Driving Profits

Revenue stuck in neutral? Then push the pedal on your software programs and ride technology to first place.

A living computer, the human brain is a marvel of organic technology. Think of all the accomplishments made possible by the brain from artistic expression to scientific breakthrough.

Still, urban legend would have us believe that the typical person only uses 10 percent of her full cranial capacity. While this isn't strictly true, it's easy to understand how such a legend got started. After all, plenty of people choose to challenge their gray matter by plopping on the couch and flicking between channels.

Just as many people don't realize the full potential of their brainpower, many clubs don't push the limits of their management programs. How about you? Have you streamlined your club with software, or are you crawling along at a Luddite's speed?

If software has put your club in the pole position giving your business an edge in terms of speed and efficiency you are in the minority. Most clubs are the technological equivalents of couch potatoes. Or worse, Yugos.

Consider this. Rio Rancho, N.M.-based Legend Information Systems once released a program with a bug that prevented users from printing membership graphs. The glitch went undiscovered for 18 months. Why? Because the clubs that installed the software never used the graph function, so they never noticed the bug.

"And we serve hundreds of clients," notes Steve Williams, Legend's COO.

To be fair, club operators aren't computer programmers. They aren't worried about software bugs. They are worried about satisfying customers, recruiting new members, and running the day-to-day operations of the club.

But here's the catch: If club operators learned more about the available software, they could concentrate more on management, believes Bill Nichtberger, executive vice president for Houston's Aphelion Software.

"I think [club owners] get swept up in the daily operations of their club, and they don't devote time to fully understanding the management software," Nichtberger explains. "And if only they did devote the time, then they would free up more time for management."

While developers argue that their products can help operators run clubs more efficiently (and profitably), operators can't always appreciate the benefits of software, according to Andy Wigderson, the East Coast sales representative for the Houston-based CSI Software. That's because the benefits aren't always tangible.

"With a treadmill, it's something that you can kind of kick the tires, but with software, you can't see it," he says.

What operators can see are the obvious solutions such as check-in and electronic funds transfer (EFT). But these solutions only scratch the surface of what management software can do. Here are the software capabilities that operators often overlook, without realizing that these features could help their clubs blow past the competition.

  1. Marketing and Sales

    To improve retention, club managers can generate member-attendance reports through their software. It's as simple as plugging a query into the program. For example, you could ask the software to search for "members that have been here less than x number of times within y days," explains Jeff Colen, the president of Club Runner, out of Jupiter, Fla. The program would then output a list of all members who fit into this category.

    Operators should run this report sooner than later. If a member has only visited the club twice, and his annual contract will expire in a month, it's too late to get him to renew.

    Once a manager has compiled a list of infrequent users, she has several options. She can call them to find out why they stopped coming. She can send them a letter, inviting them back. She can even assign a fitness counselor to them.

    Any of these tactics would help retention. And it's cheaper (and healthier) for the club to keep old members than to sell new memberships.

    In addition to reaching out to missing members, clubs can use software to sell more paid services to frequent visitors. "Once someone's in a club, the whole idea is to sell them everything and anything," comments Colen.

    Colen gives this example. A member purchases a low-priced package for personal training. The software tracks this purchase and allows the club to follow up with the client. If the client is satisfied with the training sessions, then a club salesperson could invite him to upgrade to a higher-priced package.

    Here's another example. A member buys an expensive supplement package. The software flags the purchase and alerts the club to send the member a letter whenever the pro shop is running a supplement special.

    This type of marketing doesn't need to be limited to the sale of products and services. By tracking members with software, clubs can also find new ways of selling memberships. For example, use the software to pinpoint family and corporate links, advises Williams.

    "You might actually have 40 different IBM employees [as members] but you don't have them linked [in the computer system]," he explains. When you link them, you'll notice a pattern: Many IBM employees are members, yet IBM doesn't have a corporate program with your club. This is an opportunity that your club may be missing.

    "IBM isn't paying for the membership," Williams points out. "You could contact IBM and tell them you'd like to do a corporate membership," and let them know just how many of their employees already belong to the club.

  2. Guest Tracking and Follow-Up

    In addition to selling and marketing to members, clubs can use management software to reach the hottest prospects: club guests.

