Direct mail campaigns

One of the big questions any small business owner wants to know is "How do I get the word out about my business". I won't go into all the low cost ways to get your marketing message that are covered in the excellent book Guerrilla Marketing (a must read for any small business owner). Instead, I wanted to let you know about one of the only advertising methods that I have found success with - direct mail.

Specifically, I recently began using a postcard mailing company called Boise Direct (http://www.boisedirect.com/). They mail oversized postcards (see photos) at a cost of less than the price of a first class stamp. I'm not saying this is cheap in the overall sense. If you pay let's say 35 cents for each piece and you bulk send to 5,000 residents, we're talking $1750. But, when you really break it out by the piece, 35 cents is a huge bargain. Could you gather demographics, design a beautiful postcard, print it in full color, and mail it to every resident in your town for that price? I know I couldn't.

In the end, every business decision you make should be dictated by one thing - return on investment. You already know that I'm a fan of EFT's, so let's plug some numbers into this and see what the return is. Let's say we run a promotion with 2 options: $49 enrollment fee plus $19 a month EFT (with a 12 month minimum) or $249 for a 1 year paid in full. We send out a postcard with this promotion to 5,000 residents, at a cost of $1750. We sell 5 one year paid in fulls and 20 EFT's. I am oversimplifying this, but that actual dollar value of this promotion is as follows:

• $1245 up front revenue on the paid in full plans (5 x $249)
  
• $735 up front revenue on the enrollment fees (15 x $49)


• $285 a month for the next 12 months on the EFT's (15 x $19/month)

That gives us a grand total for the year of $5400. The $1750 investment returns a profit of $3650, which is very good. In fact, in our example, the money spent on the postcard was actually recovered right at the start, so all the EFT's processed over the next 12 months represent your profit from this promotion.

So I guess what I'm saying is that you may want to consider a direct mail program, just be sure that if you do, you make sure to document your results, so that you can better comprehend the success of the program. Even so, I'd probably advise running a program like this 4-6 times year if your budget will allow, thus taking advantage of the repetition

If you've got a marketing method that you've had success with, please feel free to post it here by submitting a comment.

The invention of the EFT!

Now that I've spent some time telling you about an idea to quickly recapture the money you spent to convert your club to 24/7 (the B1G1F sale), I'd like to discuss what I think is the best long term plan to achieving a profitable club. The answer is the EFT ... and specifically, the open ended EFT.

EFT's (electronic funds transfers) are just a way of drafting your members for their monthly dues automatically each month. Open ended EFT's are simply EFT's that have no expiration date. They may have a minimum term, but once that minimum term has been met, these EFT's automatically convert to a month to month plan. In other words, unless and until the member cancels his or her membership, you just keep on drafting their account.

Back in the day, the majority of memberships sold were paid in full (term) plans, for example - 3 months for $99, or 1 year for $399. In my opinion, paid in full plans just do not work in a key club. Here are my thoughts:

1. If you are like most key clubs, you only staff the club during peak times of the day - in order to interact with as many members as possible while also capitalizing on new member sales. That means that there are a good percentage of your members that you will never see at all. When this type of member is coming up on their renewal, how are you going to get with them to renew them? True, you could call or email them, or send them a letter - but all these things take time and effort. If the member was in on an open ended EFT, the relationship flips - instead of you chasing the member to renew them, you just keep drafting their account - and it is up to the member to contact you to stop you from doing this.
2. Next, EFT's will help you level out your cash flow. If like me you own a club in a colder climate, you absolutely dread summer. First, you have fewer new members joining the club, and second, your electricity bills skyrocket because your air conditioning system is working hard. As you know, a reduction in revenue and an increase in operating expenses is absolutely horrible to the bottom line. Wouldn't you rather know that you are going to have roughly the same revenue in July as you did in January? Not only from a cash flow standpoint, but also for budgeting, it is much easier if you have some cash flow predictability.
3. I think some of the best membership plans out there are the $X down (enrollment fee) + $X a month (cancel anytime) memberships. These plans work to build your long term cash flow, while still allowing you to bring in a nice chunk of change in the busier months, by way of the enrollment fee. What's more, the fact that the member can cancel anytime is often the thing they need psychologically to feel good about joining your club.
4. Another idea I've seen used is the annual "maintenance fee" that you draft from your members in your club's slowest month. These things are usually marketed as equipment upgrade fees, rate guarantee fees, or annual fees for the use of reciprocal clubs.

