Maximizing Revenue Per Member Through Strategy, Sales and Service

www.brentdarden.com

How can you leverage existing customers into more business?

“Ancillary” Income by definition

• Webster - “secondary, auxiliary, supplemental, additional, incremental.

• IHRSA - “revenue from sources other than membership dues and initiation fees.”

Benchmarking “non-dues” revenue of

68%

32%

Dues/ Iniation FeesAncillary Fees

TYPICAL CLUBS SURVEYED

Benchmarking “non-dues” revenue at

32%

68%

Ancillary FeesDues/ Initiation Fees

TELOS FITNESS CENTER

Clubs have one thing retail businesses crave...

Repeat Foot Traffic

The Impact & Influence of Incremental Sales.

Increasing revenue per member can pay big dividends.

For Example:Total # Members = 3,000 x Additional Revenue Per

Member/Per Month of $ 2.00 = $ 6,000 Revenue Per Month

Increasing revenue per member can pay big dividends.

For Example:Total # “Active” Members = 1,800 x Additional

Revenue Per Month of $ 10.00 = $ 18,000 Revenue Per Month

Increasing revenue per member can pay big dividends.

For Example:Total Member “Visits” Per Day = 600 x 10% “Upsell”

Success = 60 Members x $ 1.50 Additional Revenue Per Visit x 30 Days = $ 2,700 Revenue Per Month

Generating incremental sales actually helps member retention.

“ The more members spend the longer they

stay!”

Member Connections = Member Retention

Maximizing revenue per member through strategy, sales and service

Competitive Lodging Industry - Lessons

Lodging Industry REPVAR Strategy

• REV =Revenue

• P = Per

• A = Available

• R = Room

REVPAR

Generating Incremental Sales

• Mini Bar

• Convenient Bottled Water

• Internet Access

• Retail

Generating Incremental Sales

• Pay Per View Movies

• Laundry Service

• Phone Calls

• Fitness Center Usage

• Room Service

• Gift Shop

• Restaurant

Generating Incremental Sales

Lessons from Cinema/ Theater Industry

Approximately 70% of Gross Revenue is

derived from movie tickets

Profit contribution is approximately

57%

Cost of the product is 52% - 55%

Approximately 30% of Gross Revenue is derived from

concessions

Cost of the product is 15% - 20%

Profit contribution is approximately

43%

Lessons from Cinema/ Theater Industry

“Something sweet, something salty, & something else”

Generating Incremental Sales

Suggestive selling works!

Generating Incremental Sales

Lessons from the Fast Food Industry

“Would you like to supersize that?”

Up-selling works!

Strategic Approach to “Added Value”

Current Customer

1Opportunity

Analysis

3Potential Value

Adds

2Delivery

System(s)

4

Current Customers

1 • Characteristics

• Demographics

• Behavior Trends

• Purchasing Patterns

Step 1: Define Your Current Customers

Stay at Home Mom

Retired

Business Professionals

College Students

DEFINING CURRENT CUSTOMERS

Potential Value Adds

2“What might our members

want/ purchase?

Step 2:

Generating Ancillary Income Through Membership Options

TELOS Individual Membership Options:

Basic Membership

$450 initiation fee

$115 per month

Performance Membership

$450 initiation fee

$134 per month

Performance Plus Membership

$499 initiation fee

$285 per month

TELOS PERFORMANCE PLUS Membership:• Unlimited Yoga and Pilates Mat & Tower Classes• $100 credit towards private sessions:

– Professional Training– MAT– Private Pilates– Nutrition

• Buy one get one free Massage each month ($80 value)• Permanent Kit Locker & Laundry Service ($30 value)• Two meals per month at Caesar’s Café ($20 value)• DFW Society Membership ($42 value)• Four complimentary guest passes each month ($80 value)• Complimentary child care • Complimentary Educational Lectures/Seminars

