Breakthrough Offers During the Recession By Will Phillips The Recession Is Real The experts disagree on whether we are in a recession or not. The public is convinced. In a recent USA Today survey over 50% said 'times are worse.' Club owners are convinced. Several of the strongest operators of high end, family clubs are worried about fall sales for the first time in years. For the first time in decades small sedans sold better than pickups. Pickups sold well because they did not have to meet passenger car standards so the purchase price was low. Now the cost of gas makes the small sedan much more attractive than a pickup. Many middle class SUV owners are downsizing due to gas costs. Families are deciding not to eat out and what else to cut. How will you drive strong sales and retention during the rest of 2008? It will be harder, much harder for many of you the recession is real. Right now you have members considering where to cut their expenses. Many potential prospects are dropping off your lead list due to financial stress. This is unlikely to go away quickly. What can you do? Manage the Back Door The recession is putting real pressure on your members. I expect attrition to rise during the rest of 2008. Action 1: Make sure you track each month's attrition numbers vs. the same month for the last 3-5 years. This will reveal your trends better than anything else. Action 2: Have a strong back door process. When someone announces they want to leave the club, do not create a barrier to their exit. Doing so encourages them not to rejoin your club in the future and supports the negative reputation that clubs have. Here is how a strong back door process might work: Apologize for failing the member. Take 100% responsibility for the failure. Ernest Hemingway said, 'Every damn thing is your fault... if you are any good." Ask how did we fail you? Probe! Practice this process so you go deeper. You can only go deeper into why they are really leaving if you respect what they say 110%. Remember, very few really move and price is never the real reason. It is always value.And, if the value, if low, i.e., your club failed them, the price matters. As you learn more in #2 above, think of solutions: Such as 'I didn't make progress.' Solution: 3 free PT sessions. 'I never came in.' Suppose we set up appointments. 'I never connected with anyone.' Would you try some group exercise classes? "I had a problem and it was never addressed." Let me fix that right now. Remember, it is very unlikely that the reasons and motivation which led to their joining your club have disappeared. It is more likely the club failed to deliver what they hoped for. In my experience with club owners and GMs in REX Roundtables over the last 20 years, I have found that if they manage the back door—even with little preparation—they save about 25-35% of the exiting members. When you hear 'I can't afford the club" and you have done a solid, in depth exit interview there are several options. Read on. What Recession Does to People It stresses their budget, and their mind. Together this produces STRESS in all and DEPRESSION in some. Now you know that exercise can help with both of these. So make sure you regularly remind all your members and prospects that NOW, right now in the midst of recession, it is more important than ever to start and keep exercising. Next, figure out how to identify members under severe financial pressure, such as a job loss. Then quietly and informally accommodate them with free or $5 a month memberships. This can create life time loyalty. And if word creeps out that you care this much—particularly for regular users—you will build member pride and loyalty. Now explore a new type of 'on hold' membership for low users. The goal is to keep the member and adjust the cost and services so you can. This makes it much easier to upgrade that member once the recession goes. You might offer a recession membership for $9 or $13 or $29 a month (based on your current monthly fee), which offers your newsletter on better physical and financial health during the recession, PLUS two passes a month or a punch ticket for 10 passes (2/month). When this is used up, see us for another (and we will try to upgrade your membership) PLUS no initiation fee when you become a full member again. One club in a REX Roundtable had over 1,000 'At Home Memberships' instead of 1,000 exits. Sell Strong During the Recession Selling is very likely to get harder, much harder in the rest of 2008 and 2009. Here is what you can do to insure a strong selling process. Have a strong sales process where your club: tracks numbers; gives sales people tools to generate their own leads; holds brief, daily sales meetings. Explore multiple channels of generating leads. See A Waterfall of Sales: A power point presentation which has 120 ideas for generating sales leads. (This is posted at under Presentations on the home page; under NEHRSA 2008). Create a marketing/promotion plan for the next six months using #2 above and your own experience and keep it rolling so you always have a six month plan. Change your attitude. Most club owners are operations focused and not marketing and sales focused. As a result operations owners have a blind spot for sales. They want sales. They even invest in sales training now and then, but lack the discipline to create a sales and marketing culture. Either change your focus (unlikely) or invest in a person who naturally focuses on sales. You will have to pay this person well, but then they are worth their weight in gold. Or you will need visits from a professional sales coach several times a year. This probably costs the same, but is easier to access. Just look over the NEHRSA Convention speakers for sales consultants. All of the above is standard, best practices that have been confirmed in over a dozen REX club Roundtables involving clubs from the US, Canada, UK and Australia. Now for something entirely new and out of the box. This may be too different for some of you, but consider it. Will You Promote Wellness or Health or Fitness? Real health includes physical health enabled by exercise; mental health enabled by exercise and stress reduction and finally financial health. Chris Crowley in Younger Next Year describes this as 'Spend Less Than You Earn.' Not only do the vast majority of people need help (methods and encouragement) to exercise, they also need help in spending less than they earn. I suspect that stress, depression and financial fears are increasing among current and future members. Here is how you can help them. Be more than a gym for fitness. This means providing total wellness and health for the Family. In my mind and I believe in the consumers' mind health includes fitness (aerobics and weight training) plus mental health (add yoga, meditation, and massage for stress management) plus financial health (managing your money: earning, debt, saving and investments). If any one is missing, family wellness deteriorates. During the last few decades the economy has been strong enough that the financial component could be neglected—not any longer with a real recession. So who will help your members with this aspect of health. Why not you—the community wellness center. Here is how. Prepare to present a seminar and coaching on financial health. The three resources cited below provide the intellectual content. You could be the presenter. Or contact the authors to see if they want to present. The web site for Your Money or Your Life offers tools and materials to teach their nine step process. Or search on line for local Certified Financial Planners—CFPs—those who do not sell products such as investments or insurance or annunities. Chat with several to find one who also works out and might lead a hot seminar. Survey your members for CFPs or find out which members use a CFP. Now offer your RECESSION WELLNESS MEMBERSHIP PROGRAM. Use the same or even an escalated monthly fee. It includes physical, mental and financial training. No reduction in monthly dues but an increase in services to meet the needs of the times. Expanding Your Services is a Common Strategy in Other Industries Many businesses create or induce a secondary need which is quite different from the primary need that their business serves. Car dealers sell cars. They need service. General Foods manufactures and distributes food to grocery stores. They realized the grocers knew little about inventory management, so they provided that service. John Deere realized landscapers rarely had capital to buy new mowing and digging equipment so that created a financing service. GE did the same and its financial services divisions are the most profitable. So if your members can't afford your club, create a service to help them manage their budget so they can live longer, stay healthy, reduce stress and enjoy life! Resources which are reviewed under Book Reviews: Welcome to Your Financial Life: A Guide to Personal Finance in Your 20's and 30's by Virginia Morris, Kenneth Morris Transforming Debt into Wealth by John Cummuta Will Phillips chairs eight REX Roundtables for club executives. Two of these are exclusively for NEHRSA members. Roundtable clubs average double digit growth year after year. For information on joining contact Will Phillips or Jan Woodman at NEHRSA.