If you haven't noticed, things don't stay the same for long. The economy was terrific and now we have a recession. You lose a staff member, a new club opens around the corner, people get laid off from work, your promotional actions didn't give you the response you expected. You're wondering if you should discount your prices, raise them or keep them the same.
The key tool for keeping your finger on the pulse of your club and its performance is by using statistics. Having a good statistical management system allows you to manage and control your club. Just as a driver of a car looks at the dials of his car to determine its speed, fuel level, time, distance, battery life or oil level in order to determine the health and performance of his vehicle, so does a club need its dials. They are the indicators of the viability and performance of that enterprise.
What is the product of a Club?
A club just like any other business has to produce a product or service. This product has to be measurable or it is not a product. In the case of health clubs, this product is known as the Valuable Final Product (VFP) for its members. IHRSA's John McCarthy once pointed out that the longest silence he ever heard was when I asked club owners do define their product.
If you know your product, then you can figure out the statistic that shows the quantity of the product being produced or obtained. An example of a VFP is Enthusiastic Members participating on a regular basis at the club and referring new members. With this product you can figure out the key statistic in the club because what is really being measured is participation. Clubs are in the participation business.
There are many types of numbers to keep. There are numbers that show the performance of the club, the divisions, the departments and the performance of the individual staff member. Each staff member should have some statistic that shows his or her productivity.
Why Keep Numbers?
These are some of the reasons you want to keep the numbers:
- What gets measured and rewarded gets done.
- You can see if things are getting better, staying the same or getting worse.
- You can see success from failure.
- Helps determined future strategies.
- Managing by the numbers is better and safer then by operating on hearsay, feelings, hunches and personality contests.
- Statistics gives you the facts, and nothing but the facts.
- Lets the staff know how they will be measured and rewarded.
- Tells you what needs correcting and strengthening.
- Key to performance evaluations.
- If you can't measure it, it's probably not worth doing.
Graphing the Numbers
Lots of clubs keep statistics and look at their numbers, but don't graph them. A statistic is used to make comparisons between now and an earlier time period. Do we have more members this January than last January? Do we have better retention this month versus last month? Graphs allow you to make the comparisons easily and quickly and see the trends affecting your club.
Interpreting the Numbers
The numbers will show a relationship. We know that if referrals go down so will new memberships, which will affect the EFT trend. There are a lot of strategies for improvement, depending on the circumstances. Knowing what questions to ask can help you come up with solutions:
- Am I getting enough people into the club?
- Do I have a sales or marketing problem?
- Are the salespeople closing at least 65 percent of their tours?
- Am I getting enough referrals?
- Do we promote enough and to the correct demographic?
- Is my staff trained?
- Are any staff members affecting the club in a negative way?
- Am I rewarding and acknowledging the marketing and sales people for their accomplishments?
- Is my staff really motivated?
- Is our advertising getting the response I should be getting?
- Is our pricing correct?
- Determine what you want to produce. What is the VFP for the club, divisions, departments and each staff member?
- Identify the correct statistic to measure that VFP.
- Develop a system for tracking those statistics. Gather statistics for such items as gross income, profit, EFT trend, usage, new members and retention.
- Graph those numbers weekly, monthly or yearly.
- Notice the trend and analyze the numbers. What do they indicate?
- Develop a written strategy to improve the numbers.
- Work with your staff to implement those strategies.
- Evaluate the effectiveness of the strategies based on the new trend and repeat the above steps.
- Reward your staff for their accomplishments.
- Set new targets and quotas on a weekly basis.
Great management starts with caring about what's going on, observing what's going on, being aware of what's going on, evaluating what's going on and acting on what's going on so that conditions continuously improve in your club. The key tool to your success is having the facts, and knowing the numbers that show your productivity. Remember, what gets measured and rewarded gets done.
Klaus P. Hilgers is the founder and president of Epoch Consultants, Inc., and is an internationally known consultant, speaker, author and trainer.