In a growing health club industry, with an increasing number of competitors and rising operating costs, establishing a solid operational model and financial plan is more important than ever. Some health club brands focus on creating better promotions and marketing to drive membership sales. Others seek to offer more and more fitness services and programs, or target the management of every penny to insure costs are contained. The holistic approach as to how revenues are optimized, however, can sometimes be overlooked and may represent an even more significant opportunity that can significantly impact the bottom line.
How can health club brands optimize their revenues in 2020 and beyond? Addressing several interconnected factors can make a big difference. Here are the five key aspects of health club revenue optimization that operators should be considering in 2020.
1. Having The Right Data
By analyzing member data, health club operators are able to more effectively identify key insights and prioritize strategies that drive growth, retain members, and regain memberships. In a recent article, Health Clubs Must Become More Driven By Insights From Data, ABC Financial Services CEO, Bill Davis, had this to say about the importance of data in today’s health club industry environment:
“Companies in the health club industry that have learned how to turn data into insight will be the ones that have greater success. Forrester research refers to these companies as “insight-driven businesses.” They are smart enterprises that use data, analytics, and software in closed, continuously improving loops to differentiate and compete. ABC Financial Services has helped many of its clients achieve their business objectives by doing just that.”
Collecting the right key data points and understanding how to gain insights from those is an underlying foundation of revenue optimization.
2. Segmenting Your Members
When data is effectively gathered and analyzed, segmenting members into relevant groups based on their past member purchases, interests, or other factors becomes possible. Market segmentation is critical to gaining insights and to applying the right approaches to the right members at the right time.
As this article on how health clubs must embrace digital transformation to compete in the decade ahead reflects, today’s brands often struggle to deliver tangible personalization. From the initial discovery stage and product or service recommendations to post-sale support, developing a 360-degree view of what members need across channels helps highlight where a business is providing exceptional service and where improvement is needed. Health club operators can then connect with prospects in a more personalized way and provide anticipatory support.
3. Creating A Systematic Revenue Cycle
A disciplined process that systematizes revenue optimization by effectively managing the revenue cycle is essential. The revenue cycle encompasses all administrative functions that contribute to the capture, management, and collection of member revenues. In the basic terms, this is the entire lifecycle of a member, representing all steps from signing on a new member, to processing and collecting their payments, to servicing them as a member. The key components of executing any health club revenue cycle are disciplined systems, the right technology tools, and a trained and capable staff.
4. Effective Ongoing Evaluation.
Performing data analysis enables operators to predict what members will do and how the market is likely to behave at a given point in time. With these unique insights at hand, you can determine what aspects of your business could be optimized to generate higher revenue, whether that’s evolving your pricing strategy, enhancing customer lifetime value, diversifying marketing channels or expanding service offerings.
Measuring what matters is key to managing any business. The health club space is constantly changing. What’s effective and yields results today may change tomorrow, so making certain that you’re continually re-evaluating your services, pricing, and processes to maximize your revenue is key.
5. Having An Experienced Partner.
A challenge to effective revenue optimization is having a disciplined process, the right technologies, and well-trained staff. Orchestrating these components is harder than ever.
As a recent article on evaluating new health club technology attests, it is becoming more difficult and even overwhelming for business and health club operators to navigate the intricacies of revenue optimization or on their own:
“Seven in ten business leaders today are worried about their ability to adopt new technologies according to the 2018 Insight Intelligent Technology Index. 72 percent of business owners feel overwhelmed by their roles and responsibilities according to a 2017 survey by the firm The Alternate Board…This is not surprising given that most business owners, including health club operators, have so much to do with little time to do it in the midst of a period of rapid technological and business change.”
When it comes to optimizing health club revenues, having a trusted and knowledgeable partner that understands how to construct a disciplined revenue optimization process, with the right tools, and well-trained staff is essential to gaining the right insights that help achieve growth, better profitability, and superior member experiences. When selecting a vendor partner for your health club or gym business these are important factors to keep in mind. ABC Financial is the partner of choice for leading fitness, health club, and gym brands. The team at ABC Financial is here to help you optimize your revenues by lending its decades of industry experience. Let’s discuss how you can best prepare for 2020 and optimizing your health club’s revenues.