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-   -   5 Dos and Donts when setting up your affiliate - Your thoughts? (http://board.crossfit.com/showthread.php?t=81650)

Chris Jones 04-27-2013 10:05 PM

Re: 5 Dos and Donts when setting up your affiliate - Your thoughts?
 
Quote:

Originally Posted by Ryan Cole (Post 1161421)
Awesome advice James . Question: how did prepay and pay as u go options hurt u?

curious to this as well. If the people pay for months up front, and then cant make classes from time to time or just dont show i dont see how thats a problem :shrug: Obviously you want repeat business, but its not for everyone and youre still getting the money right? Also sometimes peoples jobs/goals/priorities just change for whatever reason, so they may have to bail on a gym membership at some point and are afraid to pay for a 12 month period at a time.

James Gordon 04-28-2013 04:31 AM

Re: 5 Dos and Donts when setting up your affiliate - Your thoughts?
 
Quote:

Originally Posted by Ryan Cole (Post 1161421)
Awesome advice James . Question: how did prepay and pay as u go options hurt u?

Two words: CASH FLOW.

Although it may be nice initially to get a chunk of cash up front, what happens after that? In order to have a stable and predictable business, you need to have a good idea of how much revenue to expect each month to cover overhead, labor etc. Unless you manage your cash extremely well (many small business owners don't), you could be left short. For example, if I have 100 clients, and 90 of them are paying me monthly, I can easily predict my cash flow (average client value x 90) for the next 30 days. If I have 100 members, but 40 of them are pre-paid, my cash flow is a lot lower each month.

Pay-as-you-go cards do have their place, but only occasionally. I don't offer them or advertise them anywhere, but I have used them with clients who travel frequently for work and wouldn't get fair value out of a monthly fee. However, this is the exception and not the rule.

This has just been MY experience, not saying it's right or wrong. However, as soon as I switched from pay-as-you-go to monthly automatic billing, my business was WAY more profitable and my stress level dropped significantly :kicking0:

Best of luck to all on their new venture!

James

James Gordon 04-28-2013 04:52 AM

Re: 5 Dos and Donts when setting up your affiliate - Your thoughts?
 
Quote:

Originally Posted by Chris Jones (Post 1161453)
curious to this as well. If the people pay for months up front, and then cant make classes from time to time or just dont show i dont see how thats a problem :shrug: Obviously you want repeat business, but its not for everyone and youre still getting the money right? Also sometimes peoples jobs/goals/priorities just change for whatever reason, so they may have to bail on a gym membership at some point and are afraid to pay for a 12 month period at a time.

I'm not sure if I follow your logic here. If people pay up front and then don't show, that's a HUGE problem (IMO). It means you're not doing you job as a Coach. That may be the globo-gym model, but it's not how I run my business.

I offer month-to-month memberships with automatic billing and a 30 day cancellation policy. That means that if I'm not giving my clients what they are paying me for, they can walk at any time. That's a huge motivation for me to provide an excellent product month after month.

If a client pre pays, and then something happens and they REALLY don't want to be in your gym anymore, do you really want them there? If a client is miserable and is only coming because he/ she has pre-paid, it will tarnish their relationship with you, your staff and the other members. It can create a toxic environment and adversely affect your business.

What if a client gets divorced and doesn't want to be at the same gym as her husband (who was sleeping with another member)? Does she get a refund? What if a client gets offered a job in another city 4 months after he paid you for a year in advance? Does he get a refund? These situations DO come up, and you either have to cut some big checks, or come off looking like a greedy ****** to your other members.

Best,

James

Nathan Holmes 04-28-2013 09:08 AM

Re: 5 Dos and Donts when setting up your affiliate - Your thoughts?
 
James,

A local box has a similar, and very successful, approach. Clients agree to monthly auto-payments for various amounts of time (I think it's 6, 9, and 12 months) with a 30-day cancellation requirement. The longer clients agree to auto-pay, the cheaper their rate is. When their "contract" period is up, they are subject to the new rates (if the rates have changed). The combination of the lower rate + longer price guarantee leads clients to sign on for longer but maintains that focus on quality from the owner's perspective. The box is one of the most successful in our area. They also have awesome trainers and a great facility...so that helps.

-Nate

Brendan McNamar 04-28-2013 11:17 AM

Re: 5 Dos and Donts when setting up your affiliate - Your thoughts?
 
