Help! How Can I Prevent Severe Member Attrition This Summer?

Kids laughing, playing in water at outdoor summer camp

Summer’s coming and I’m worried. A lot of our students, both children and adult students, took extended vacations last year and then never came back.

Any advice you can give? Ways I could be proactive … increase my chances that students will take part in training during the summer and return after vacation?

Korbett Miller’s Answer on Preventing Summertime Attrition:

You’re not alone. Summer is typically a challenging time for Martial Arts schools. We’ve had downturns in our enrollment and our gross/net almost every summer since opening our school in 1996.

In the beginning, when we didn’t have any financial cushion, it was desperation and panic in the summer. As my school became more viable, I began to just accept the fact that summertime was a down period and part of a business cycle. I resolved that there wasn’t much I could do.

A few years ago though, I realized that just isn’t true. You CAN do something about it. You CAN have a profitable, stress-free summer by taking some purposeful actions.

Here are two categories I recommend you consider. These will help create a sustainable summertime and a fun environment to maximize profitability and minimize member attrition.

#1 – Make Decisive, Positive Changes in Your Culture

First and foremost, everyone who has earned a black belt understands the value of commitment. Martial Arts is about consistency and commitment. Commitment is staying with something even when it’s a challenge or obstacles stand in the way.

Action Step: Make sure “commitment” is part of your instructors’ vocabulary and stump speeches, so that “commitment” is being reinforced with students.

Second, hosting events at your school is a great way to keep your culture fun and exciting, and your students involved and committed to training.

Action Step: Schedule fun events each week in your school. Take advantage of the warm weather. Go outdoors if possible to change things up.

Here are some event ideas for kids and adults:

Kids

  • Balloon Training
  • Water Balloon Toss
  • Dunk Tank Day (each year we have a “Get Back at Instructors Day”!)
  • Chux Days
  • Obstacle Course Days Ninja Warriors

Adults

  • Host a BBQ
  • Go hiking with your students
  • Host a special seminar

#2 – Change the Mechanics to Change the Mindset

Whether you offer ongoing or term memberships, I strongly suggest NOT offering summer holds or freezes. Here’s why:

If you “hold” people’s tuition during the summer, this is the mental conversation that you and your families will have come September when they are no longer attached to your school financially or physically:

Parents: “Johnny’s done Martial Arts for a while now. There’s that new sport, _______ or activity _______, he wants to try. I will just call and tell them we’re not coming back.”

Now here’s the mental conversation if you don’t “hold” someone’s membership for July and August, and they continue to make payments.

Parents: “Ok, I have paid for two months over the summer. I’m going to get my money’s worth with tuition. Johnny starts back right after Labor day.”

It’s a completely different mindset.

Action Step: Don’t offer summer holds or freezes. If you offer term agreements, credit the missed time to the end of the student’s enrollment period.

If you offer ongoing agreements, stress that you want to keep the student enrolled in the program and offer FREE private make-up classes for the weeks they missed.

This simple shift in the mechanics of how you run your school can dramatically change the complexion, cash flow and culture of your business in the summertime.

I hope this helps and wish you a successful, profitable summer! If you have any other questions, feel free to comment below or send me an email.

Thanks,
Korbett Miller

Korbett Miller has been teaching at his Martial Arts school in Kirkland, WA for the last 17 years. Korbett still actively trains in Muay Thai and Brazilian Jiu Jitsu, and most recently received his Black Belt from the legendary Saulo and Xande Ribeiro and won the Brown Belt Senior II World Championships in Jiu Jitsu. He is most proud of his three daughters and 17 year marriage to his wife, Elise.Visit http://www.de-mythify.com to learn more about Korbett’s book and mini-course on finding freedom in a small business. Korbett can be reached at korbett.miller@gmail.com.

New Membership Strategy Kit!

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5 Tips to Selling Memberships during a Recession

Recession graph on computer screen

We have read the headlines and listened to newscasts of the global economic crisis. Consumers are fearful and are not spending their hard-earned dollars as freely as they did in better times.

Traditionally, the health and fitness industry has not been adversely affected by economic downturns. Consumers spend money on necessities and good valued essentials. What can be more important than one’s health?

Listed below are five tips to selling fitness memberships during a recession. See if you can add more, and share this article with your staff.

1) Sell yourself.
The first person that needs to be sold on investing in one’s health, especially during downturns — be it financial, emotional or physical—is you, the membership advisor (I would go as far to say that every employee must feel the same way).

Believing in the value of exercise is not an option. Everyone knows the value of exercise, and now more than ever, must believe that exercise helps one’s physical and mental well-being. This helps overcome the emotional and physical challenges that we currently face and that lie ahead. Once you embrace the fact that living a healthy lifestyle is a 24/7 attitude in good times and in bad, you will close more sales.

