So it’s the middle of the month, and you are looking at all your past due member accounts, wondering if any of those delinquent members are going to get caught up or if they’re a lost cause. Is it worth calling them again or should you just send them along to collections?
No one likes sending their members to collections. It just feels dirty for some reason.
Why, I don’t know. They made an agreement that they’re not adhering to. After all, you held up your end of the bargain. But still, no one enjoys it.
Let’s look at these past 10 years…the deepest recession in decades. Some states had unemployment rates that neared or exceeded 10%. Foreclosures were the norm. Jobs were lost. The last thing anyone cared about was whether or not their gym membership was paid.
Granted the economy is better now for some people, but everyone remembers the financial vice grip that was their life. Many are still feeling the pinch now.
So if you really want to feel good about your past due accounts, and you want to be seen as the good guy and not another debt collector, then here’s an idea for you…
Forgive their debt. Let them start over.
I usually hear “No way, people owe me that, a deal is a deal!!”
Time to join the real world my friend, they aren’t paying you. Sure a collection letter will scare some of them into paying, but you can be certain that they will never come around your gym again. But I would estimate that 90 percent will never pay you and will ignore your continued threats. So here’s a chance to be different.
Start a “Membership Amnesty” Program for your gym. Offer 100 percent forgiveness on any past due balance. Here’s the catch. In order to be forgiven of their past due balance, they’ll need to come in and bring new billing information, and they must commit to a new membership term.
If you’re not comfortable with allowing them to slide completely, then offer a 75, 80, or 90% off forgiveness sale on their past due balances.
How many gyms around you are offering to forgive the balance of delinquent members? I would venture to say zero. Even when the member’s financial situation improves, they’ll likely look for a new gym to join, because they are embarrassed or just don’t want to pay the hundreds of dollars necessary to bring their account current.
Wouldn’t you as a gym owner rather have something than nothing? Wouldn’t you rather be seen as a community leader who forgives rather than punishes? I know I would rather have a fresh $30 in my receivables account every month than $300 in collections.
This is also something that will separate you from the gym down the street. This member that you offered to help in a time of need, will now be a member for a long time. They’ll remember the kind gesture and will feel a great deal of gratitude and less stress thanks to your good deed.
Another cool thing about offering a program like this is that it will remain a “secret” strategy that your competitors will never learn about, because it’s not like a prospect is going to go down and tell another gym they’re signing up at that they were delinquent elsewhere. Plus if someone mystery shops your club, they only learn about your sales process, not your collection process.
Now granted, there are some bad members out there, members who will never get caught up no matter how many times you call, no matter what kind of forgiveness you are offering. They just don’t care. And for those members, I think it’s fine to send them along to a hard collection company and let them deal with them. You do fitness…it’s no fun trying to be a thumb breaking debt collector.
So let’s look at some quick numbers. Let’s assume you have 100 members in collections or are past due. If your monthly dues are $40 and you just get 5 of those delinquent members current, that’s an increase in $200 per month. Over the course of a year, just getting 5 members current each month will equate to $15,000 in revenue by the end of the year.
That pays off your car and makes 60 members very thankful for your generosity. The other 95%, let someone else try to collect from them.
What you’ll find is that people really want to get caught up. No one likes the feeling of being unable to pay bills. Relieve that nagging guilt and increase their loyalty by forgiving them.
To be successful in today’s competitive landscape, you as a gym owner are going to have to do things differently. This is just one of the many ways in which you can differentiate yourself, be a better person, and gain the trust of your members.