AB Conference: Everything You Know Is Wrong

That's not quite the title of this seminar…Barry Klein and Rob Bishop, owners of Elevations Health Club in Scotrun, Pa., are speaking about questioning assumptions about your business plan in "Everything You Know About Running a Health Club Is Wrong." Barry was just relating an interesting anecdote about a seminar he attended at a club conference a couple of months ago. The subject had turned to enhancement fees, which are a one-time annual fee charged to members ostensibly to fund capital improvements such as new fitness equipment, new carpeting and so on. These are becoming very popular in for-profit facilities - that is, popular among club operators, not club members. Members, in fact, can get downright ornery about them - "isn't my $49 a month fee paying for fitness equipment and carpeting?" Barry and Rob are inclined to side with members on this one, as they consider such fees cowardly; one would think a business owner would be courageous enough to charge $52 instead of $49 a month, rather than stick a one-time $36 fee down in the fine print.

However, they've considered them because it's the conventional wisdom right now, and the theme of their talk is that everything should be on the table if it could potentially help your business. The trouble is they haven't been able to find any industry "expert" or other club owner who can make the case for enhancement fees given their particular fee structure, which involves three-month memberships. What's to stop members from quitting to avoid the fee?

Back to the club conference: Barry was sitting in this seminar as enhancement fees were being touted, and the attendee sitting in front of him raised his hand and said, "If you are not doing enhancement fees, you're really missing out - you have to charge them." Barry says he was really excited, especially when a quick whispered conversation confirmed that this attendee also sold three-month memberships - here was the guy who was going to be able to answer all his questions!

After the seminar, Barry buttonholed the attendee, who told him he sent a reminder to members in October that the fee would be charged November 1. That was a nice touch - the fee wasn't in the fine print at all. The attendee told him, "We're very up front about it."

Hmmm! Barry thought, impressed - but then asked: "Why don't your members quit on October 29th?" The attendee said, "Oh, well, we have a 60-day cancellation policy." So…the trick, apparently, is to wait until after September 1 to remind your members of the November 1 fee. They can't quit, and they must pay.

The moral of the story - everybody may be charging enhancement fees, but it may not be right for you. Or, as one Powerpoint slide concluded:

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