    Guests have already taken the initiative (by visiting the club) and expressed an interest in a healthier lifestyle. Clubs must not let these prospects slip through the cracks.

    Thanks to management software, club operators can capture the name of a prospectand create very specific letters to this person on a regular basis, explains Casey Conrad, president of the Rhode Island-based Communication Consultants and the national franchise chain Healthy Inspirations Weight Loss Centers.

    With the software, operators can time when the letters are sent out (so as not to annoy prospects). Also, the recipients can be broken down in whatever way the operators deem appropriate. This means that a 19-year-old female college student won't receive the same letter as a 40-year-old married man.

    "I can go into the computer and say, Give me everyone between the ages of 50 and 60 who gave me money as an objection [for not joining], and I can print out a letter that's very specific to them," Conrad says.

    This can be a tremendous help to time-starved salespeople who can't follow up with every prospect. The software makes it easy to get personal with guests, without requiring an unrealistic investment of time.

    Not only can sales and marketing people rely on software to follow up with guests, they can use the programs to determine their most effective advertising venues. For example, when a guest registers at the front desk, the clerk should inquire as to how the person heard about the club, and record that information, advises Williams. Over time, the marketing department will be able to note the advertising that works best.

  3. Statistics and Demographics

    Are you pretty confident that you know your club's market base? Or are you just assuming that you understand your club's demographics?

    Clubs can use software to gather useful marketing information like zip codes, ages, household income and more. They can also determine if their demographics have changed for example, comparing the average age of today's member to five years ago and make any necessary adjustments.

    "Are you paying attention to what's happening to the age demographics at your club?" Conrad asks. "Information is the key to bettering your business. You need statistics to create new ideas and new systems."

    Besides drawing conclusions about overall demographics, software programs can break demographics down into exact numbers year-to-year, day-to-day and even hour-to-hour. "We actually monitor every minute, every second of when people are in the club, says Williams. Most people can say, Yeah, we're slow at 3 p.m. And you might be slow, but all your seniors are coming in at 3. What a perfect time to promote your senior programming."

  4. Financial Reporting/Forecasting

    While the majority of owners are aware of how much cash flow is coming into the clubs every month, they may not know the how and why of it. "Very few clubs really take advantage of the reporting that's in their system," says Williams. "They don't really explore the reports. They don't use the billing analysis tools that are there."

    Sean Kirby, the director of new accounts for Denver's ASF International, agrees. He gives this example. A club client once raised a question about his EFT system. The client had noticed that the drafts coming in that month were lower than they were in the past. Kirby accessed the client's files and found that his club was selling more paid-in-full memberships than it had in the past. Therefore, his monthly draft was less than in previous years.

    Although the client had access to this information, he never realized that he could use the software for this purpose. He isn't alone. Software programs will allow clubs to compare sales month-to-month, year-to-year, but few clubs bother with this feature, according to Kirby.

    "This information could be turned around and dropped into a spreadsheet and used for forecasting, he says. Financial reporting and forecasting are the two biggest under-used features."

  5. The Internet

    With the right software, club owners can take full advantage of the Internet. They can manage contracts, handle billing, process credit cards, take class reservations, and even sell products (e-commerce). They can also capture the e-mail addresses of Web visitors, and send these people marketing materials saving on postage.

    Additionally, multi-facility clubs may find that management software installed on Web-based servers is much handier and quicker than traditional paperwork. These servers allow several clubs to access account information simultaneously, in real time. In other words, a person could join the ABC Health Club located downtown in the morning and be in the computer when he visits the club's sister location uptown during his lunch break that same day.

    This process eliminates paperwork. It may even eliminate the paper contract altogether. Through many vendors' software capabilities, club staff can create online contracts with electronic signature capture. Hardly the way clubs are accustomed to conducting business.

    "People at clubs are typically used to doing things in a certain way, and typically on paper," says Mark Johnson, the senior vice president and general manager of CheckFree Health and Fitness, based in Norcross, Ga.

    There is some controversy, however, about using Web-based servers for such sensitive information as contract information and credit card numbers. Although extremely rare, hackers and virus programmers could wipe out this information or use it to their own advantage.

    "That information has got to be secure," Colen advises. "If that technology breaks down, you're screwed. If it goes missing, there's no, Whoops! I'm sorry. That information's gone. You don't want to be that one out of 999 clubs that it happens to."