I highly recommend you take advantage of your software provider's ability to draft your membership dues for you. This automates the process, and in most cases, if there are any problems with the membership dues, your software will lock the member out of your club automatically until they make good on their account.

Pay for your 24/7 conversion in 1 month!

Here's my favorite idea for recouping the money you shelled out to convert your club to 24 hour access. RUN A GRAND RE-OPENING SALE!

Here's how it works:

Let's say you dropped five to ten thousand dollars converting your club to 24/7 - you really went all out. Now your goal is to get that money back into your pocket as quickly as possible. By far the best promotion I have ever used to do this was to run a grand re-opening sale. Specifically, my sale promoted one offer heavily - the Buy 1 Get 1 Free (or B1G1F) offer.

One important thing we took into account was the fact that we knew this promo was in the works, so we started the run up to it by offering only short term memberships (really short term - like 1 to 3 month). We did this because we didn't want existing members being upset that they just bought a membership and now it's on sale. In fact, we really got creative, when we were two weeks out from our sale, we literally gave away memberships. We gave anyone who came in a 2 week membership and told them exactly why we were doing it ... so that when we run our Grand Re-opening sale that they would be free to take advantage of it.

Here are some details of the sale (you're probably not going to believe that a little 4,000 s.f. club could do this, but I assure you it's true:

• Run the short term memberships explained above running up to the sale - which acts to create many members whose memberships are coming due at just the right time.


• Announce (heavily) the promo for the entire week leading up to it - and the offer like I said was a buy 1 membership get 1 free offer.


• Run the offer for 3 days only - we chose Saturday, Sunday, and Monday - which was perfect. We actually closed the 3 days before the sale to clean the place head to toe and repaint the walls.

How much money do you think we brought in during a 1 week period? ... $5000? ... $10,000?

Try $24,000!! We were absolutely blown away by the results! Granted, we took a lot of people out of the market by offering this promotion, but I can assure you that it was a runaway hit.

People bought many different membership lengths and plans. For example, some people bought a 3 month membership for themselves and then used their free 3 months in the form of a gift certificate which they could give to a friend or family member. Others bought an entire year, getting a year free (we capped the maximum length at 1 year, although we sold a few 2 year memberships to members that specifically asked).

In short, I highly recommend running a huge Grand Re-opening sale in order to recover your conversion costs. I think you'll be amazed with the results! And don't forget to market to your past (expired) members. this is a perfect chance to tell them that you've changed something about your club ... which will help them justify giving you another chance.

By the way, if you've run any promotions that you've had extreme success with, I'd love to hear from you. Just click on 'post a comment' below and let me know what worked for you. Thanks!

Technology Wrap-up

At this stage of the blog, everything I have spent time on is related to technology. In summary, the major areas of technology that you need to address are:

• Access Control
• Surveillance
• Panic Buttons

As you've already learned, the technology area of starting or converting a "key club" is my favorite area. Using technology to improve our quality of life is something that I have been a student of for a long time. In my world, that means using computers, software, and the internet. If you're a club owner, you do it too - offering members ellipticals for cardio, circuit equipment for strength training, and an entertainment system to keep them working out longer.

Now that I've written about so much of the technology needed to run a successful 24/7 fitness center, I'm moving on. In my next couple of posts, I'll give you some ideas about how to promote your new key club. My company has helped nearly 200 club owners convert to 24 hour access, and we've seen several very good ideas related to getting the word out - which I'll share with you in October.

