“How do I get more members?” This is a question that pretty much every fitness studio owner asks themself at some point. And depending on who they ask, they will probably get different answers, suggestions, or even growth plans. That’s the beauty of marketing your business; there aren’t always right or wrong answers, but rather ideas based on data points and insights on our target audience.
When considering this initial question, there are plenty of tools in your box to pick from, and realistically, “one tool” won’t be the answer, but rather utilizing each to an appropriate amount in a series of ads, touchpoints, and interactions with your fitness facility that are ultimately built into a more extensive, and cohesive, plan called a marketing campaign. In this blog, we will cover referrals as a marketing tool that can help your business grow organically with “minimal” effort for you, the owner.
What is a Gym Referral Program
In short, referral programs for fitness studios and gyms are a way for facilities to reward current staff or members for bringing in new members and clients through their recommendations. This is viewed as a marketing tool as it harnesses and monetizes word-of-mouth marketing efforts, essentially turning your current member and training staff base into champions of your brand to their personal social networks.
While these programs are a great idea to implement from a new membership generation standpoint, one of the factors commonly overlooked is their effect on potential membership retention rates. As current members start bringing in people from their social circles, a sense of community and strong attachment to your facility naturally begins to develop.
How to Start a Referral Program for Your Fitness Studio
Contrary to what other business gurus suggest (i.e., jumping right in with a scripted program and structure), we recommend starting a different point. If you are considering starting a referral program, ensuring that your current audience base is enjoying your gym and that it is something they are actually willing to refer others to is an often forgotten step. And the easiest way to find this information is by asking them. You can send surveys, schedule sit-downs, implement a suggestion box, or even just have conversations with your people. Sometimes, this step can uncover a disconnect between your business operations or brand and your target audience’s values, needs, or pain points. Aside from setting up a referral program, confirming that you are in touch with your audience is seldom wrong; this can help drive retention rates, employee satisfaction, and even online business ratings, to name a few areas of advantage.
Starting a referral program is relatively easy once you are comfortably synched with your member base. We will break it down into a four-step process that involves selecting a structure to build a program on, how to track referrals, incentivizing the process, and marketing the program.
Structuring a Referral Program for a Gym/Studio
When we talk about structure, it’s more of the business’s bones you will build on. For many owners running a Client Management System, there is a good chance that there is a referral option pre-built into your system. Suppose you don’t have that option in your system, or you aren’t utilizing this type of software currently; structure might then look like documentation (i.e., adding in additional notes on client files via whatever style you use).
In addition to the data management side, knowing how you want to onboard new members from referrals will be important early on. For some studios, setting up a meeting first is critical; for other gyms, establishing a trial period or initial sign-up discount might be an essential factor to consider when setting up a membership type in your system or structure. Further, we recommend having rules and terms documented for your referral processes. Clearly outlining details like a probationary period on new leads before payment (30 or 60 days), how payment/reward is distributed, or even who is eligible for the program can help reduce confusion, people trying to game the system, or payment on non-sticking members.
Tracking and Analyzing Gym Referrals
Let’s talk about analytics because we are growth-focused marketers here who love this nerdy stuff. We want to emphasize the importance of being able to track referral programs. Similar to the analytics within a marketing campaign, data can help tell a story, give you a snapshot of your business’s health, or even be an early alarm for issues early on. From helping map connected clients to spotting cash cow champions of your brand, collecting, monitoring, and analyzing your membership referral data can be a financially beneficial addition to almost any gym.
Your data collecting, tracking, and analyzing may look slightly different depending on the structure (mentioned previously) that you are implementing a referral program onto. But for many software-based systems, you will probably be working with one of two primary methods. The first would be a built-in report that allows you to look at referral numbers snapshots, growth over time, and some may even enable easy access to data points (i.e., client data) to see who the referrers are and how many each bring in. The second method would be a system data export, where you would need to filter the relevant data points in spreadsheet-based software like Microsoft Excel or Google Sheets to manipulate the information in a way that helps you find what you are looking for. Similarly, those opting to utilize another system for membership management can use spreadsheets to analyze their data points as long as they collect the necessary information.
When analyzing information, some of the common key performance indicators (KPIs) to look for with referral programs is growth (month over month, year over year, and 12-month rolling) both as a program and from a member level. Seeing how your program is doing throughout the year can help expose peaks and valleys (which can help show success or failure with program implementation, marketing efforts, etc.), seasonality of business, or even migration/loss of clients early on. Additionally, being able to drill into the data and spot your brand champions can be a helpful driver of future business and a great insight into how your fitness studio’s membership community is socially interconnected.
