Are minimum term contracts costing your gym big money?
The past decade has seen an incredible amount of change in our industry and one of the more obvious examples is the explosive rise of the 24 hour low frills no term contract franchises that have popped up everywhere. This has also brought larger change in client mindset that has had an affect on the business of gyms of every service level and
if ignored can slowly erode your business
despite doing everything else perfectly.
Traditionally the model for a gym has been to sell a contract on a renewal basis, usually something from 6 months to two years. This has been fantastic from a commercial perspective obviously, but now that no term contracts are pervasively available, new clients juggling their options to sign up to a gym may well choose an inferior service over an otherwise superior offering simply because the financial commitment for such a period is significantly more daunting than the alternative available.
That being said I am not advocating everybody emulate the entire business model of these new gyms that have been so disruptive to the status quo, but there is room to be clever about how to respond to the new environment we are in. Ideally, you will make the action of taking the commitment to join as low resistance as possible. The real trick from that moment on is to find ways to make your new member personally as committed as possible to staying on.
“make the action of taking the commitment to join
as low resistance as possible”
Being able to state on your signage that you have “No Term Contracts Available” is fantastic from a sales perspective, there is still a very good case though for continuing to offer your core pricing via minimum term contracts. I would suggest however having them open ended and ongoing this way there is no cue at the end of that term when the client has to renew that may cause them to reevaluate their commitment to you. Locking in a preferable rate via the minimum term can also create a situation that adds resistance to terminate their membership, as if they were to rejoin their options would be the more expensive no term contract or to make a fresh long term contract again. Personally this has kept me paying my fees to a gym that I am a member, even in months where I have solely been running and not visiting as I felt getting that rate back later would take more effort than not leaving the gym.
Being aware that no contract memberships are now in the public consciousness and are creeping towards being seen as the new normal does also provide the opportunity for you to reframe the value of a term contract. Turning things back on their head, you could advertise along the lines of “Make the commitment to yourself for 6 months and together we will reach your goals”, of course in such a case your job once you have them is to make them want to stay a whole lot longer than that.
While pricing and opening up with no term contracts are a part of the equation, nobody wants a race to the bottom with regard to pricing. Going down that path can only hurt the industry and in the end the clients we are there to serve too. For this reason, I hope that while more gyms will save themselves from being excluded to such a large share of the market by offering a no term contract option, they will continue to reaffirm and hold their members committed to their facilities with unique points of difference and through quality of service.
At GymMaster we have had the pleasure to be able to work in partnership with
hundreds of gyms over the years, assisting them with their operation and growth.
This provides us with unique insights into the problems gym owners face
and the solutions we have seen that work in practise.
Ben – Gym Management Solutions Consultant at GymMaster