No contracts,No sign up fee’s,No catches,No sales gimmicks…blah blah blah very common phrases from the new kids on the block of late!
Gym contracts are they good or are they bad? Well, from my point I think the consumer has more to win than the club owner and I’ve been a club owner for 12 years. Let’s look at it from these points which of course are my thoughts and not the thoughts of every fitness business owner…
Club owner decides to get marketing company in to run promotion. Here are some facts you as the consumer of a gym membership may not know.
1.Marketing company puts a 6 week strategy together before arriving at the club,they (not club) organise Tv & Radio ads, newspaper advertising ,mail drops,banners, A boards and telemarketing. The average cost for the marketing company which is outlaid by them is 80k-120k. During the 6 weeks Tv & Radio ads will run along news paper ads and telemarketing, gym prospects come into the club where they make contact with a sales person from the marketing company,these guys get paid weekly based on their sales.Their wages form part of the promotion spend. The prospect is offered a cheaper gym membership based on them signing up for a set period of time, usually 18 – 36 months. Now let me make it clear that no person forces the hand of the prospect to buy,ultimately it is their choice,after all they made the appointment and drove to the club. The policy in my club is the following – I sell a gym membership cheap and the consumer saves around $6/7 per week. The consumer commits to me for a period of time and I repay them for that time by offering them a cheap membership. Now here’s where people have a difference of opinion. In my club if you want to cease your membership during the contract time then you pay an early exit fee. This is a NOMINATED FEE you both agreed on before your membership started. This is a great idea because both parties know the circumstance of ceasing the relationship before it commences (like a pre-nup). Most clubs like mine charge $100-$150. Now this is where it gets a little dirty and this is what I don’t agree on. Clubs and Marketing companies that sign members up on this agreement — if you cease a relationship you have to pay out the balance! That means if there is 18 months left and you want out because you don’t want to be there any more you have to pay 18 months worth of payments. Sorry this is not my thing. Early exit fee leaves a better taste and higher retention. If you need to get out of a contract and your stuck in a ‘pay out’ situation, advertise your membership for sale! If you don’t want to be there you shouldn’t have to pay the balance. So onto the next part. The consumer is better off financially when buying into a gym membership because although the cost of living goes up for the gym owner your membership won’t go up for the entire time your in a contract. So you will save more $$$ than initially told. Making sense now?
Not all gym contracts are promoted by marketing companies gyms can run these direct from their clubs as we do offering shorter terms EG: 12 months/6months etc. So if you think you can commit to 6 or 12 months with an early fee then do so. But remember the shorter the contract the LESS amount paid for the early exit fee should occur.
So if a marketing company comes in and spends 100k on advertising etc how do they get their money back? Well, your money from the direct debit that is paid each week, the marketing company collects 60% of it until the debt is paid back.Thats right the gym does not receive all the money for at least 18 months by which sometime some members have left. Who gets the exit fee? Approx. 50% goes to each party…..So running a promotion isn’t what you thought, is it.
The gym owner is not rolling around in your money instantly. But a good club owner will invest your $$ back into the club – another reward for members.
So why have I written this blog? To be honest I’m sick of seeing gyms belittle other gyms with DUMB ads…”No gimmicks,No contracts,No sales tricks,Free 24/7…. Like get an education a you for real? Every club needs direct debits,every club needs contracted direct debits. Why? If you’re asking that question and you own a fitness business you opened for all the wrong reasons. Ego being first and you thinking your smarter than the club down the road second. Go sell your cheap direct debits and no contracts – Good luck with that because you just de-valued your business, I and many others won’t do that the teams and owners work to hard to undervalue their service.
If you’re a consumer and wanting to join a gym and feel comfortable committing to your health and wellness for life then a contract just may suit you. If you find all the options to confusing then just purchase upfront until you feel comfortable with commitment.
If you’re a fitness business owner and you think this is a whole lot of crap – look up look around
Your wealth is in what you OWN and not what you OWE.