Panic Buttons

So far, you've learned how to get members into your club using fitness management software and an access control system, in addition to using a surveillance system to verify that the members are following club policy when they enter. The next requirement that insurance companies ask for is related to making sure that members are safe while they're in your club. This is accomplished by using a panic button system.

A basic panic system consists of 4 wall mounted panic buttons, 2 panic "necklaces", and a security panel. If any emergency situations occur while your club is unstaffed, your members may press a button and emergency personnel will be dispatched to your club.

As you may have guessed, the necklaces are wireless devices. They are available for your members to use if they should want to keep a panic button with them while they are using the club. The wall mounted panic buttons may be wired or wireless, although the trend is towards wireless due to its ease of installation. You should also have signs that clearly describe what the purpose of the panic buttons is, and how to use them.

The security panel consists of a wireless receiver (to communicate with the wireless panic necklaces), an automatic phone dialer, a battery backup, and a keypad. The panel installs in a similar fashion to a standard answering machine, plugging it into a phone line and then plugging your phones into it. It is designed this way so that the security panel can take control of your phone system to dial a central alarm monitoring station if a button is pressed. The central station will then dispatch the proper authorities, as well as notifying you of the alarm activation. A nice side effect of the panel is that it can also alert you if there is a power failure at your club.

Some optional equipment that can make your panic button system even more functional include a strobe light which flashes when an alarm event occurs (this helps provide members with a visual clue that emergency personnel are in route), smoke / heat detectors, door / window alarms, and glass break detectors.

Surveillance Enhancements

There are many things that can be done to make your surveillance system easier to use, which will be the topic of this post.



One question we hear from customers of our systems all the time is "What if a member lets someone into the club behind them?". Technology provides the solution for this problem (a problem that is generally larger in clubs that have a lot of younger members). The device is called a tailgate detection system, or TDS. The TDS is a device that consists of two plexiglass posts mounted on the inside door frame of the entry door. The TDS watches the comings and goings of your club, and if it detects more than one person entering the facility on a single card swipe, it sends out an alert to your surveillance system.



Your surveillance system then picks up that signal as an "alarm event", which causes your DVR to log the event and record it at a very high quality and low speed. This change in the recording parameters allows the club owner to review the surveillance history of the TDS infraction quickly and easily by simply reviewing recordings in the alarm history event buffer. In fact, several of the DVR's we sell can even send an email to the club owner with a picture embedded into it of the TDS infraction. All of this works to reduce the amount of time that a club owner needs to spend reviewing surveillance footage.



Another question that we often hear is "Can I view my club's surveillance from my home?". As long as your DVR has a network interface on board (and most do), you can network the DVR to your router and, using a high speed Internet connection, you can view the club's surveillance using the Internet. There may be some advanced configurations that need to be performed at your club in order to allow this to occur - and these can be done by either your network technician, or remotely by the company that you buy your system from.



Built in to most DVR's is the capability to record only when motion is detected. This feature if used can save hard drive space on your DVR, allowing it to record for more time before overwriting itself. Many club owners report that they are getting 3-5 days of a recording history out of the DVR's, and many insurance providers have minimum requirements with respect to either hard drive size, or length of recording time, so you should probably check with your insurance company before you buy a DVR to make sure it meets their requirements.

Surveillance System

Now that you know how to get members in and out of your club using an access control system, you need to move into the realm of enforcement and safety. The first part of securing your 24 hour access fitness center is performed by installing a surveillance system.

Most insurance companies that insure this type of facility require a minimum 4 camera system. The system will consist of a 4 camera digital video recorder (DVR), a vari-focal (fancy word for manual zoom) camera, 3 dome cameras, a video monitor, a power supply for the cameras, and a battery backup for the entire system. The insurance companies generally require that the vari-focal camera watches the comings and goings at the front door, a dome camera views the treadmills, one views the free-weight area, and the last one views the back door.

