Drive Club EBITDA with Revenue Assurance


September 1, 2020

The fitness business is exactly that, a business. Unfortunately, when it comes to driving financial performance, fitness operators usually start by asking the same basic and familiar questions:

– How can I get more members?
– How can I improve member retention?
– How can I increase member spend?

The common theme in these questions is a focus on marketing, sales and customer relationship management (CRM) — strategies to drive customer demand. While the answers to them can have a profound impact on your bottom line, they won’t uncover all opportunities available to you, especially those where you’re missing out on your own hard-earned money.

Revenue assurance​, a practice from the telecom industry, focuses on improving operational efficiency, reducing waste and ensuring all possible revenue is collected. When applied in the fitness industry, operators can enjoy significant earnings before interest, taxes, depreciation and amortization (EBITDA) gains, without even touching customer demand.

While no operator is the same, revenue assurance delivers benefits in three ways:

Scheduling and booking: After membership dues, scheduled services — personal training, swim lessons or tennis lessons — are an operator’s next main source of revenue. After struggling to get members to sign up for these services, operators face continued headaches like members who haven’t fully paid, sessions not being tracked and potential fraud continuously requiring investigation. Revenue assurance efforts focus on improving reporting and integrations between member accounts, member payments, bookings and payroll.

Membership changes​: Memberships continually evolve throughout the member journey: upgrades or downgrades, freezes, adding or removing family members, dues increases, club transfers, etc. Operators leave money on the table when these changes are not fully automated and governed. Examples include front-line staff not collecting membership change fees, charging pro rata amounts and accurately updating dues. Revenue assurance helps you streamline and protect membership changes.

Billing: Operators pay far too much in transaction fees. Renegotiating terms with your payment provider or management solution can go a long way. Revenue assurance also optimizes billing by maximizing conversion rates, testing alternative payment cycles and deduction dates, enhancing resubmissions and debt collection, and ensuring members are always charged on time for the correct amount.

What causes revenue assurance to be so impactful? There are three main reasons:

1. The fast pace of change and competitive landscape can lead to mistakes.
2. Offerings can be highly complex, span siloed business areas and involve the interaction of multiple IT systems.
3. Even small errors have severe financial implications since revenue is primarily subscription-based and involves a high transaction volume.

The fitness industry should follow the lead of large telecom companies and make revenue assurance a top executive-level priority. The opportunities to improve how you operate are substantial and should be discussed with professional consultants who understand both the fitness industry and revenue assurance. Additionally, large operators need to ensure their club management solution enables the automation, governance and integration capabilities required for the opportunities uncovered by revenue assurance.

Discover how revenue assurance can impact your EBITA.