In a world where convenience is paramount, gyms across the country have adapted by moving towards flexible and pay-as-you-go business models.
Fitness brands such as the Gym Group and PayasUGym are offering monthly rolling contracts, as well as membership passes to various gyms for durations as short as one day, without tying members into long contracts or asking them to pay a joining fee. It’s estimated that about 75 new budget or pay-as-you-go gyms are opening every year, attracting about 300,000 new members annually.
So, fitness businesses can no longer rely on annual contracts to lock in members for the longer-term: but what can finance and ops leaders do to keep members coming back?
More than you might think. Research from energy firm JD Power in the utilities sector revealed that billing and payment factors can account for 20 percent or more of total customer satisfaction scores.
So, in this guide, we’ll examine how your team can impact key financial metrics like retention rate, average membership duration and member lifetime value, by focusing on an important, but often overlooked part of member experience: payments.
1. Measure member payment satisfaction
Track the number of payment-related complaints that come in each month, or track the time your team spends handling payment issues.
If gym members commonly complain about errors like being double-charged, incorrect payment dates, incorrect amounts charged, difficulties in making payments or cancelling a membership (the latter often results from confusion about the terms of their contract), then it’s likely your member payment experience is poor.
You could also consider including questions about the membership payments process as part of a wider a member satisfaction survey. Then your team can use the results to plan and implement a strategy for improving membership payments.
2. Vet your member-facing suppliers
Your members won't make a distinction between you and your suppliers, so make sure any third-party providers you work with can be trusted to uphold your service quality levels. Check your suppliers' Trustpilot ratings and review, for example, how many member complaints stem from mishandling by your fee collection agency.
It also helps to retain a level of visibility and control over the payments process, so that you can be more responsive to members when they contact you.
3. Reconsider debt chasing tactics
Aggressive debt chasing can trigger negative online feedback from members and risks creating negative perceptions of your gym among potential new or rejoining members.
Some gyms see the majority of their less flattering social media or Trustpilot reviews coming from disgruntled members who have had negative experiences with debt collectors. These gyms are risking their reputations and their future revenue.
Consider how you can better communicate the terms of membership contracts to new members, and how to resolve payment issues without aggressive debt chasing.
Be sure you speak to your fee collection agency to see how they can help prevent the need for debt collection in the first place, for example by reducing your payment failure rates. If you’re payment failure rate is higher than 0.5%, you should be able to improve it.
4. Be flexible
Most gyms prefer to take membership fees through Direct Debit because of the low transaction fees and low payment failure rates. But not all Direct Debit solutions give you flexibility. Find a provider who lets you collect on any day of the month to bring even more benefits for you and your members.
The Fitness Space is one of the UK’s fastest-growing franchise businesses. Especially important for them is the ability to take payments for new membership sales on any day – in club or remotely - and to flex payment collection to suit their members. Read Fitness Space's story here.
Flexibility in payment dates can also reduce your payment failure rates, since you can allow members to choose when they pay you (for example after they have been paid). This in turn reduces disruption for members and the need for unpopular debt collection practices.
5. Master the data behind retention
Your membership teams may already be leveraging attendance data from their membership management software to identify 'at risk' members, but as a finance or ops leader, you’re well-placed to give your business further insights into member retention.
Ask your Direct Debit provider how they can help you monitor member engagement via your online payments portal, for example sending you real-time notifications so you can see instantly when a member cancels their Direct Debit mandate. This makes sure your membership teams can promptly put into action re-engagement campaigns, which increase the chance of winning your members back.