I would suggest that there are other areas of your club that are important to you from a safety / security standpoint, and so I advise that all of my customers trade up to an 8 camera surveillance system instead of the 4 camera system. With the added cameras, I recommend having a parking lot camera, a foyer camera, a camera watching the front desk, and a camera watching the circuit area. 8 cameras provides you with significantly better coverage than 4. I also recommend installing an LCD video monitor viewable by your members as the enter the club. This concept is used as a theft deterrence by stores, and you'll be using it to just remind members that they are on video.

In my next post, I'll discuss other devices and options that can make your surveillance system more functional, and easier to use.

Access System - part 3

We've now learned about the door hardware system, and the access system. The last part of your access control system is your computer and your fitness management software. 75% of fitness software companies are compatible with access control (though many of them refer to it as turnstile or gate control). However, not all of them are created equally as to how functional they are in this area. The old school way that these companies thought of access control is simply that an employee would be sitting at the desk, a member would present their card to a reader, and a turnstile would activate - allowing the valid member to enter the workout area. This meant that, in the software provider's eyes, if there were some type of problem with the membership, the turnstile, or the software, there was a staff member there to assist the member.

In today's world of access control, the access system does not consist of a turnstile, but an actual entry door. In addition, there is very often no staff member there to assist the member if there is a problem (say for example their membership has expired) - they just simply don't get in. This means that the access system must run flawlessly, for hours (and sometimes even days) with no employee interaction. This task can be daunting for some software providers, who are still stuck thinking that someone working at the club is there to click their way out of a message or error. In addition, providing feedback to the member as to why the system isn't letting them in becomes extremely important. Some companies provide audio signals ("your membership has expired"), or visual cues via a video monitor. The best software providers are more proactive, and they alert the member before his or her membership expires via email, or by simply providing the audio cue "membership expires in 10 days" for example.

It is not only the software that has to be functional and robust for this application. Your computer and its operating system has to run flawlessly in an unattended fashion for several days. Think of how many times your computer pops something up asking you to "click here to continue" or "would you like to update this program". These things cannot occur when no one is there to interact with them, especially if they prevent your check in software from letting members in while they wait for user interaction. And the kiss of death is an automatic update. How many times have you gone to your computer system only to see the message "Windows has performed an automatic update and your computer was restarted"? Imagine if this chain of events had occurred while a member was trying to enter your club.

I highly recommend that you ask your software provider if their check in software can be set up to launch automatically if the computer should experience a reboot. The last thing you want to do is be called down to your club in the middle of the night to simply restart your software program.

Beyond the computer, your operating system, and your fitness management software, you must give serious thought to weather related power outages. However brief these may be, your entire computer and access system should be running on a robust battery backup system. We're not talking about a $50 battery backup here - this is more likely a $200-300 system.

We've now learned about the 3 main aspects of access control - the door hardware, the access control system, and the computer and software. Now that you know what it takes to get members in an out of your club, we'll move on to the safety measures that must be put in place to allow them (and you) the peace of mind of knowing that everyone using the club is safe. In addition to peace of mind, you'll have to find insurance for your 24/7 access fitness club - and the insurance companies willing to insure this type of business have some safety requirements of their own as you can imagine.

Access System - part 2

I'd like to spend some time informing you about the parts of the access system that bridge the gap between your computer system (which I'll discuss in the next post) and the door hardware (which I discussed in my previous post).

We now all know that the door is going to be opened through the activation of either an electric strike, or a maglock. But what tells these devices to function? That is the job of the access system itself. An access system consists of two smaller systems - an input system, and an output system.

The primary component of the input system is a card reader. Typically, and especially in fitness club access systems, this is a barcode reader (see photo). A weatherproof barcode reader mounted to the outside of the fitness center waits for your members to swipe their membership card or keytag through it. It then sends this information to your computer, and more importantly, to your member management software, as input. Since I'm going to spend time in the next post discussing the details of the software and computer, let's just simplify things for now and assume that the member who swiped their card is a valid member.