Every gym reflects its owner's personality. This almost always means there is room for improvement doing things that don't come naturally to the owner. My back ground before CrossFit was accounting, finical planning/Investment management and relatively high stake poker. I'm long on planning and analytical thinking short (but improving fast) on people skills and fun. So here are things I have learned (usually by not doing them at first and learning):

Do's:
1) Build a brand that your members can join. If you get it right they want to be known as a member of CrossFit whatever. This is the whole package: Website, logos, car stickers, building, coaching, programing. It is your way of doing things. The better you do this the more successful you will be. Make no mistake this takes hard work and long hours. If you want a great example of this see CFNE.

2) Get your members interacting with each other. You can't do it all yourself. When we started to develop larger classes and better member interactions everyone had more fun and got better results. Attendance increased.

3) Focus on a great member experience before profits. Clearly you have to make sure you can pay the bills but paying to have extra coaches around to help out is a great investment in your brand not an expense to be minimized. Right around 50 members and our new location this became important. People walk in no matter how many times you ask them to make an appointment on your website. People come back to join at 6 PM on Monday night even though you warned them it is your busiest class of the week. It is our job to help our members not our members job to make our lives easy.

4) Suck it up and buy the best equipment you can afford from day one. Every time I try to save 10 or 20% not buying the best I regret it. Along the same idea is set part of every months budget to maintenance and repairs. As CrossFit gyms have been open longer I'm seeing more and more starting to look very tired. If you do one project a month you don't have to worry about a big bill all at once or someone opening a shinny new gym close to you.

5) A picture is worth more then a 1000 words. Buy a good DSLR camera and take lots of pictures of your members in action. I bought a Cannon T3 for about $400 to replace a small hand held. May be the best $400 I have ever spent for the gym. High quality picture, big memory and long battery life. We take lots of pictures and discard any that don't make our members look great. We post albums to Facebook and these albums reach 3 times as many people as we have Facebook likes. People love pictures!

I'll be back with my 5 Don'ts.

P.S. My gym gets painted to match our branding next weekend.

Matthew Whittemore 04-28-2013 09:17 PM

Re: 5 Dos and Donts when setting up your affiliate - Your thoughts?
 
Definitely agree with you James on the cash flow point, I've experienced both sides of that now with the current business I'm running.

Thanks for those points Brendan, I will have a look at your affiliate online now.

James Gordon 04-28-2013 11:20 PM

Re: 5 Dos and Donts when setting up your affiliate - Your thoughts?
 
Quote:

Originally Posted by Nathan Holmes (Post 1161498)
James,

A local box has a similar, and very successful, approach. Clients agree to monthly auto-payments for various amounts of time (I think it's 6, 9, and 12 months) with a 30-day cancellation requirement. The longer clients agree to auto-pay, the cheaper their rate is. When their "contract" period is up, they are subject to the new rates (if the rates have changed). The combination of the lower rate + longer price guarantee leads clients to sign on for longer but maintains that focus on quality from the owner's perspective. The box is one of the most successful in our area. They also have awesome trainers and a great facility...so that helps.

-Nate

Hey Nate,

That's the exact model I used at my former affiliate (3/6/12 month contracts). However, I don't see how a contract works if there is a 30 day cancellation policy (as in your example). Do they also charge a cancellation fee?

I'm only commenting because I ran into this problem in the past. A client signs a 12 month contract and enjoys the lowest rate. They then leave after 4 months (work, schedule etc, relocation etc). Should they have to pay the difference in rates?

James

James Gordon 04-28-2013 11:21 PM

Re: 5 Dos and Donts when setting up your affiliate - Your thoughts?
 
Quote:

Originally Posted by Brendan McNamar (Post 1161527)
Every gym reflects its owner's personality. This almost always means there is room for improvement doing things that don't come naturally to the owner. My back ground before CrossFit was accounting, finical planning/Investment management and relatively high stake poker. I'm long on planning and analytical thinking short (but improving fast) on people skills and fun. So here are things I have learned (usually by not doing them at first and learning):

Do's:
1) Build a brand that your members can join. If you get it right they want to be known as a member of CrossFit whatever. This is the whole package: Website, logos, car stickers, building, coaching, programing. It is your way of doing things. The better you do this the more successful you will be. Make no mistake this takes hard work and long hours. If you want a great example of this see CFNE.

