There are a number of ratios and statistics that are commonly used to measure membership and operating performance in the industry. While this is not a complete list of all possible ratios in this category, I recommend the following as key indicators and critical to your analysis as it pertains to membership and operations: Membership Attrition (measured on an annual basis for a more accuracy), Average dues payer (or average monthly dues), average initiation fees, revenue per square foot, revenue per member, memberships per square foot, cost of sale (sales and marketing cost per new member, payroll to/or as a percentage of revenue, dues as a percentage of revenue, operating expense as a percentage of revenue.

I also recommend the calculation of finance and liquidity ratios such as the current ratio and debt-equity ratio to measure the financial position of your operation(s).

PCI Compliance has been a popular issue lately and has prompted a lot of questions and inquiries.

PCI Compliance and validation regulations outline a set of security standards PCI Compliance security standards that are designed to protect cardholder information that is stored and used in applications or while making a transaction. The Payment Card Industry pcisecuritystandards.org/, including Mastercard and Visa, require banks, online merchants and Member Service Providers to adhere to these standards to ensure the security of cardholder data. If a company/merchant is PCI compliant they have developed and maintain secure systems and applications that protect cardholder data and encrypt transmission of this data across open, public networks. This becomes critical as it relates to transmitting EFT records for monthly member billing. You should confirm that your software provider is PCI compliant so that your member records are not in danger of being compromised in any way. Failure to comply with these security standards can result in fines, restrictions or permanent explusion from card acceptance programs.

For more on this subject, read "Time to Comply," the PCI story that appeared in the May 2007 issue of Club Industry's Fitness Business Pro magazine.
Time to Comply

I cannot answer your question by making a case for outsourcing your billing since the answer will vary from person to person and club to club. The outsourced or full service billing solution is not for everyone and there are several factors to consider as you evaluate this critical part of your business. It is definitely not a “one size fits all” model. I can help you review the pertinent factors to consider as you go through the decision making process.

In an outsourced “full service” billing solution, you are entering into a process where a company will process your EFT portfolio for you and mange all related a/r functions. This would include follow up on any decline activity that occurs as a result of your EFT process. It also usually includes handling any changes in membership, client follow up, a/r recovery and virtually any process that effects the member account. In essence, you are pushing all of your back office activity out to your full service provider. This is an option that exists in our industry, but it is not for everyone. And, there are several factors to consider when you make this decision, such as the availability of back office personnel who could manage your billing activity. Many facilities simply do not have the resources to manage this function…therefore, a full service (outsourced) billing solution is an obvious course of action for them. Some club owners and operators believe in the philosophy that they are not in the business to provide administrative assistance. They want to hire staff who are all dedicated to enhancing profit center revenue, selling memberships and improving the customer experience. They subscribe to the belief that the “ billing and admin function belongs with the billing and software companies”. Rates for the full service model are another variable to be closely scrutinized and considered since you want to have a clear and concise understanding of exactly what is being charged for this service. This will likely be another key factor to consider in making this decision. Full Service Rates will be higher than simple EFT processing rates. Know and understand those differences.


You also have the billing option or working with a software provider who provides an interfaced solution for simply processing your EFT file for you without the cost or the details of the full service follow up. This is a very popular, cost efficient, and financially viable solution for many owners and operators. In this scenario, you are responsible, at the club level, to manage your accounts receivable in house. This includes all returned or declined items that occur as a result of the EFT process. I personally support this approach and see the value in most instances. Again it depends on the factors involved and the business philosophy of the operators. There is no right or wrong way….there is only the way that is the best fit for each facility.

Since the success of club management is largely predicated on how well we manage our accounts receivable….it is critical to make the decision that will have the most optimum bottom line effect. Be sure to do your due diligence; understand the billing models, the rates, and the product that is the backbone to these solutions.

There are a number of factors to consider when you evaluate club management software solutions. And, the criteria varies depending on the size, scope and requirements of your operation.

At a basic level, however, you should be looking for technology that is strong enough to provide you the performance, scalability and expandability that you need to support your operation and any future growth of your database or your facility. You don’t want to make this buying decision again because you have outgrown the product or it doesn’t perform in your environment. Changing your software provider is not as easy as swapping out a treadmill. Make sure you are getting a strong, secure, expandable, and intuitive technology solution. It may sound like every software provider does the same thing…..make sure you see what is “under the hood” to find the major differences. Don’t settle for less since this decision is pivotal to your bottom line success.

Look for an integrated billing solution since operating your billing separate and apart from the rest of your solution results in operating inefficiencies and poorly managed receivables. If you are interested in using additional software products from the industry for online booking, retention, health/risk assessment etc., make sure your club management solution can interface with these products. The club management software should be the foundation of this type of enterprise solution

What kind of reputation does this provider have from a serviceability and support standpoint? Are they responsive to your needs? And, how well do they understand their client’s needs? Do they have an experienced team of professionals that truly understand your business? Depending on the complexity and unique requirements of your facility, you may want to check their project management, program customization, and product development capabilities.

Finally, you’ll want to be given the option to run your solution through the internet since there are a number of benefits to this method of operation. Check into the options that are provided.