With that valid member input, your computer system will then send an output to a door controller (see photo). The door controller is an electronic device that picks up that signal and provides the power needed to activate the electric strike. As we learned previously, if you are using a maglock, the door controller keeps that device powered all the time, and when it wants to unlock the door, it actually cuts power.

So we've learned that once we get past the door hardware, we find the access system, which is simply an input and output system that manages the electric strike or maglock. Next week, we'll get into the final component of the access system - the computer (and software).

Access System - part 1

As previously mentioned, the access system is typically the most misunderstood system related to converting a 24 hour access fitness club. That's probably because part of the access system includes hardware related to the door, and that is generally the domain of a locksmith, not a fitness center owner. But it doesn't have to be that difficult - you'll simply find a qualified local locksmith to handle this part of your installation. All you need to do is understand the basics so you know how to find the right locksmith for the job. In this post, I'll discuss many of the details related to modifying your door to allow member access.

First, there are two main methods of controlling door access - electric strike and maglock. Which one you use will depend primarily on what style of door you have. If given a choice, we always recommend customers opt for installing an electric strike.

The way an electric strike works is that in its locked condition, it is not powered. Once power is applied to the strike by your access system, it unlocks, allowing member entry. This is what's known as "fail-secure". This means for example, if you have a power outage, your facility is secure (locked). Of course, members will always be able to get out of your club, even if power fails - by using a crash bar or exit push paddle. We tell customer to budget around $500 for a typical electric strike installation.

In contrast, a maglock is a "fail-safe" device. This means that if power fails, your door will be unlocked. The way a maglock works, is just the opposite of how a strike works. That is, when power is applied to a maglock, it is locked. It is when power is removed from the maglock (by your access system) that free entry to the club is allowed. Because of the way it functions, a maglock requires other devices to be installed inside the fitness center to allow members to exit. These devices are called requests for exit devices, also known as RFE or REX devices. Often these are motion activated, so that if someone approaches the door from inside the club, it unlocks automatically. Although they are often easier to install, maglocks are generally twice as expensive to install than electric strikes.

Other locking devices are available, and they may be used in unique situations. They include devices such as electrified crash bars, electrified latch pull devices, and more. In any case, most of the alternate devices operate by the same principle of the strike or the maglock, and they are designed mainly to accommodate non standard doors.

Intro to technology

There are 3 main areas of technology that need to be addressed when creating a 24/7 operation:

1. Access Control
2. Surveillance
3. Security

The access control system includes hardware specific to your door, your computer and fitness management software, a card reader and door controller, and various cables and wires linking all of the components together. This system is responsible for allowing members access to your club, depending on their membership status, while keeping non members out.

Surveillance systems provide you with a way to view the comings and goings of your members while your facility is unstaffed. Typically, these are digital surveillance systems, which have begun replacing older time lapse VCR's.

A security system provides a monitored system of panic buttons and necklaces. The security system may also include such things as door sensors, smoke detectors, and glass break detectors.

Each of the three systems mentioned above have several components. I plan to devote a post to each of the three systems, providing a detailed breakdown of each of them. In the next post, I'll discuss everything related to the access control system. This system is generally the one that is least understood by our customers, so I will do my best to make sure I break it down in to easy to understand pieces.

3 sections of interest

There are many facets to converting your club to 24 hour access, but I plan to break it down into 3 main areas - technology, marketing/promotion, and operations. Of the three overall sections, I will spend the most time describing the technology required to run a 24 hour operation - mainly because it is my favorite area.

I have always been what marketing experts refer to as an "early adopter" when it comes to new technology - latching on to it as soon as I can afford to. That means that I tend to use technical products before most people do - sometimes it's a good thing, and sometimes it isn't. The good part about being an early adopter is that I am able to use new products for my own gain before they are widely available. The bad thing is, I usually pay more for the products since they are not usually being massed produced when I buy them.

