Presents:Presents:

Managing Managing By The NumbersBy The Numbers

By Will PhillipsBy Will Phillips

Mature Clubs PlateauMature Clubs Plateau

2002 2006

NetMbrGain

Fortune MagazineFortune Magazine

Top 100 growth companies.Top 100 growth companies.

36% aver. increase in REVENUES36% aver. increase in REVENUES

46% aver. increase in EARNINGS46% aver. increase in EARNINGS

Fortune 500Fortune 500

Most growth comes from Most growth comes from – Acquisitions Acquisitions – Price IncreasesPrice Increases

Real Organic Growth Over 7 Real Organic Growth Over 7 years?years?– Under 3 %Under 3 %

Organic Growth ?Organic Growth ? CAUGHT A WAVE-CAUGHT A WAVE-BoomersBoomers

FOUND A WAVE -FOUND A WAVE -Partner with parents in schoolsPartner with parents in schools

NEW MODEL FOR AN OLD NEW MODEL FOR AN OLD INDUSTRY-INDUSTRY-CurvesCurves

NO COMPETITIOR-NO COMPETITIOR-Cooper Wellness CenterCooper Wellness Center

NICHE-NICHE-Manage Corporate Wellness CentersManage Corporate Wellness Centers

Non Dues RevenueNon Dues Revenue McKinsey: Execution?McKinsey: Execution?

Driving GrowthDriving Growth

Get an IdeaGet an IdeaDesign ActionsDesign ActionsWait for ResultsWait for Results

Working On ie.ImprovingWorking On ie.Improving

Get an IdeaGet an IdeaDesign ActionsDesign ActionsMANAGEMANAGE

For ResultsFor Results

To want to ACHIEVETo want to ACHIEVE

is not enough.is not enough.

If you don’t achieve the If you don’t achieve the results, results,

you are not a manager.you are not a manager.

MANAGERS MANAGERS

MUST MUST

MANAGEMANAGE

For Those Who ManageFor Those Who Manage Achieving the first quarter’s results is the Achieving the first quarter’s results is the

most important challenge of the year.most important challenge of the year.

Achieving the first month’s results is the Achieving the first month’s results is the most important challenge of the quarter.most important challenge of the quarter.

WHY?WHY? Less time to make it up. Demoralizing or Less time to make it up. Demoralizing or

Winning?Winning?

As soon as something is off, MANAGERS As soon as something is off, MANAGERS throw everything at it throw everything at it

What if results slipped?What if results slipped?

Find the problem!Find the problem! Try a solution.Try a solution. Then anotherThen another Then anotherThen another

Everything ethical and legal is tested Everything ethical and legal is tested out.out.

Use Everything You Have:Use Everything You Have:

Your educationYour education Your experienceYour experience Everything you can learn from each Everything you can learn from each

otherother Your intuitionYour intuition Your brainsYour brains AND ALWAYS USE THE NUMBERSAND ALWAYS USE THE NUMBERS

Using The NumbersUsing The Numbers

Start with a numbers plan = BUDGETStart with a numbers plan = BUDGET Start the next years budget months Start the next years budget months

in advance! in advance! – Built with thought NOT projectionsBuilt with thought NOT projections– Built with commitment NOT complianceBuilt with commitment NOT compliance– Built before the FY starts NOT afterBuilt before the FY starts NOT after– Built with honesty NOT paddingBuilt with honesty NOT padding

To Manage To Manage

Start with a plan or budgetStart with a plan or budget Most businesses have widely Most businesses have widely

inaccurate budgets inaccurate budgets (CFO Jan 2007)(CFO Jan 2007)

50% of managers can’t explain the 50% of managers can’t explain the gaps.gaps.

40% managers don’t log on to B&P40% managers don’t log on to B&P

To Build Manager Commitment To Build Manager Commitment

Involve in the planInvolve in the plan Key in own numbersKey in own numbers Contribute to design of metricsContribute to design of metrics Train in use of B & P software/ExcelTrain in use of B & P software/Excel Use rolling budgets and updateUse rolling budgets and update Decouple pay from budget targetsDecouple pay from budget targets Incentives based on value creation cf.peer Incentives based on value creation cf.peer

companies.companies. From the Beyond Budgeting ROundtableFrom the Beyond Budgeting ROundtable

Measure the GAPMeasure the GAP

Planned vs. ActualPlanned vs. Actual The GAPS are symptomsThe GAPS are symptoms The GAPS are not the problemsThe GAPS are not the problems Do not manage the numbersDo not manage the numbers Manage the businessManage the business

Set The ExampleSet The Example

CEO must care about managing.CEO must care about managing. CEO must dig into numbersCEO must dig into numbers CEO must ask about number CEO must ask about number

performanceperformance– Daily, Weekly, MonthlyDaily, Weekly, Monthly

The more managers who MANAGEThe more managers who MANAGE– The better the resultsThe better the results

Okay-Surprises HappenOkay-Surprises Happen

Then what?Then what?

