Increasing Revenue: The ROI of Product & Services in the Fitness Training Market
Since we announced Moxy’s Charter Certified Training Center (CCTC) program this past spring, I’ve had the privilege to speak with hundreds of trainers, many of who are business owners as well.
From these conversations I quickly realized that, regardless of sport, owners possess an undying passion for the quality of their services and an uncompromising commitment to excellence. I also discovered that, regardless of their business’ size, generating revenue with a solid ROI was a key objective.
The objective of this four-part blog series will be to share and develop ideas on generating revenue for the small- to medium-size Fitness Training Centers.
We have worked hard to help our partners develop solid ROI models by leveraging Moxy as both a direct product revenue source and, maybe more importantly, by integrating Moxy into high-value assessment and consulting services. My objective here is to take a wider view, as the concepts we’ll be covering will reach beyond a Moxy-only solution.
The Simple Truth About Increasing Revenue
Regardless of a business’ particular product offering, whether selling training services or tacos, there are really only three ways to grow revenue:
- Increase the number of clients - Seems simple enough; get more paying customers in the door and revenue goes up. But not so fast. Social media, sponsorships, local ads, and referral models all have impact, but knowing what to do and when can be daunting. Furthermore, if done incorrectly, the drain on finances can be disastrous.
We know of one high-end coaching firm that looked very strong to the market but fell apart in less than two years. Lots of reasons, but one pain point certainly was a Facebook ad bill for $14,000—the lack of ROI consideration is never a good thing.
Larger clubs have the resources in the form marketing dollars or an in-house staff person who understands the landscape and—just as importantly—has the time. For smaller coaching shops, outreach is a big challenge. Increasing what is, in effect, a top-of-the-funnel sales activity is a big topic that we’ll dive into in the next blog.
- Increase Prices - Increasing prices can be a touchy subject. My experience outside of the fitness space is that small business owners do not charge enough. We’ll dive deeper into this subject in the third bog of this series, but as a hint, think about your differentiators: what separates you and your staff from the team down the street?
As a primer on pricing, it is generally accepted that there are two types of pricing models: first, and probably the most common pricing model, is often termed Cost Plus—I pay my trainer and that costs me $25/hour, my building costs me $15/hour, and as the owner I want to net $20/hour (the plus). Therefore we need to charge $60/hour (oversimplified a bit but I’m hoping to get to a bigger idea).
The second pricing model is called Market-Based Pricing. I look around and see the guy up the street charges $125/ hour, so depending on my position I will charge between, say, $95/hour up to maybe $160/hour based on services (this can start to get a bit complicated).
A third method, and the one we’ll be focusing in the third blog, is to develop your position based on what is often termed Value-Based pricing (this can start to get really complicated).
- Increase the number of products/services sold - Increasing the number of products offered, whether additional widgets or packaged services, is a low-risk method of improving revenue. Sometimes called Horizontal Integration, it allows you to offer value-added products & services across your offering to an audience that is already engaged and with whom you’ve created trust. An obvious example: a cycle shop adding lines of clothing. For an example with a bit of a twist, a tri club we know of receives 10% every time a club member buys gear from one of three local bike shops. We’ll cover this in the fourth post.
I hope this post got you thinking. Let me know. Rich
My Next Post: How to Increase Your Client Base.