Acquisition vs. Leverage.... by Art Rothafel

Here's one thing upon which almost all business consultants agree.  The cost to acquire a new customer (acquisition) far exceeds the cost of marketing (leverage) to an existing customer.

What do I mean by this?

Big clubs have a "cost of acquisition" number they use to determine how much it costs to sign-up a new member.   They simply look at how much they spent on marketing/advertising for the month and divide that dollar amount by the number of new members.  For example, let suppose a club in the month of June spent $10,000 to sign-up 30 new members.  ($10,000 ÷ 30) = $330. The acquisition cost per member is $330. 

Now, during an economic downturn this becomes a concern because it's harder to attract new members when people and companies are cutting back their personal and professional budgets.   It means the cost of acquisition will go up.

The answer for all businesses is to focus more on leveraging their existing customers.  How to do this?  Here are just 4 suggestions:

Call Members:  That's right.  Pick up the phone and call your clients and members.  Whether it's simply a customer service call: "How are we doing?" or testing a new concept: "We're thinking of starting a Yoga Program and are interested in your feedback."  Call them.

Expand Profit Centers:  Create a new pro shop or get more creative with an existing one.  Be more creative with merchandising and expand your line of products.

Create Value-Added Propositions:  Develop value-added programs like weight-management curriculum, sport specific programming (skiing, swimming, biking, etc.) outdoor boot camp programs, grocery store outings, etc.

Recognize Best Members/Clients:   Regardless of criteria, recognize your "Best Members/Clients" through awards, photos, newsletters, website, rewards (gift certificates), etc.  You or your staff will figure out the best way to recognize your best members.

Comments

[Pete]

Thanks, Art, for taking the time to advise health club owners on business issues!