October 02, 2012

Fitness Revenue Management for your business

Royce Gomez is a Dubai colleague of mine, and we were discussing fitness industries. I was informing him, that many fitness centers lack on implementing the revenue management minimum requirement.

Although Revenue Management is now quite known in United Arab Emirates for the hotel rooms / car rental / airline industries, it remains a complete desert highway for the Fitness Centre in the region.

Have you ever sat on an airplane and asked the person beside you what price they paid? or asked someone at the hotel your staying at what rate they got compared to yours?

To apply it to your Fitness / Health Club, the manager needs to understand those principles:
* Seasonality: High / low periods of your Business (Hourly, Daily, Weekly, Monthly...),
* Analytics: Revenue per Square Meter, Memberships Levels, Number of Members growth...
* Competitive Set: Online & Offline; what rates would you be able from the receptionist at the counter vs. a published rates?
* Pricing Strategy: variable and fixed pricing, upsells
* Sales and Marketing Plans: does our Media Plan link with our occupancy at the Health Club?
* Market Segmentation: who are my clients (Age, gender, marital status, payment methods...)

If you fill those conditions, you may contact us for an early business meeting, to elaborate a discussion.

How to understand your metrics / analytics?
Now this comes with a bit of daily tracking to understand what the business really looks like and not what you think it look like.

Simply having someone tracking your data in an excel spread sheet your daily information and analyze accordingly.

Your new memberships will not be the same month to month. The beginning of October is traditionally a big time of the year for most Health Club, and it's usually the most competitive for market share benchmark.

In a market like Gulf Countries, you may have the same approach for your Beach and Pool access, where generally the rates identified to High or Low Season. There are more to explore and drive for the profitability.

Bear in mind that a Fitness Club standalone and a Fitness Club attached in a hotel may have different market segmentation mix and marketing program.

To prevent prices war, you need to analyze and see what works for your business units and adapt your pricing structure.

How to understand your competitors market?

Smart business owners understand their clientele. The AED 3000.00 (USD 800.00) of Fitness First Dubai may have more facilities than the Shangri-La Dubai (AED 7,500.00 - USD 1,750.00), however the price and segmentation is depending on the positioning of the brands.

Many time when you understand how much each member is spending (membership, nutritional needs, equipments, coach, extras...), you have a number to bench market on, plus it allows you to forecast the next 90 days period of your gym.

How to understand your clientele?

Many managers would see their clients as a result of 1 promotional price = 1 client. Ok, fair enough basic analysis! Except upon enrollment, how many times will the Point of Sale - CRM activities will be properly use.

In fact, is my Client just a price tag, or do I want to understand more his/her purchasing habits? For that you have to elaborate a set of analytical reports and understand who are your clients.

What about we think the fitness industry as Space and Time Management environment? 

*What are we selling?
We are selling a membership to access fitness machines environment in order to feels good, exercise regularly, gain muscle, loose weight, in a pleasant environment (music, Tv, deco, lightings, changing rooms, mirrors...). So we are selling space.

* What are the busy periods of a Fitness Clubs?
Generally from 5pm to 9pm, from Sunday to Wednesday.....

* What are the low periods of a Fitness Club?
All Fitness Clubs open at 10am, generally there are dead until afternoon time.
So we have time management.

* What are the market segmentation mix?
- Individuals,
- Couple or Family,
- Corporate,
- Special Groups,
- Students,

* What machines to feature?
It's important that we study which machines exercise drive the most usage.

Imagine if your gym's average monthly spend per member was AED 275.00 and you moved it to AED 350.00 per member. This is what a well though Revenue Management program could do for your fitness business.

If you require some help with your fitness business and looking at adding a revenue management program. Contact us our our website.

@ Profit Therapy for Fitness Industry
RSVP Hospitality

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We thank you for participating in our Revenue Management discussions, and look forward to bring you the best of our ideas. For more information, please visit our company website at www.rsvp-hospitality.com