1How do I calculate the total number of days impacted by my club closure?
Start with the date your club closed, when you stopped billing and your anticipated opening date and member billing date.
- If you typically bill on the 10th of the month (March 10 and April 10) and you closed on March 23, there is a member CREDIT period of 18 days (March 23 to April 9)
- Let's say you didn't stop billing until April 15, so that's 30 days CREDIT (April 9 to May 9) where member paid for but could not access the club.
- If you plan to open on May 16, then there is a member DEBIT period of 26 days (May 16 to June 9).
2How do I weigh or calculate the impact for my members and my cash flow?
- First one needs to understand how many types of the membership agreements you offer. Common examples include “term” vs “no-term”, or “paid in full”.
- Do you bill on the same day every month for every member? Or, is your billing date unique to each member agreement?
- For each membership agreement type, determine the net prorated value based on your net proration days above.
- In the example above, the net prorated days of CREDIT is 22 days = (18) + (30) + 26.
3Should I prorate or not prorate?
- Based on the impact analysis you have just completed, decide if you deem the impact material enough at the club and individual member level to warrant a per-member change.
- If you deem the impact to be immaterial, then no proration is a viable option. Assessment of member reaction to no proration is a critical part of your overall evaluation.
4If I want to prorate, how should that be implemented?
Based on your typical membership agreement term, there are two options to consider. The two options impact your members and your cash flow considerations differently.
- Extend the membership term. In the example outlined in item 1, you would extend the term by a net credit of 22 days. If the original term date was December 31, 2020, you would be affording the member to continue to use the club through January 22, 2021 for no additional membership fees.
- Apply outstanding net credit to club dues in the next billing cycle after the club re-opens. In the example outlined above, if your membership dues are $20, then the member would be entitled to a net credit of $14.67 (daily rate of $20/30 days). Such credit would be applied to the member's June billing, therefore the net payment would be $5.33.
5What else should I consider regarding billing?
Based on your membership agreement types, it is important to consider how you want to handle personal training and other recurring services, like annual fees.
You should also take into account how you want to handle the timing of annual or enhancement fees. Many brands plan to push annual fees that would have otherwise been due while the club was closed, as well as annual fees coming due within first 30 days of opening to a later date (i.e., 45 or 60 days after club re-opens).
For ABC clients, there are reports you can generate to see the various membership types and their status. We will be publishing several refresher training videos in the coming weeks.
6I have decided on the plan, what should I communicate to members?
Ease of engagement and members’ ability to understand their impact will be at the core of your communication and should influence your decision. Will your front desk staff be ready to answer membership-related questions?
7I’ve never stopped billing. Does this apply to me?
For those club that were able to continue billing their members during the club closure, these billing and related credit alternatives may still apply should you choose to provide them with a credit for the time your club was closed.