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:
- 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.
- 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.
- 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.
- 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.