2) Sell with passion.
Questions membership advisers must ask themselves are:

1. Are you exercising?
2. Do you believe in the product that you are selling?
3. Do you practice what you preach?

The biggest component to selling anything is emotion. People buy on emotion. They can sense whether the representative is sincere or just putting it on to make the sale. Today’s consumer is very savvy. Do not underestimate their ability to see right through false emotion and excitement. Membership advisors must have a burning passion for fitness and living a healthy lifestyle. That passion must flow through their presentation and engulf their prospect.

2) Ignore the negativity.
Membership advisors should not get caught up reading doomsayer headlines and watching stock market results or chaos around the world. Yes, they must know what is going on, but, should not dwell on it. They should stay away from negative people. Everyone knows who they are. Have them run, not walk, away from them. Being distracted from their daily “success cycle” will only make matters worse.

Membership advisors must keep their PMA (Positive Mental Attitude) in check every day, no matter what is going on around them or in their own personal lives for that matter. They must stay focused.

3) Provide value.
Consumers are evaluating where to spend their hard-earned dollars. Membership advisors must make the value proposition relate to their goals and fitness needs. Showing prospects the value of starting an exercise program, and that starting now, makes more sense than ever. They must explain how spending less than $2 per day for a fitness membership (some may be as little as $0.50 and others as much as $5 per day) is a great value, especially when you determine what their daily spending habits are.

Check out these stats. According to the National Coffee Association, the average yearly coffee consumption per person in the United States is close to 4.4 Kg. Among coffee drinkers, the average coffee consumption in the United States is 3.1 cups of coffee per day. That adds up very quickly when you talk about two to four cups of coffee per day.

You probably don’t know that Americans spent 2 million on cosmetics last year alone and that cutting out cigarettes—whether you light up once or more than a dozen times a day—can save you hundreds, if not thousands, of dollars each year. A pack of cigarettes now costs more than $5 on average— with some states tacking on additional taxes that raise the price even more.

In New York City, local taxes have pushed the cost of a pack to about $10. I can add to this list, but you get the point. Members can join your program for a low fixed cost and enjoy the benefits of living a healthy lifestyle. Prepare your team by having membership advisors list as many cost benefit savings as they can.

4) Empathy versus sympathy.
Empathy is the capacity to recognize or understand another’s state of mind or emotion. It is often characterized as the ability to put oneself into another’s shoes, or to in some way, experience the outlook or emotions of another being within oneself.

Sympathy is a social affinity in which one person stands with another person, closely understanding his or her feelings.

Membership advisers should not sympathize but empathize with prospects. They must understand their situation but not get caught up in their story. Bring the conversation back to results and benefits of joining your program. Turn each negative into a positive.

People on a tight budget usually don’t have much to do other than watch TV, read, and surf the web. That gets boring quickly and only encourages a less than healthy lifestyle. They can be at the gym, exercising, socializing, networking, and making new friends all for a low monthly fixed fee. They can read, surf the web, and watch TV while working out.

Selling memberships is not just giving a “Vanna White Tour,” as my partner and senior vice president, Deana Valente, calls it. Or as my good friend and colleague Casey Conrad calls it, the “Disney Tour,” and asking the all-too-familiar closing statement, “So what do you think?”

Selling is a profession and selling memberships is no different. Remember there is always a sale made during a tour of your facility. The consumer sells you or you sell the consumer. Which do you prefer?

Author: Tony Santomauro

Profit & Loss Statements: What Every Business Owner Should Know

As an owner or manager of a business I’m sure you have heard of Profit and Loss (also known as P & L). But do you know what it is and understand its components?

It”s important to understand in order for you to talk knowledgeably with your managers, bankers, tax advisors, and investors. In this article, I”ll show an example of a P & L Statement and explain what the terms mean.

A Profit and Loss Statement or Income Statement is one of the documents that show the financial condition of a company. Other documents include a Balance Sheet, Cash Flow Statement, and the Statement of Retained Earnings.

Here is an example of a P & L and an explanation of each item:

ABC Example Company, Inc.

Profit and Loss Statement
For the Year Ended December 31, 2011

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The first section of the Profit and Loss Statement is the heading which shows the name of the company and the period of time for which the statement relates. Every Profit and Loss Statement is for a specified period of time. It is usually for one year but could be a week, month, quarter, or any other time period.

The first line of the P & L, after the heading, is Sales, or Gross Revenue. This is all the money reported for sales of products and services. The term gross is used in business to mean that the item is shown prior to deducting certain expenses.After expenses are deducted, the term used is Net.

Next are Discounts and Returns which must be subtracted from the sales to arrive at Net Revenue. On occasion, you will see these first three lines shown as one line which would read as Revenue Net of Discounts and Returns.

