So, Should You Pursue Alternate Income Streams or No?

There comes a limit to the number of memberships you can sell, which is a good thing. You hit the ceiling for your single gym it means you’ve maxed out the potential for monthly subscriptions. To go further, you have to sell more to the same people with alternative fitness club revenue streams.

There’re some alternatives to this alternative, but they may not be the best choices. You can do the big-box corporate brand shuffle, which means over-selling memberships and hoping they don’t all turn up. Instead, you have to connect with members to sell additional services, which means they need to attend.

What Constitutes Oversold Memberships?

The old "Pile’em high and sell’em cheap" philosophy still seems to have a following in the bureaucratic halls of the global headquarters of big-box fitness brands. This Fitness-Inc approach figures that you can’t have too many fitness club members because they never turn up anyway. That stinks.

However, it’s a real thing. If a location has a carrying capacity, the membership to pursue might be a multiple of that number. Say, you’ve got a spacious and well-appointed gym. One-hundred people can be working out at a time, say you’re open 100 hours per week and people who work outspend an average of say, 4 hours per week in the gym.

More Overbooked Than Your Favorite Airline

In theory, you have a carrying capacity of 2,500 members. Say an adjusted gross revenue from that of $10 per member is $25,000 per month available for overheads and profit. But wait! The next factor is how many actually turn up a month after signing up for the year. So, 500 people who attend for one month and disappear without canceling their monthly memberships.

So, you can have 2000 active members and 6,000 ghost members. Eight-thousand members look pretty good on paper if you can keep it up. It means that 6,000 x 12 gives you $72,000 + $20,000 for an income for overheads and profit of $92K.

That sounds great, right? But is it sustainable? You have to maintain it, invest in churning more prospects through the door. You have to onboard them and start again every day like you’re on a maxed-out treadmill and your business depends on it.

The Alternative with Added Revenue Streams

The example above assumes you can sign people up and lock them into contracts for a year. Also, it assumes that the market will withstand that kind of strategy for the long-term. What happens when you can’t attract new members because of your reputation in the community? Even the regulars don’t turn up, or if they do, they’re hardcore bodybuilders who hog the weights for hours at a time, driving out other members.

A transactional and impersonal feel to your gym adds to the downward spiral of your gym. Unless you’re in the fastest-paced, most impersonal big-city location, your name matters and when it’s Mud, you’re on the way out of business. Now let’s look at an alternative where you try a little harder.

Imagine that you have 2,500 members who give you $20 per month, and who turn up with enthusiasm and then purchase $20 of premium products or services.

In this case: 2,500 x ($20 +$20) = $100,000 of revenue per month

If you sell the value and promote additional services, you’re likely to earn more from grateful customers, who appreciate the benefits, engage with your club, and stick around longer. Plus there are intangible benefits, such as goodwill and enthusiasm, which translate into word-of-mouth marketing.

The reality is that you will likely have to replace some of your members each month. There will always be a significant fraction that stays scarce enough that. You never have a realistic opportunity to sell them anything. So, the average is just an abstract number. In reality, you might have to sell $100 worth of premium products and services to the twenty percent who are receptive.

The Best Alternative Fitness Club Revenue Streams

Independent fitness trainers can be fantastic resources for a small independent club. If your club is a little larger, so can your employees, assuming they understand the importance of generating revenue. The motivation is a combination of training and clearly defined policies that include commissions. With the right strategies, your stakeholders to build upon the foundations of your business and share the rewards.

One of the foundational principles of a people-based business, like fitness, is that selling is about making customers aware of additional value that they want. Whatever alternative fitness club revenue streams you can conceive will only work if your people consistently promote them and close sales. The ability to get those extra sales is vital to a small business being successful.

Merchandise in the Gym and Online

If you have the brand, a merchandise section, and the associated e-commerce platform are easier to launch than ever before. Having items for sale at the front desk is an old favorite. Your merchandise section can be another channel through which your staff can earn commissions. Get members to make their first sales from local stock and offer online re-ordering to your customers through a portal on your website.