The Training Trap

All of the software features in the world won't do any good if club employees don't understand how to use the program. That's why club operators must take the training process seriously, making sure that the entire staff from the newest front-desk counter person to the veteran sales pro gets the proper education.

Unfortunately, club operators are often more concerned with selling memberships than training staff, according to Jim Balint of Balint & Associates, a subcontracted company that performs installations, training and programming for Fair Financial. And this attitude wastes the software investment.

You can have hundreds of dollars worth of software programs, but if [club owners] are not going to spend the effort to train and educate their staff, it's just going to be baggage, explains Roger Salisbury, the IT manager for National Fitness Financial Systems (NFFS) in Utah.

While there are three main methods of training (training on-site at the club, classroom-style training at the vendor's location, and Web-based training), their usefulness (and price tag) varies.

Web training is more cost-effective, but a lot of people don't do well with that type of training, says Casey Conrad, president of Communication Consultants. Hands-on [training] is so important. For most people, it's so much easier to show them in person rather than have them try to figure it out from a manual.

Still, manuals are important, as are ongoing training programs. After all, the employees who receive training as part of the initial installation probably won't be around forever. We all know the crappy turnover rate in this industry, Conrad continues. You'd better have the materials that can self-educate someone.

Additionally, many industry experts agree that it's wise to train a few point people on the intricacies of the software package, and have them disseminate the information to the rest of the staff. Again, just make sure that these employees will be at your club for the long haul, or any training will be wasted.

If possible, send these point people off-site to the vendor's location for hands-on, classroom-style training. With software manuals, there's a lot of room for interpretation, says Sean Kirby, the director of new accounts for ASF International, and on-site training at the health club requires maximum cramming in minimal time.

Furthermore, training at the club can distract employees, who are more concerned with day-to-day operations than the computer screen in front of them. Moving the training location off-site minimizes these day-to-day distractions, allowing employees to focus entirely on what they are learning.

No matter what training method clubs use, they should invest time and money into continuing education, believes Steve Williams, Legend Information Systems' COO. Fortunately, some software companies give customers a certain amount of training time, allowing the clients to break the training periods up into blocks. This means that employees don't need to learn everything in a single session before they have even had a chance to test the software in the club setting.

The Hard Sell on Software

It’s easy to get swept up in all the latest techno-jargon from sales representatives when shopping for a software program for your club. That’s why Club Industry went to an expert on software sales, Andy Wigderson, the East Coast sales rep for CSI Software, and asked him what kinds of things club operators should ask before purchasing any kind of program for their club. Here are his suggestions:

1. What are the features and functionality of the software?
2. Are the programs fully integrated?
3. What type of database is used?
4. What programming language is used?
5. What direction is the technology going?
6. What happens after the sale?
7. What kind of training will I receive?
8. What is the company infrastructure?
9. How many customers does the company have?
10. What is the company history?

Wigderson also says club operators should insist on a reference list containing both new and old customers, as well as insist the company send a representative, at no cost, to do an on-site demonstration of the software and go through real life scenarios. Additionally, operators should inquire as to how one vendor differs from another.

Go to trade conventions and visit with the vendors, advises Casey Conrad, president of the Rhode Island-based Communications Consultants and the national chain Healthy Inspirations Weight Loss Centers. “Visit with the vendors and have a list of what they want the software to do,” she says. “Don’t buy the first package they see, and take notes. Compare one software program with another.”

Also be sure to make sure that any new programs you are buying are compatible to any of your existing software programs, advises Mark Johnson, the senior vice president and general manager for the Colorado-based CheckFree Health and Fitness. “When we were at the IHRSA Convention in San Francisco… what we heard was that this was singularly the largest concern in both small clubs and large clubs,” he says.

And, before you talk to any software vendors, decide what needs your clubs has. Don’t let the vendor tell you what you need. You decide. “They need to really evaluate what they want to be involved with,” Roger Salisbury, the IT manager for National Fitness Financial Systems (NFFS), says. “I personally think you shouldn’t invest more than $1,000 on something without speaking with someone that has been around the block with it. I would call up people [who already use the program].

“That holds more weight in my mind than talking to a sales person,” he adds.

Agrees Conrad, “It’s a corner that [many club operators] cut that’s not a corner that should be cut.”

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