Quantiving Sales Opportunity. Part 2

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Telephone inquiry-to-appointment efficiency

Telephone inquiry efficiency is the second critical area that can bolster club income. Many clubs do not track this information accurately, leaving the membership sales staff unclear about their level of efficiency and possibly under the false impression that they are excelling. Accurate tracking ensures reality-based performance.

When tracked properly, telephone inquiry-to-appointment efficiency can result in significantly increased revenues from the sale of new memberships. Figure 2 will quantify the importance of this approach, along with good membership staff technique and effectiveness. The figure uses an average of 120 incoming telephone inquiries per month, with an average annual membership cost of $500. The example begins with a 50 percent incoming membership telephone call-to-appointment ratio (IC/AT) effectiveness (common among clubs that do not track accurately), and progresses to where each club should be, which is 80 percent.

The difference between capturing 50 percent versus 80 percent of people who call for information about your facility is $108,000 per year, with zero additional expenditure on your part. Each five percent improvement in this scenario yields about $18,000 in revenue.

Appointment-to-show ratios

The next critical area, appointment-to-show ratios, has been demonstrated above. It is crucial to track appointment-to-show ratios accurately, because even if your staff is performing at an 80 percent IC/AT ratio, it’s meaningless if only a small percentage of people actually keep their
appointment.

First-time closing presentation efficiency

First-time closing presentations are one of the most misunderstood and most important aspects of membership sales. The amount of additional membership revenue that can be generated through professional, non-threatening techniques is tremendous. Unfortunately, most clubs do not track the closing process accurately, if at all.

The following example will demonstrate that consistent, professional closing within a quantifiable system can generate as much as $700,000 per year, without spending any additional money.

Example: 180 prospects per month

Average annual membership = $500

(Key: FTCP = First time closing percentage)

180 prospects per month @ 50 percent FTCP = 90 new sales per month

90 new sales per month @ $500 = $45,000 per month x 12 months = $540,000 per year

The following increase occurs as a result of
reality-based performance (the above as a result of fantasy based performance)

180 prospects per month @ 70 percent FTCP = 126 new sales per month

126 new sales per month @ $500 = $63,000 per month x 12 months = $756,000 per year

Be-back efficiency

The expression “be-back” refers to prospects who are interested but unwilling to join on their first visit. They usually tell the membership staff person that they will be back to join.

Most clubs do not track this number; the fact is that 90 percent of all clubs have only a 15 to 20 percent actual be-back-to-join ratio. This also highlights the importance of first-time closing presentation efficiency.

The be-back numbers are as follows.

Example: 50 “be-backs” for 60 days

Average annual membership = $500

(Key = RTJ = return to join; DNR = did not return)

50 “be-backs” @ 16 percent RTJ = 8 new sales

8 new sales @ $500 = $4,000 net gain club
revenues

50 “be-backs” @ 84 percent DNR = 42 lost sales

42 Lost Sales @ $500 = $21,000 net loss club revenues

If out of 50 people who said they would be back, only 16 percent of them return to the club, and 84 percent do not, this means 42 lost sales. Forty-two lost sales at $500 each represents a $21,000 net loss in revenue for your club. Therefore, even though “be-back” percentages are very low, you can see that to attain the highest number of sales possible from this source, these prospects must still be followed up.

Point-of-sale referral efficiency

Most clubs derive the highest percentage of new memberships from member referrals. This is true even though most clubs have no point-of-sale referral program. The most likely time for a member to excite their friends about something is when it’s new and exciting. Furthermore, a certain percentage of new members never get fully involved in their membership and their help in recruiting new members is lost. Therefore, both the club and the new member lose, since the member will most likely not achieve his/her fitness goals.

When clubs realize the impact that even a good point-of-sale referral program can have in terms of increased annual revenues, it becomes important to implement a program and, of course, use a quantifiable tracking system.

The point-of-sale referral efficiency (Figure 3) uses only a simple program, with a simple goal of only one referral name for every two new members. The example is based on 130 new members per month with an average annual membership cost of $500. The ratios vary slightly from non-referral types of leads. For example, the appointment-to-show ratio is higher, because a member has referred the prospect. Another example is the appointment show-to-appointment close ratio. For member-referred leads, the closing ratio is slightly lower, as the membership sales person should be very low-key with these prospects. The referring member will do much of the selling themselves.

The bottom line is that an additional 21 membership sales per month can increase your club’s revenue by a surprising $126,000 with zero additional expenditure on your part.

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