All good answers everybody. Thanks. I like it because it’s one sale to the client up front and then automatically charged to their credit card every month there after. It’s paid for ahead of time and attached to time so the clients have incentive to complete them. Make ups are allowed, of course.
There’s no chasing down people for checks, no bad checks, nobody forgetting their wallet when they are supposed to pay, nobody stretching out packages of sessions over long periods of time, I don’t have to re-sell them to renew, if I need to give a refund, it’s never for more than a month’s worth at a time. I know exactly how much is coming in and when.
There are a lot of reasons to do it and not many not to. I’ve written something about how to do this if anyone is curious or would like the exact model we use. I’d be glad to help implement it if you’re looking to do the same. Contact me with any questions you might have.
In fact, I’ll post the report I wrote below on specifically how to do this and it’s benefits. If you’d like a free copy of this, just shoot me an email at my address below.
How to Set Up EFT/ARB in Your Personal Training Business
A better way to bill and retain your clients and avoid “selling”
It’s no secret; most personal trainers hate to sell. They hate to sell themselves and they hate to sell their services. That’s fine, a lot of people have a hard time pricing themselves and that gets better with more experience as an entrepreneur. But, if you hate doing it, don’t put yourself in a position where you are forced to do it over and over again. What am I talking about?
I’m talking about EFT or ARB. EFT is electronic funds transfer, or as my bank calls it, automatic recurring billing. We are fortunate to be in an industry where typically, your services are paid for ahead of time. That’s great. You don’t have to bill your clients after the fact and constantly chase down 50% of them to get paid for what you have already performed. So, we are a step ahead on that one.
Now why do most trainers continue to sell single sessions or packages of 10, 20 or more sessions? What happens at the end of that 10 or 20? You are in a position where most of the value of your clients comes from repeat business. Selling a fixed number of sessions implies that they will stop at some point. Not what you want!! You want them to fall in love with you and not be able to exercise without you.
Every time you come to an end of a package, you have to resell them on another package. If they bought a big one up front, how are you going to convince them to buy a big one again? If they see that big dollar amount, they may want to go for the smaller package this time. How are you going to top your original sales pitch to get them to sign up the first time? Worst of all, they may just take it as an opportunity to “take a break” or stop altogether. Does this sound familiar? Wouldn’t it be better if you could have a better chance at retaining these people, more predictable and reliable income, and not have to resell people every time they complete their package with you? The fact is, there is.
Just take a look at what your own gym does to you. They sign you up with an advance (initiation fee), slowly dribble a recurring monthly fee out of your account“automatically. If they are smart, they locked you into a long term deal like a year or more. Some places will lock you in for 3 years. Those days may be gone for a while. I like to advertise and use as a selling point, month to month agreements, but that’s because I know the likelihood of someone quitting after only the first month or two is low. It makes them feel comfortable not having to “commit” to something too big or for too long. The point is that the system is automatic, just like a gym membership. Think of what you are selling as a personal training membership. Here’s how we have done it.
You’ll need a business bank account with your EIN number. This is your Employer Identification Number. You can obtain that easily from the IRS after you are a legal business entity. Once you have your business bank account, ask about their merchant services and the ability to take credit cards. My bank uses a virtual terminal through authorize.net. Even other services like Paypal now have a business account and virtual terminal option to make things easy. The point is to find a payment processor that will allow you to take and process credit cards automatically. There will likely be a very small transaction fee and something like 2-3% of the total transaction. And I think our cost for having the recurring billing option is $10 a month. And possibly the more volume of transactions you do, the lower your rate will be. It can look like a lot when your statement comes, especially for American Express cards, but with such a high priced service, we should be able to maintain relatively high margins to allow for this. Plus, NOT having the headaches of chasing people down, keeping track of sessions, getting bad checks, etc. makes up for the relatively small costs of processing credit cards and doing it automatically.
The crucial feature of this system is the ability to set up recurring payments on a monthly basis automatically. So for every new client I see, I sell them on one of our options, usually either 2 or 3 times per week (it’s cheaper per session the more frequent they workout). From here on out, it is just a monthly membership. You can choose to charge them an initiation fee if you like or not. If not, make sure you note that to them so they know how much they are saving. If you own a facility, I would charge them a small one. Let’s say they want to train 2 times a week at $60/session. That’s $480/month. Let’s make it look more marketable and call it $479/month. That’s it. You enter that into your system open ended with no end date and let it roll until they need to stop, if they need to. I’ve had clients for the better part of a decade on this system and I’ve never stopped it.
You can tell them that twice per week is 8 workouts a month based on a 4 week month. Some months have 5 weeks so they may get 9 or 10 workouts, but only pay for 8. That’s a plus for them. Or if they happen to take a week off out of 3 months, there’s no penalty. That’s another plus for them. Over the course of a year, you are actually giving them a full month for FREE if they are consistent (52 weeks in a year, but you only charge for 48). That’s another plus for them. Think of it like a bonus for consistency. Actually, due to sickness and vacation, they probably will end up taking that month off, but the point is that you are over delivering and accounting for things that may arise. This way they aren’t paying for something that they aren’t using like a traditional gym membership. If they need to take more time than that, then you can have them do make up sessions into the next month or simply adjust next month’s payment amount. Some programs will let you skip a month or stop the subscription and restart it later. It’s very easy to do without having to keep asking them to write big checks or give you their credit card over and over again. The more they feel like they are repeatedly paying you, the more they may consider cutting it out eventually. You want to remove that emotional action from your dealings with them so they see the transaction later on their credit card statement and it’s just another bill coming from someone else, not you!!
Let’s compare this to the same rate per session of $60 and you sold them 48 sessions that will last 6 months. The total for that package would be $2880. That’s a lot to plunk down all in one shot for most people. That could be a down payment on a new car! Why would they want to waste that on PT? Good question. Many wouldn’t. Now let’s say you come to the end of that package. What is the likelihood that you will get a renewal for that amount again in a quick 6 months especially in a down economy when few people have much cash lying around? Maybe not the best chance. If you have this person on ARB, they will probably just blow right past that 6 month mark and you would not have to “resell” them again to keep working with you. You’d get more out of them, they are more consistent and get better results. In the long run, you are more likely to realize the true lifetime value of the client by increasing your retention by charging lower monthly fees. There are a few different ways you can work this scenario, but above all else, do it monthly, and make it automatic. It also keeps the client more accountable by having their sessions attached to time instead of having someone stretch out 48 sessions over two years. That isn’t helping anybody. This system will weed out those people as well so that you can focus on the more committed clients. For added stability and predictability, pro-rate your client’s first month and start their next month on either the 1st or the 15th of the month, whichever is closest to their sign up date. This way you won’t have unpredictability by having nothing coming in for 8 days and then $10,000 in one day. It will even out your cash flow and you should know exactly what is coming in twice per month. It will help with your cash flow to pay your own bills. And it should help you with your projections based on your monthly goal of new clients to acquire. Simply add the number of new clients and the resulting revenue to the monthly totals to find what you need to reach your monthly goals.
I hope this report is useful for you. It is a little utilized system, but the best in terms of what I have seen to sell and retain the clients that you worked hard to get. If you have more questions about the system or how to implement it, just shoot me an email at [email protected] . I’ll be happy to help. For similar useful tools be sure to check out our Personal Trainer Marketing and Sales materials at http://www.spartatraining.com/store.