You can’t afford to lag behind in the competitive fitness sector. Staying ahead of the curve requires your business to maintain a healthy cash flow. In this article GoCardless offers some expert tips on getting the best from your payment methods, to ensure your gym blows away the competition and keeps on delivering, day in and day out.
Cash flow equals confidence
Knowing how much cash you’ve got coming in each month is a vital part of confidence in handling everyday business expenses. This peace of mind helps you plan for more exciting decisions, such as investing in new fitness equipment or hiring instructors to teach awesome new classes.
That’s why collecting membership fees is the lifeblood of any successful gym, large or small. The recurring payment method you choose for your gym should be carefully evaluated to make sure it’s giving you optimal performance.
Direct Debit is a popular choice for many gym owners. As well as creating business efficiencies, choosing the right Direct Debit provider can improve the level of service you offer, helping to develop a loyal membership base and, most importantly, keep members coming back to your gym.
The following key focus areas can help determine whether your current Direct Debit provider is really the best choice, both for your gym business, and for your member base.
Understand fees and hidden costs
Before deciding on a Direct Debit provider, gym owners should make sure they fully understand the cost implications. Some providers charge for setup, failed collections and making payment amendments to fees or collection dates. These charges can soon add up as the number of collections increases.
At GoCardless, we only charge a fee for successful collections. Our simple and transparent payment terms enable gym owners to forecast payment collection costs more accurately, based solely on the number of anticipated, successful collections. We also have no minimum contract, so you only pay for what you use.
Automated payment handling, all across Europe
Most gym owners welcome systems that minimise admin, leaving more free time to concentrate on operational and service driven aspects of business. When choosing a Direct Debit provider, you should check if collections are triggered manually or automatically.
GoCardless’ fully-automated system ensures Direct Debit payments are securely transferred into the business account, on time, every time, regardless of other pressing business matters. Retries can be triggered automatically after first-time failed collections, removing the need for time-consuming manual reminders.
What’s more, for UK gyms looking to expand into Europe, the GoCardless dashboard offers a simple all-in-one way to collect Direct Debit payments from all over the eurozone, using a single account.
Flexibility and control over payments
Allowing customers to choose when payments are taken is a simple way to increase the number of successful collections. It offers customers more control over their personal financial management.
Failed collections often happen because a Direct Debit payment date falls before a member’s salary is due. Setting the collection date to fall after payday ensures available funds and usually resolves non-payment issues.
It’s also important for your Direct Debit provider to deliver real-time notifications. This highlights initial failures immediately, allowing you to contact members to resolve problems. Doing so ensures minimal delay in payment collection and creates a positive experience for members, who may be unaware payment had failed.
While any failed collection attempt is undesirable, it’s worth bearing in mind that 95.5 per cent of Direct Debit payments are successful. A gym with 1,000 members paying monthly by Direct Debit can expect an average collection failure rate of only five payments per month.
In addition to the cost saving of handling failed collections internally, there are other factors worth considering, such as the impact on customer relationships.
“Here at Big Health and Fitness in Luton, we manage all conversations with members regarding payment failure ourselves,” says gym owner Graham Waugh.
“In many cases, there’s a simple explanation. A personal call from us ensures the issue is resolved quickly and in a friendly, non-intimidating manner.
“We pride ourselves on our customer service, so it wouldn’t make any sense to outsource the payment failure process to a third party.”
Easy access for members
Direct Debit is a great choice for members needing a hassle-free, seamless payment method. As a gym owner, you should ensure your Direct Debit provider makes it easy for members to activate payments and amend details.
It’s important to ask your Direct Debit provider the following questions:
Can Direct Debit payments be set up online and by phone, as well as in person?
Can information, such as changes to bank details, be updated easily and swiftly to ensure no interruption in payment collections?
If you’re setting up a Direct Debit payment option for members, you should ask your provider the following questions:
How soon will I be able to make collections?
Do I need a service user number (SUN) from the bank?
Will I be approved to collect Direct Debit payments even though I have no history of doing so?
“I’ve recently started to collect monthly member payments by Direct Debit, via a seamless integration with ClubRight. It’s been a revelation. Setting payment dates that suit our members has enabled us to offer an extra tier of customer support, which members have appreciated,” says Angus Browne, owner of Brownes Boot Camp in Brentwood.
“In our first few months of collection we’ve achieved almost 100 per cent collection success, with minimal manual interference.”