IHRSA Europe update
Consider offering good, better and best versions of your membership
Competing with the budget clubs • Rafi Mohammed, PhD C
lub owners, like most businesspeople, are intimidated by things they don’t understand. So they spend their time on
marketing, membership and programming. But if they’d invest half a day, or perhaps a day, to create one or more intelligent pricing strategies, and then implement them, they could reap a huge return. For example, most clubs recognise only
two pricing levers: one to push prices up, and one to push them down. However, in my book, The 1% Windfall: How Successful Companies Use Price to Profit and Grow, I offer more than 50 different ways to think about pricing. Club owners just need to become proactive and creative. Price is the compensation for the
hard work companies do and the financial risks they take. You can create a foundation for better pricing by bringing price and value into alignment. Keep in mind that value doesn’t mean the
lowest price. In fact, club owners are too quick to discount memberships because, while many offer great value, they tend to underrate themselves. Instead of trying to lure new members with low prices, they should consider offering different membership options. I’m a big fan of good, better and best versions of a membership
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– a pricing strategy that allows customers to self-select and make value choices. We see this in other service industries. Alongside their regular dinner menus, restaurants have long offered ‘early bird’ specials, which are great value for price- sensitive diners. The ‘chef’s table’ offers equally great value for high rollers who want to splurge and interact with the chef. Why, then, do clubs feel obligated to
offer all-inclusive memberships? Why not break out group classes and other special offerings? This would, for instance, permit clubs to set prices a little lower for customers who don’t sign up for classes. It’s important to recognise that a discount
today hardly guarantees a pay-off tomorrow – it often simply devalues the club. That said, the proliferation of budget clubs is a hot topic because it’s a real challenge. Unfortunately, if budget clubs offer the same equipment and services as yours, then you’re commoditised and you’ll probably have to lower your prices. But it’s rare that any two clubs are identical, so you need to identify what sets yours apart that justifies charging a premium. If a US$11-a-month club just opened down the street, you should ask yourself: why should people choose my club over that low-priced club?
Read Health Club Management online at
healthclubmanagement.co.uk/digital To answer that question, you need to
create a value statement, and this isn’t the time to be modest. This is designed, in part, to boost the confidence of your staff, so take the time to understand what sets your business apart and communicate those defining differences to your staff, your members and potential members. Then you can focus on ways to increase
value, from offering health and workout tips to expanding your menu of social activities. You have to be proactive, but when you really think about what your club has to offer, you’ll be surprised at what you’ll find. Rafi Mohammed, PhD, is a pricing strategy consultant who spoke at a recent IHRSA event.
About IHRSA
Founded in 1981, the International Health, Racquet & Sportsclub Association is the only global trade association, representing more than 10,000 health and fitness facilities and suppliers worldwide. To learn how IHRSA can help your business thrive, visit
www.ihrsa.org Locate a quality IHRSA club at
www.healthclubs.com
July 2014 © Cybertrek 2014
PHOTO:
SHUTTERSTOCK.COM/RACORN
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