1-Scale back costs NOW.1-Scale back costs NOW.– Sooner rather than laterSooner rather than later– Scale back far enough to create a Scale back far enough to create a

reservereserve

2-Use the reserve to drive sales2-Use the reserve to drive sales

The GoalThe Goal

Comprehension of the numbers and Comprehension of the numbers and what they mean.what they mean.

How numbers reveal the business.How numbers reveal the business. How managing the business drives How managing the business drives

the numbersthe numbers

7 Problem Solve

1-Desired Results

2 Know Capabilities

3 Plan The Solution

4 Take Action5 Track Progress

6 Identify Gaps

The Management Cycle

8-Celebrate

The Puzzle: Where Is Your Club Soft?

To MANAGE: Understand 3 NumbersTo MANAGE: Understand 3 Numbers

What drives revenue? What drives revenue? How does my work impact it?How does my work impact it?

What drives profit? What drives profit? How does my work impact it?How does my work impact it?

What drives EBITDA? What drives EBITDA? How does my work impact it?How does my work impact it?

LOTS OF PEOPLE MUST UNDERSTAND!!!LOTS OF PEOPLE MUST UNDERSTAND!!!

What Drives Club ProfitsWhat Drives Club Profits

No single number appears to be No single number appears to be causal in EBITDA greater than 25%.causal in EBITDA greater than 25%.

Based on 14 independent clubs over Based on 14 independent clubs over 14 years.14 years.

What Drives Club Profits EBITDA What Drives Club Profits EBITDA to 30%, 40% or more:to 30%, 40% or more:

Above average work in FOUR Above average work in FOUR AREAS:AREAS:

1.1. Member Gain Member Gain

2.2. AttritionAttrition

3.3. Cost Per SaleCost Per Sale

4.4. PayrollPayroll as a % of Total as a % of Total RevenueRevenue

Growing Sales = Growing LeadsGrowing Sales = Growing Leads Company Generated Company Generated

LeadsLeads– SignageSignage– LocationLocation– WebWeb– TVTV– RadioRadio– MagazineMagazine– Direct MailDirect Mail– OutreachOutreach– Piggy Back MailingsPiggy Back Mailings– WheelWheel– License PlateLicense Plate– Portable Sales KioskPortable Sales Kiosk

Self Generated LeadsSelf Generated Leads– POS ReferralsPOS Referrals– Customer referralsCustomer referrals– Cold CallsCold Calls– Former customer callsFormer customer calls– Lead BoxesLead Boxes– HangersHangers– On the street passesOn the street passes– Be backsBe backs– Former MembersFormer Members– Class visitsClass visits– SeminarsSeminars– NetworkingNetworking– Presentations-AIAPresentations-AIA

1-Net Member Growth

Growing Sales = Growing SkillsGrowing Sales = Growing Skills

Daily sales trainingDaily sales training– Info CallInfo Call– QualifyingQualifying– Touring/QuotingTouring/Quoting– PresentationPresentation– ObjectionsObjections– POS ReferralsPOS Referrals– Lead ManagementLead Management

Weekly sales meetingsWeekly sales meetings

Managing SellingManaging Selling

1.1. Individual Sales Person GoalsIndividual Sales Person Goals2.2. Financial and Time ImplicationsFinancial and Time Implications3.3. Business Sales GoalsBusiness Sales Goals4.4. Sales FunnelSales Funnel5.5. Monthly-Weekly and Daily Sales GoalsMonthly-Weekly and Daily Sales Goals6.6. ActualsActuals7.7. Diagnosis by the numbers at noonDiagnosis by the numbers at noon8.8. Daily Sales Problems SolvingDaily Sales Problems Solving9.9. Daily Training-Role Playing-CoachingDaily Training-Role Playing-Coaching