2) Get your members interacting with each other. You can't do it all yourself. When we started to develop larger classes and better member interactions everyone had more fun and got better results. Attendance increased.

3) Focus on a great member experience before profits. Clearly you have to make sure you can pay the bills but paying to have extra coaches around to help out is a great investment in your brand not an expense to be minimized. Right around 50 members and our new location this became important. People walk in no matter how many times you ask them to make an appointment on your website. People come back to join at 6 PM on Monday night even though you warned them it is your busiest class of the week. It is our job to help our members not our members job to make our lives easy.

4) Suck it up and buy the best equipment you can afford from day one. Every time I try to save 10 or 20% not buying the best I regret it. Along the same idea is set part of every months budget to maintenance and repairs. As CrossFit gyms have been open longer I'm seeing more and more starting to look very tired. If you do one project a month you don't have to worry about a big bill all at once or someone opening a shinny new gym close to you.

5) A picture is worth more then a 1000 words. Buy a good DSLR camera and take lots of pictures of your members in action. I bought a Cannon T3 for about $400 to replace a small hand held. May be the best $400 I have ever spent for the gym. High quality picture, big memory and long battery life. We take lots of pictures and discard any that don't make our members look great. We post albums to Facebook and these albums reach 3 times as many people as we have Facebook likes. People love pictures!

I'll be back with my 5 Don'ts.

P.S. My gym gets painted to match our branding next weekend.

Agree 100%. All excellent points.

Matteo Pagetti 05-02-2013 01:52 AM

Re: 5 Dos and Donts when setting up your affiliate - Your thoughts?
 
Hi to all!

I'm following this thread 'cause I'm still work to open a Box in Italy, Milan area sooner.

I don't in shame affirming that I'm bit confused about members fee's and so on.
Let me explain better to you...
In Milan, as place where I want to open, there's 4 boxes already open, two of them Reebok branded (you can find them in affiliates map).
We are planning to set up our box in south area, where there's another, but is working with mini class and one to one, as a sort of personal studio, so no problem for each others...we plan to have our classes, the still remain with their clients.
BTW, the main task is the pricing, as following the thread.
You guys how much euros suggest to charge for an open month?
I think more or less around 120/130 euros, planning to reach 100 members in one year.
Do you think is higher?

thanks in advice!

Matteo

James Gordon 05-02-2013 02:54 AM

Re: 5 Dos and Donts when setting up your affiliate - Your thoughts?
 
Quote:

Originally Posted by Matteo Pagetti (Post 1162525)
Hi to all!

I'm following this thread 'cause I'm still work to open a Box in Italy, Milan area sooner.

I don't in shame affirming that I'm bit confused about members fee's and so on.
Let me explain better to you...
In Milan, as place where I want to open, there's 4 boxes already open, two of them Reebok branded (you can find them in affiliates map).
We are planning to set up our box in south area, where there's another, but is working with mini class and one to one, as a sort of personal studio, so no problem for each others...we plan to have our classes, the still remain with their clients.
BTW, the main task is the pricing, as following the thread.
You guys how much euros suggest to charge for an open month?
I think more or less around 120/130 euros, planning to reach 100 members in one year.
Do you think is higher?

thanks in advice!

Matteo

Hi Matteo,

Instead of guessing at what your monthly rate should be, start by deciding what you want to earn as a trainer/ box owner. From there, work backwards to get your monthly rate.

Example: To live the kind of life that you want, you need to take in $100 000 per year (just using round numbers). Next, figure out your overhead expenses (include EVERYTHING; rent, utilities, insurance, staffing, bank fees, affiliate fees, management system, savings for future equipment, web site, toilet paper....) and add that to your $100k. For argument, let's say it's $50k, so you would need to bring in $150k to meet your goal of $100k take home.

$150000/ 12 months = $12500 monthly. If your goal is to run a small studio with 100 members, they would need to AVERAGE $125 monthly to reach your goal income.

Obviously, this is a simple exercise, but it gives you a starting point. If your market won't support the monthly fee, you need to change the model to meet your income goal. Increase the number of clients, or lower overhead. Also, this is all pre-tax. You would need to factor in the tax situation for your area.

Good luck!

James


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