The monthly draft is the lifeblood of most fitness businesses. You put in the work to grow your member base and achieve your business model’s goal for recurring revenue. When you finally attain it, you breathe a little easier. The draft is there like a big blanket—keeping your business warm and cozy during the coldest nights. Or, as is generally the case in fitness, the slower sales months of summer. Something so precious to your business should always be top of mind. You should nurture it with new sales (obvious), mind your cancellations (still obvious), and ensure you have a good system in place to pick up missed monthly payments (totally obvious, right). That last piece is where we’ll focus today. Because, while obvious, chasing past due payments is something that frequently falls by the wayside for many fitness businesses. Somewhere between driving new sales and running your club, this vital process gets relegated to a task on the front desk staff’s daily task list. Maybe it gets done, likely it doesn’t.
A healthy draft requires a systematic approach and constant work. Our Past Due Communications team here at GYM HQ works with successful ClubReady clients across the country to ensure no member is left behind! But, if you’re stuck tackling the chore yourself, here are seven key steps to ensuring your hard-earned draft doesn’t slip through the cracks.
An ounce of prevention is worth a pound of cure.
The absolute best way to maintain a healthy draft is to prevent past due payments from ever occurring. Ensure that good billing information is captured at point of sale. If your billing system allows for two payment methods (ACH and credit card), obtain both. Inquire if your system or merchant provider can set you up with an account updater service. This will help pick up the new card data for many cards (due to changes in card number or expiration date).
Make sure you can reach all your members.
Capture ALL contact information from ALL members at point of sale. In order to clear up a past due balance or update billing information, you must be able to get in touch with the member. It’s also a great idea to run member rosters from time-to-time and spot check the data. Is your team filling in real email addresses or firstname.lastname@example.org? Are they capturing cell numbers? The more contact points available, the more pathways you have for resolution.
Have a system and schedule for contacts.
How often will you contact your members? After how many days past due? For how long? How will you make contact (email, phone, letter, SMS)? What will your message be? In business, everything needs a process and this is no different. To be effective, it should be clearly mapped out and followed consistently. This includes considering which team member(s) is responsible for making the contacts. Dependable, consistent contact provides the best chances of successful resolution.
Trust but verify.
Once you have a system in place, it can’t be “set it and forget it”. Just like any other task you assign your team, it’s going to require some degree of monitoring and oversight. How do you know calls are being made? Insist that your staff notate all contacts on the members’ accounts. This way you can audit the process anytime you’d like.
More contacts x more ways = more money.
Phone calls are great, but some people respond better to other channels. Text is a great tool as most of your members always have their cells in hand! A personalized email explaining the amount due and who to contact to make payment can also be effective. Make sure your team is utilizing all methods of contact to maximize the impact.
Why allow a past due payment to languish for weeks on end? The longer a balance ages the smaller your chances are at resolving it. Your process should start outreach within the first few days of the missed payment. The golden rule in successful billing resolution is contact early and often.
Numerous club management software providers offer billing support as an additional service. This is well worth exploring. While prices can seem prohibitive at first glance, the amount of draft saved and the missed payments collected generally far outweighs the costs! Many operators find it challenging to micromanage the process internally. Staff members aren’t incentivized to succeed and it takes away from new sales. Outsourcing the process eliminates this headache. Regardless of who is minding your draft, what’s ultimately important is that these past due accounts are receiving attention.
Bonus. Utilize a collections firm for later stage balances.
After 90 to 120 days, the soft approach used by your team or the software/billing company has lost its impact. Every effective process needs a closed loop. For past due members, this is determining when to walk away. There are varying opinions on the use of collections agencies. Many owners would rather write off the loss than deal with the fallout from heavy handed collectors. However, the right firm can be effective and help return some of that lost revenue back to your bottom line! Consider these key factors when selecting an agency:
Skip those who charge a fee when you remove someone from collections. You should always be able to pull a former member who is causing bad press for your club or who wants to come back into the fold without a fee being associated with it!
Ask your trusted fitness network for references. The sales guy will always tell you they’re the best. An owner will be honest about performance and any issues they’ve had with agencies.
Ensure you can reach an account manager. Will you have a direct point of contact when you have an urgent question? Will they be responsive?
It all boils down to people (who’s working the accounts), process (how are they working the accounts), and profit (retain more of that hard-earned revenue). Want to talk past dues? Shoot me an email and I’ll be happy to help or connect you to someone else who can! Tasks others loathe, we love at GYM HQ.