1-Net Member Growth

Sales FunnelSales Funnel

Company Leads: CLCompany Leads: CL My Leads: MLMy Leads: ML Total Leads: TLTotal Leads: TL Appointments: AAppointments: A Presentations: PPresentations: P Sales Size: S1Sales Size: S1 Sales: SSales: S Sales Size: S2Sales Size: S2

TL/A x 100 = Prospecting %=P1TL/A x 100 = Prospecting %=P1 A/P x 100 = Proposing % =P2A/P x 100 = Proposing % =P2 P/S = Closing % = CP/S = Closing % = C S1/S2 = Quoting % =QS1/S2 = Quoting % =Q S2/S = Average Sales Size=AssS2/S = Average Sales Size=Ass

TL x P1 x P2 x C x Q x Ass = YVTL x P1 x P2 x C x Q x Ass = YV

1-Net Member Growth

Sales person Goals Sales person Goals – Begin with Personal GoalsBegin with Personal Goals

Plus Business GoalsPlus Business Goals = Monthly Weekly and Daily Goals= Monthly Weekly and Daily Goals

1-Net Member Growth

Sales Person’s HistorySales Person’s History– Four Percentages: Four Percentages:

Prospecting Prospecting Proposing Proposing Closing Closing QuotingQuoting

– Average sales sizeAverage sales size Calculate Needed LeadsCalculate Needed Leads = Monthly Weekly and Daily = Monthly Weekly and Daily

1-Net Member Growth

Manage These KPIsManage These KPIs

Inspect what you expect Inspect what you expect – DailyDaily

Use to Use to – keep sales people focused dailykeep sales people focused daily– diagnose training needsdiagnose training needs– identify coaching areasidentify coaching areas

1-Net Member Growth

Prospect TrackingProspect Tracking

Weekly Prospect PlannerWeekly Prospect Planner Sales lead trackerSales lead tracker Self Development Self Development

– Feedback &PlanningFeedback &Planning– Resources in houseResources in house– Outside trainingOutside training

SalesSalesPersonal developmentPersonal development

1-Net Member Growth

AttritionAttrition All customer loyalty is emotionally All customer loyalty is emotionally

basedbased Customer loyalty is based on ?Customer loyalty is based on ?

– Customer AcquisitionCustomer Acquisition

2-Attrition

Use the single question survey.Use the single question survey.– How likely are you to refer someone to How likely are you to refer someone to

us?us?– Then dig for WHY?????Then dig for WHY?????

Stop trying to manipulate retention Stop trying to manipulate retention by irrelevant research on who stays.by irrelevant research on who stays.

2-Attrition

Cost Per SaleCost Per Sale

Promotional EffectivenessPromotional Effectiveness– Measure Calls 10 days after promotionMeasure Calls 10 days after promotion– Measure walk ins 10 days after promotionMeasure walk ins 10 days after promotion

Web EffectivenessWeb Effectiveness– Measure Calls / downloaded passesMeasure Calls / downloaded passes

Sales Person Effectiveness:Sales Person Effectiveness:– Self generated leads per weekSelf generated leads per week– Quoting ratio : call to appointmentQuoting ratio : call to appointment– Closing ratio: appointment to saleClosing ratio: appointment to sale

3-Cost Per Sale

Labor CostsLabor Costs

1. Because revenue changes can 1. Because revenue changes can mask labor productivity changes, a mask labor productivity changes, a better measure may be better measure may be labor dollars labor dollars per memberper member..

This is the real ratio to manage in This is the real ratio to manage in terms of improving productivity in terms of improving productivity in lowering the dollars per member to lowering the dollars per member to deliver the value the member wants deliver the value the member wants to pay for.to pay for.

4-Labor Cost

2. Figure out your labor % per user.2. Figure out your labor % per user.

-Calculate over 3 -5 years.-Calculate over 3 -5 years.

-Trends?-Trends?

-Insights?-Insights?

1-Net Member Growth

3. Reduce hours where staff does NOT 3. Reduce hours where staff does NOT deliver value:deliver value:

-face to face with members-face to face with members

-fixing equipment or facility-fixing equipment or facility

-cleaning-cleaning

4-Labor Cost

4.4. How often does a staff member sit How often does a staff member sit around?around?

5. What 10 things are staff trained to 5. What 10 things are staff trained to do, WHEN there is nothing to do?do, WHEN there is nothing to do?

