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New membership sales related to the economy: For prospective members, their annual rush to join for "New Years Resolutions" has been tempered in 2009. With all the gloom and doom being touted by the economic "experts," many folks are closely examining any and all potential expenditures. One of the local television stations (WBIR) in Knoxville, TN ran a story about the "situation" in area health clubs and how they have to offer "significant membership deals" in an attempt to offset the decrease in prospect activity. Marc Onigman reported in his publication "The Stone Hearth Fitness Newsletter" that a national AP Wire Story claims clubs are lowering their prices in hopes of "locking people into long term contracts."
Clearly the economy has had a negative impact on traditional business operational strategies in our industry, but many club operators do not have the understanding of how to not only survive, but to THRIVE in these market conditions. They foolishly lower their prices. Is this a signal that it is time for a change?
Simple answer: YES
Should this change involve "membership pricing discounts?
Simple answer: NO
Increased Competition: In 2008 there came a great throng of new fitness competitors. Many were of the "discount" variety. Uneducated consumers mistakenly believe that due to lower price it is a better financial decision to go ahead and join this type of club so that they don't have to spend as much as they would at what they perceive as "expensive" clubs. Sadly, most of these "discount" operators do not offer new member initial programming designed to encourage a non-exerciser to actually begin exercising like the "expensive" clubs do. So, while the consumer may "spend less," they have no real chance of accomplishing the benefit they wanted and likely needed!
Non-regular exercisers join with good intentions. They need guidance and programming to help them effectively begin the lifestyle change they were seeking when they joined. Simply joining a club does not cause a spontaneous event whereby the person suddenly becomes an exerciser.
With the proliferation of low price operators, as mentioned above, many long time club operators have moved too quickly to lower their rates as their educated coping mechanism in this rapidly changing landscape in our industry.
The Monthly Templates:
January 2009 is a killer of a month for those who opine for a strong start to 2009. Of the 31 days, New Years Day is, as always, not a strong sales day. As the month progresses there are only four good Mondays, four good Tuesdays, four good Wednesdays and four good Thursdays. Sadly, there are five Fridays and five Saturdays and the month ends on a Saturday. There are also five Sundays, but Sundays are generally not good sales days nor are Saturdays or Fridays for most clubs.
February has four of each days of the week and ends again on a Saturday. March is the first month where the layout of the days is favorable for maximum new membership sales performance. Many clubs fail to recognize these issues and, as a result, are underprepared to deal with the reality facing them.
Most clubs do not understand the power of effective goal setting and attainment methodology, and it negatively impacts their true performance potential.
See following example of monthly goal chart…
External Advertising:
As the marketplace has adjusted to the current economic climate, external marketing has become increasingly less effective. It stands to reason that if folks are tightening their wallets mentally and physically, then traditional external advertising cannot possibly have the same positive impact it once did.
Overall Assessment:
Unquestionably, the landscape has changed. Even prior to the downturn in the economy and the proliferation of low priced competitors our industry was with plagued false assumptions as to quantification of "success" or lack thereof. Now is the time for any business that wants to not only survive but thrive in this uncertain economy to shift the dynamics of how they conduct their business. It's time to look to maximum staff performance in a dynamic team environment that focuses on true member service and supportive environment and some marketing and promotionally budgeted funds to focus on member referrals. You know…The number one source of new memberships in our industry!
Without an adequate understanding of the dynamics of maximum performance realization, the first quarter of 2009 will indeed produce the perfect storm for far too many clubs. More…
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