My interest in technology is not the only reason that I plan to spend the most time on that subject. The fact is, installing the various technology required to run a 24/7 club is sort of the first step required to operate one. For example, you won't need to know how to market and promote your 24/7 club until you actually have one to promote! On top of that, there's no reason to know the ins and outs of operating this type of club until you actually own one. And believe me, operating a 24/7 club is quite different than running a traditional fitness club.

In my next post, I plan to introduce you to the various types of technology needed ... stay tuned.

Fitness Industry Trends

Before I move into the technical systems, I'd like to first offer my insight into the fitness industry in general. I have been in the industry for nearly 15 years, and in an industry as young as this one, that is actually considered to be quite a long time. I started out repairing fitness equipment for some of the biggest manufacturers around - including Life Fitness, Precor, Star Trac, and many more. I was so interested in the equipment and technology required to run a health club that I opened one of my own about 8 years ago. In fact, over my career in this industry, I have visited literally hundreds of fitness centers, and I have several friends that own clubs.

Now that I've explained what it is that I feel qualifies me to have an opinion as to what I believe is the future of fitness centers, I would say that this is just that - my opinion. I can say that I have quite a few trends in the fitness industry that proved to be accurate. One is that I saw first hand the excitement surrounding Precor's introduction of the industry's very first elliptical (called the 544 Transport) . I encouraged every club owner I knew that they needed to start adding ellipticals to their cardio mix as soon as possible. At that time, ellipticals were cheaper than treadmills and they took up less floor space, so I was constantly encouraging club owners to add ellipticals instead of treadmills when their budget allows. Now most clubs have an equal number of ellipticals and treadmills - proving out that the trend was here to stay.

I saw the same type of excitement around cardio entertainment systems such as Cardio Theater. Again I encouraged club owners to add televisions and Cardio Theater to their clubs, knowing that keeping members interested in fitness would be the name of the game when it comes to retention. Now you wouldn't even think about opening a new club without installing a cardio entertainment system.

Now on to my trends for today's fitness center owners. If I were someone considering opening a fitness center today, I would only open one if it were one of the following formats:

1. A 24 hour access facility in a small town or neighborhood area.
2. A nationally recognized franchise (examples include Planet Fitness, Powerhouse Gym, or Gold's Gym).
3. A combination of the two (examples include Anytime Fitness, Snap Fitness, and World Gym 1440 All Axcess - with more on the way).

It is widely thought that as in every other industry, as the fitness industry matures, the smaller independently owned (mom and pops) operators are going to be disappearing. Squeezed out by pressure from larger operators, some independently owned clubs are selling out, being forced out of business, or simply retiring. It is true that the buying power, business model, and deep pockets of the larger club chains (including franchises) are extremely difficult to compete against. I would contend that if you plan to own a club in a metropolitan area, you should seriously consider being part of a franchised operation (if you can't beat them, join them). If you plan to open a club in a small community, open as a 24 hour access club (the large chains cannot justify putting their business models in small towns). And if you plan to open in a small to medium sized town that already has other fitness clubs nearby, you should open as a franchised 24/7 operation (brand name recognition and 24 hour access could be unbeatable!).

I hope that I've provided at least some food for thought for those of you considering opening a new fitness club. If you already own a club, my suggestion would be to simply convert to one of the above business models. If you want to convert to 24/7 but remain independent, you've come to the right place. This blog will detail out exactly how to do it.

Intro to 24/7 conversion

Welcome to my new blog!

This is actually my second blog - the first one (http://www.worldgymconversion.blogspot.com/) was so well read that it made its way to the number 1 position in Google's search engine! I had many club owners email me that they followed it, and several thanked me for writing it, which is what prompted me to write another.

My goal this time is to give you as much detailed information as possible about how to convert your fitness center to 24 hour access. If you are not a club owner, but you hope to be some day, I think you'll still find this information valuable.

When I created my last blog, I made a mistake and did not enable the ability for readers to post their own comments until after the entire blog had already been written. This time, I have enabled that feature, and I encourage you to post your comments and questions - in fact, it will help me to write the blog if I know what is on your minds, so please ask questions.