Incentivizing Your Fitness Facilty’s Referral Program
Once you’ve established that you want to move forward with the referral program and how you want to structure, track, and analyze it for success, it’s then time to consider how you plan to incentivize your program. While there will always be people who will tote your business to their friends, family, or whoever will listen, to help drive the larger population of your customer base, some form of monetary incentive has long become a best practice for success.
While this might seem straightforward, there are some nuances to consider and some recommendations that we also recommend to avoid. We will cover these in the list below:
- Flat Rate Per Referral – The concept here is that for each referral that signs up for your studio membership, the person referring the new member will receive a fixed payment (i.e., a gift card or cash). The thing we like about this is the overall ease. When you have a flat rate policy, there isn’t much tracking, maintenance, or thought that needs to go into it from a management perspective; it is just a one-time standardized payment. With this structure in mind, it can also be beneficial to occasionally run special programs during peak referral seasons (for example, around the New Year) to help drive additional interest and momentum.
- Raffle-Based Systems – This type of system works more as a lottery for a set period. Instead of paying out for each new member a current client brings in, some gyms opt to have a pool of money (that can even grow as referrals are added) where each new valid referral gets the referring client a ticket to the raffle. For owners who are apprehensive about giving monetary gifts, you can also consider raffling off baskets of goods from business partners, service packages (such as personal training sessions, class passes, etc.), or even branded gym gear. These non-monetary types of raffles can have the added benefit of driving interest in services, branding, or advertising for business partners; however, it can also come at a detriment if the offering is not appealing to your audience base.
- Store Credits – Similar to a flat rate option, fitness facilities with an on-site (or online) store portion can reward new clients referral program utilizers with store credits. This can serve as a perk for gym owners as often having a gift card compels additional purchases beyond their certificate’s value, or at the very least, can potentially drive additional interest to the storefront from an audience that may not have purchased otherwise. Similar to the point above, one potential pain point can come at the cost of current members not finding the incentive attractive enough for them to jump onto the program.
- Tiered Gift Options – Exclusivity can have more value than money for some brands and audience bases. In these situations, setting a referral program based around a tiered gift system where referrals add up over time and reached gift thresholds yield higher valued items. This structure can generate great response rates when implemented correctly, but also does a fantastic job distinguishing and recognizing your referral champions (who are ultimately a great marketing and sales tool for your business).
- Membership Discounts – Depending on your gym’s business structure, this type of incentive can either be good or terrible for you. We don’t recommend this type of incentive for most gyms due to the nature that reward requires specific billing implications and adjustments (which equals work for owners to maintain – i.e., headaches), throws a wrench into your cash flow reports ease of processing, and ultimately can have a negative response with your customer retention rate. We say potential issues with retention due to the attention that temporary discounts on recurring membership charges can draw, which could drive a cost/value revaluation process in your customers’ minds, potentially putting their business with you at risk. While this type of program can work for fitness facilities focused on dirt-cheap membership options with an audience based on cost and value, we still recommend rewarding members with another form of gift or payment instead for the various other benefits mentioned.
Marketing a Gym Referral Program Internally
Once you’ve got the structure, tracking, and incentivization established, you’re not necesiarilly done yet. While some might look at what they have so far and think their incentive should be an easy win for people to pick up and run with, you are likely mistaken. Yes, that’s right, people don’t just jump at free money when it’s an option. Seemingly, every business at thi point has a referral program of some kind; therefore, you have to really bring attention and interest to your program to drive interest, adoption, and success. So, let’s bring it back to marketing!
Rolling out your referral program like a mini-marketing campaign is a great starting point for consideration. It forces you to consider the messaging from your audience’s perspective. It can also give you an excellent opportunity to tie in additional brand-based messaging and remind them why they love your fitness business. Even throwing a special kick-off event around it can help drum up initial interest from current members. Additionally, peppering in call-outs to members that are crushing it on referrals or making public ceremonies for the reward dispersion can help catch the attention of other non-participating members. All in all, getting creative with your marketing and focusing on attention, interest, and continuous growth with a referral program can help drive growth by turning your current client base into a miniature sales team.
Making A Splash
While referral programs are by no stretch of the imagination a new concept, there are many times businesses just get them wrong. These efforts can fall flat in many ways, from improper structure and lackluster rewards to chaotic processes or going unnoticed. However, by focusing on setting it up with your business processes and audience base in mind, you can help establish something that will grab the attention of your current members and help convert them into a mini-sales team for your business.