Generating Ancillary Income Through Membership Options

Potential Profit Contributors

• Featured Service

• Professional Trainers

• Team Concept

• Systematic Approach

• Accountability Measures

• Supportive Culture

Personal Training

• Fee Based

• Affordable

• Social

•

Group Training

Potential Profit Contributors

• Introductory Offer

• Fee Based Program

• Membership Option

• Private Training

• Non-Member Participation

• Dedicated Space

Pilates & Yoga

Potential Profit Contributors

• Market Research

• Member Demographic

• Club Culture

• Member & Non-Member Pricing

Spa & Therapy Services

Potential Profit Contributors

• Introductory Offer

• Diet Analysis

• Resting Metabolic Rate

• Registered Dietician

• Nutrition Coach

• Virtual Consultations

Nutrition

Potential Profit Contributors

• Wellness Programs

• Competitions

• Social Events

• Sponsorship

Programs

Potential Profit Contributors

• Nutritional Products

• Supplements

• Self-Serve

• Location

Retail

Potential Profit Contributors

• Open/ Entry Space

• Limited Selections/ Inventory

• “Trunk Shows”

• Retail Responsibility

Pro Shop

Potential Profit Contributors

• Profitability

• Juice/ Smoothie Bar

• Meeting Space

Cafe/ Conference Room

Potential Profit Contributors

• Salon

• Anti-Aging Medicine

• Physical Therapy

• Chiropractor

• Martial Arts

• Shoe Shine

• Recreational Groups

Other Services/ Tenants

Potential Profit Contributors

• Kit Locker

• Laundry Service

• Full Locker

• Executive Locker Room

Possible Add-ons/ Upgrades

Potential Profit Contributors

Strategic Approach to “Added Value”

Current Customer

1

Opportunity Analysis

3Potential Value

Adds

2

What makes sense for your club? Why?

Opportunity Analysis

3• Matches Business Philosophy?

• Relevant/ Add Value?

• Sizable?

• Deliverable?

• Profitable?

Step 3:

Opportunity Analysis

3

Step 3:

Opportunity Analysis Calculation

Concept: _____________Potential Customers: _________Revenue Estimates: customers x price = $Expense Estimates: - Direct Cost = _____ - Indirect Cost = _____ - Overhead Allocation = _____Profit Contribution: _________

Opportunity Analysis

3

Step 3:

“choosing what not to do is often more important that choosing what to do.”

Maximizing revenue per member through strategy, sales and service

Delivery Systems

4

• Marketing Channels

• Operating Processes

• Accounting Functions

• Staffing Responsibilities

• Staff Training

• Incentive Plans

• Overall Service Experience

Step 4:

Step 4:

You must: Ask for the Business

Delivery Systems

4

Step 4: Delivery Systems

“Begin with the end in mind” during the new

member enrollment process.

Member ExperienceManagers

Delivery Systems

4

Delivery Systems

4

“One Throat To Choke”

Step 4:

Maximizing revenue per member through strategy, sales and service

Know Your Best Customers

• Biggest Spenders

Tale of Two Members

John Doe: Profile• Attends 5 times a week

• Swims/ Strength Training/ Cardio

• Pays monthly dues of $115

• Does not utilize any “services” or spend on “added value” offerings

• A “core” member known and enjoyed by staff

Total Annual Spent: $1,380

Tale of Two Members

Jane Doe: Profile• Attends 4 - 5 times/ week

• Personal Trains / Private Pilates Sessions / Therapy

• Pays monthly dues of $285

• Personal Trains 3x/week, Private Pilates 1x/ week, Therapy

2x/ month

• Frequently eats in the cafe, occasionally makes Pro-Shop

purchases

• A “core” member known and enjoyed by staff

Total Annual Spent: $32,000

• Biggest Spenders

• Long Term Members

• High Attenders

Know Your Best Customers

In the future we must move toward an “Experience Economy”.

Capitalize on Your Captive Audience

Maximizing Revenue Per Member Through Strategy, Sales and Service

www.brentdarden.com