6. Analyze staffing schedules for 6. Analyze staffing schedules for overlap?overlap?

4-Labor Cost

Exploring Labor CostsExploring Labor Costs

7.7. Redesign your staff and structure Redesign your staff and structure (reporting relationships) from (reporting relationships) from scratch.scratch.

8.8. Better yet design for 3-5 years Better yet design for 3-5 years hence. hence.

9. What would it take to cut labor 5%.9. What would it take to cut labor 5%.

1-Net Member Growth

Labor Productivity ConstraintsLabor Productivity Constraints

Remember cost cutting is not a reduction in Remember cost cutting is not a reduction in delivering value to your members.delivering value to your members.

Reducing the labor dollars per member Reducing the labor dollars per member must be done in light short and long term must be done in light short and long term impacts on:impacts on:– SafetySafety– Delivering value to membersDelivering value to members– Attracting new membersAttracting new members– Damaging your image Damaging your image – Impact on staff moraleImpact on staff morale

1-Net Member Growth

5What Drives Club Profits?5What Drives Club Profits? For EBITDA of 30%, 40% or more: For EBITDA of 30%, 40% or more: Doing above average work in Doing above average work in

1.1. Net Member Gain Net Member Gain

2.2. AttritionAttrition

3.3. Cost Per SaleCost Per Sale

4.4. Payroll as a % of Total Payroll as a % of Total RevenueRevenue

5.5. ??Aggressive Cost Reductions that do ??Aggressive Cost Reductions that do not impact customer experience.???not impact customer experience.???

Mature Clubs PlateauMature Clubs Plateau

2002 2006

NetMbrGain

Driving SALES

Driving NON DUES REVENUE

For Revenue GrowthFor Revenue Growth

Set NDR GoalsSet NDR Goals– Personal TrainingPersonal Training– Group ExerciseGroup Exercise– Small Group TrainingSmall Group Training– Massage5Massage5– FoodFood

And manage them for resultsAnd manage them for results

Expand Products-ServicesExpand Products-Services For revenue growthFor revenue growth Have margin criteriaHave margin criteria Sources of Club NDRSources of Club NDR

– Personal Training Personal Training – ClassesClasses– Court timeCourt time– LessonsLessons– LeaguesLeagues– Media incomeMedia income– Supplements?Supplements?

INTERIOR ADD ON REVENUE

-Floral/Blooming

-Succulents

-Baskets

-Holiday

-Water

Share The SuccessShare The Success

Incentive Plan: Simple, 10%, 6-Incentive Plan: Simple, 10%, 6-8x/year8x/year

Side GamesSide Games

Equity: Real or phantomEquity: Real or phantom

Resources:Resources: Key Performance IndicatorsKey Performance Indicators http://www.rexonline.org/showbriefs.php?action=keysuccesshttp://www.rexonline.org/showbriefs.php?action=keysuccess

Review and Action Planning Sessions-RAP Review and Action Planning Sessions-RAP http://www.rexonline.org/showbriefs.php?action=rapmeethttp://www.rexonline.org/showbriefs.php?action=rapmeet

Profit Driven or Profit DriftingProfit Driven or Profit Drifting http://www.rexonline.org/showbriefs.php?action=manprofithttp://www.rexonline.org/showbriefs.php?action=manprofit

Increasing Workflow ProductivityIncreasing Workflow Productivity http://www.rexonline.org/showbriefs.php?action=workflowhttp://www.rexonline.org/showbriefs.php?action=workflow

How To Stop Fire Fighting and Start How To Stop Fire Fighting and Start Solving ProblemsSolving Problems

Two Types Of GrowthTwo Types Of Growth

BiggerBigger– This presentationThis presentation

BetterBetter– Small Giants by Bo BurlinghamSmall Giants by Bo Burlingham

RememberRemember

‘‘Not everything that can be counted Not everything that can be counted counts, and not everything that can be counts, and not everything that can be counted counts’ counted counts’

When two numbers go up together or When two numbers go up together or down together, that proves nothing about down together, that proves nothing about their connection.their connection.

The same numbers presented in a The same numbers presented in a different sequence, leads managers to different sequence, leads managers to make different decisions. If we do X, 10% make different decisions. If we do X, 10% of customers will leave vs. 90% will stay.of customers will leave vs. 90% will stay.

Thank Thank YouYou

Will Will PhillipsPhillips