After that comes the Cost of Sales. These are costs which can be directly traced to the products or services sold. Examples of such costs are the purchase costs of items sold, labor associated with making the products or providing the service, and sales commissions.


Net Revenue Less Cost of Sales arrives at Gross Profit or sometimes called Gross Income.

Again, it is called gross because there are still some expenses that must be deducted to show the net profit or net income. Those expenses are called the Operating Expenses. These are the expenses that cannot be directly traced to the products or services sold. Occasionally you will hear these costs be referred to as Overhead Costs. Examples of operating expenses are owner and management salaries, marketing costs, utilities and the like.

After the operating expenses are deducted, we arrive at *EBITDA. This is an acronym for Earnings before interest, taxes, depreciation and amortization. EBITDA is a key indicator for companies that have a large amount of debt and/or property, plant, and equipment (fixed assets). This line shows the bankers and creditors how much money is available to run the business going forward. EBITDA is sometimes referred to as operational cash flow. This is generally not a line that you would see on the P & L of a small company with little debt or fixed assets.

Interest and taxes are self-explanatory. Depreciation is the term used to spread the cost of fixed assets over a period of several years. For example, a building is purchased for $500,000. Rather than showing this cash outflow as an expense in year one, the building would be placed on the balance sheet as a fixed asset and depreciated over say 30 years. So the depreciation expense that you would see on the Profit and Loss Statement would be 1/30th of $500,000, or $16,667.

Amortization is a similar term used to account for items over a period of time greater than one year. It usually refers to loans.

After interest, taxes, depreciation and amortization are deducted, we arrive at the last line which is called Net Income. This is sometimes called the bottom line. We started with Sales, which is the top rung of the company ladder, and as we deducted certain items, we descended the ladder to arrive at the bottom rung or bottom line.

I hope this brief explanation of a Profit and Loss statement helps you in all your future discussions regarding your business’s profitability.

Of course, should you have any questions, feel free to contact me at mconnor@membersolutions.com.

About the author: Michael Connor is the Director of Finance for Member Solutions. He is responsible for the financial reporting and budgeting process for Member Solutions as well as overseeing all cash flow and managing banking relations.

How You Handle Membership Cancellations Is Just as Important as How You Handle New Enrollments

"I Agree" checkbox on membership contract Terms & Conditions

20% of calls to the Member Solutions’ call center are about customer cancellation inquiries. It can be the most challenging type of call. A member has stopped attending class, has stopped making payments, and wants out of the membership agreement.

Although you as the business owner are legally correct to enforce the terms of the contract, it doesn’t change the member’s view on what they perceive as “the right thing to do.” Most times, the member does not understand why he/she is being held to terms when he/she voluntarily stopped attending. This situation creates conflict and a disgruntled consumer.

An unhappy consumer will communicate the experience to as many people as possible. With social media and review sites readily accessible, we often see disgruntled consumers post untrue and negative statements. Readers of these posts do not have all the facts, and many times perceive the biased version as the truth.

The good news is that you have the ability to turn a negative experience into a positive by implementing any of the following suggestions into your business policy.

Here are a few ideas to help defuse this situation for your business:

1. Send Member Solutions a hard copy of your signed membership agreement to store.

Many disputes are averted simply by our representative’s ability to immediately present a signed copy of the agreement. The signed document reinforces the terms, including the rights for cancellation. Seeing the terms again in writing is sometimes enough ammunition to diffuse the dispute.

2. Build a cancellation fee in your membership agreement.

Select a dollar amount that may be equal to 30, 60 or 90 days’ notice. Some of our most successful clients use this option.

3. Create a term rate that is more attractive than a month-to-month rate—and include a cancellation fee.

If a customer wants to cancel prior to the end of the term, the cancellation fee equates to the difference between the two choices multiplied by the number of lapsed months in the agreement.

Here’s an example: The month to month rate is $100.00 per month. The term rate is $75 x 12 months. The cost difference is $25.00 per month. If the term customer wants to cancel 6 months into the agreement, the cancellation fee would be $25.00 x 6 months = $150.00.

4. Make sure your cancellation terms are clearly part of the signed agreement.

 
Discussing Contract Membership Cancellation

 5. Offer a settlement when the account becomes 90 days delinquent.

Most Member Solutions clients choose to settle for 50% of the remaining balance. This option saves relationships and provides you with some of the principal balance that you may have not collected otherwise.

Additionally, a contract cancellation opt-out method may assist with your lead-to-membership conversions. Many people, especially in this economy, don’t want to commit to long term agreements and therefore won’t sign a term agreement that doesn’t allow them a method to break it.

Implement these suggestions to effectively handle membership cancellations. Ultimately, ending a business relationship on a positive note will aid member retention and referrals.

What membership cancellation terms have worked for your business? Have a tip to share? Comment below.

Margo Stauffer is the Director of Customer Service for Member Solutions.