Once they get used to that, you can market more merchandise and premium services online. It could be anything from tee-shirts and water bottles to resistance bands and kettlebells. Services like Shopify are specifically designed to support entrepreneurs like you.

Fitness Club Within the Club

Part of the fitness market doesn’t care about cost, as long as they appreciate the value. Another segment would stretch their budgets to be in the right classes, without care for the price. These customers are the easiest sell for add-on sales, as long as you can convince them of the value.

A club that makes all of the usual equipment available to general members could have a premium interior service. The premium facility might provide things like access to trainers and even more of the latest equipment.

Another premium service could be access to specialized training in sports like boxing or MMA. If you offer a fitness system like CrossFit, the premiums could be priced a long way above the general membership level. The opportunity to take the primo-level membership is always there, tempting the basic-level members. You have the benefit of two clubs in one facility.

Digital Video Ads

Advertising has come a long way. You can now stream video ads on monitors and earn income from local companies that want to market to your membership. If you have the usual screens showing cable news and sundry in a bank over the cardio machines, it might fit right in. The difference is that you get paid directly for ads and your clients see commercials for goods and services that might be useful to them.

Of course, this is not something you can buy the hardware and figure on making a few calls when you have the time. You need a service that matches local businesses to your screens. Local restaurants and shopping ads are good; promotions for your competitors and other fitness outlets, not so much. There may be some opportunities for cross-marketing between you and your home-town business community peers. Contact a local digital marketing agency to find out your options.

Events for All Seasons

If you get creative, there might be some ways to use spare capacity or rooms in the building you occupy. Perhaps an event or activity like an Escape Room might bring in new prospects and spread your name. There are as many themed events as you can imagine that could promote your gym. If you have enough space, why not host an escape room or Halloween haunted house.

If you can make up seasonal events, you can sell tickets and use it to promote club memberships. Always ask the visitors to give you their email addresses. Notify them of other events, promotions, and exclusive deals to keep them coming back.

The Premium Gym Business Mindset

Rather than adding on alternative streams ad-hoc, build an integrated set of premium services and condition your staff to sell up. All of your alternative revenue streams should make sense to your customers and to your business model. Whichever you chose, adding new streams should increase your return on investment rather than deplete it. Deliver value and charge accordingly.

It matters that you can make it easy for your team to understand what they can offer and how to sell it. Write down your policies and procedures. So employees know what’s on offer, the standard, and what they have to do to earn extra income. Give them a pricing list for additional services and a sales guide. Conduct training and casually test how well your people know the parameters. Concentrate on training away any deficiencies.

Frameworks Are Equipment Too

Gym Insight is designed to support your club and organize all of your records. Manage your business and your membership as well as your point of sale solution with one gym management software system in Gym Insight. Adding streams of income beyond basic monthly membership is not just about making money. Yes, your survival probably depends upon it, but a sales program that is part of your client fitness programming gives you the right framework.

There is much to consider in managing a fitness club. As well as those members who become ghosts, you have to retain active members over time. Your small gym business will be much easier to build when your team knows what to do. To solidify the future of your gym, invest in extending your offerings through alternative fitness club revenue streams.

Bibliography

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GoingClear Interactive. "5 Reasons to Hire a Local Digital Marketing Agency." GoingClear Interactive (blog), October 15, 2018. https://goingclear.com/5-reasons-to-hire-a-local-digital-marketing-agency/.

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Prince, Lilly. "10 Exciting New Revenue Streams for Health Clubs." IHRSA, August 1, 2016. https://www.ihrsa.org/improve-your-club/10-exciting-new-revenue-streams-for-health-clubs/.

Vanek Smith, Stacey. "Why We Sign up for Gym Memberships But Never Go to the Gym." NPR.org, December 30, 2014. https://www.npr.org/sections/money/2014/12/30/373996649/why-we-sign-up-for-gym-memberships-but-don-t-go-to-the-gym.

Zen Planner. "Sales Tips to Increase Gym Memberships." Zen Planner (blog), October 6, 2017. https://zenplanner.com/how-to-sell-gym-memberships-stop-pitching-start-listening/.