Question

Topic: Other

Tiered Membership Program For Gym

Posted by Anonymous on 5/26/2015 at 9:16 PM ET 105 Points
Hello Everyone,

I have a new client who is requesting a tiered membership program for his gym. My background is mostly in digital marketing so this is a new area for me. The client is a small business without a huge marketing budget therefore they definitely don't have the funds to hire a larger firm to take on this project. I feel it's something I can do given some direction. I've been trying to find information online but I'm being steered in several different directions. Should I be researching membership marketing, tiered membership programs, customer loyalty programs, tiered pricing strategy, or something else?

Also, where would I even begin? I do know that I need to gather some current customer data to even determine a pricing strategy. I'm also guessing some market and competitive research both of which I've done before.

Here are a few questions that I have?

1) Where do I start?
2) Do I need a full marketing plan for this? Does the client need to see it?
3) How much should I charge to create and implement this type of program?
4) How long could it take from initial concept to implementation? He wants a one month turn around.

Regarding what I should charge him, I've read that it's best if charge an hourly rate while other resources suggest charging on a project basis.

Any direction would be greatly appreciated!

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RESPONSES

  • Posted by Jay Hamilton-Roth on 5/26/2015 at 9:54 PM Member
    For this sort of project, it's vital to clearly articulate deliverables and understand their goals. Does the client want you to figure out if tiered makes sense, and if so, how many tiers, and at what rates? That's a bit of research - both in your region and with current members (to understand their reaction). Additionally, there's a bit of psychology you'll need to understand pricing models and then the articulation of the benefit for each tier (positioning). If this is all new for you, you might consider hiring a market researcher to assist/guide you. If your client wants it in a month, then you're likely to have to not make this a full-blown research project. But once the creative brief/scope is clear, set a fixed rate to avoid unpleasant surprises.
  • Posted on 5/27/2015 at 11:55 AM Author
    Thank you for the prompt response. He is set on a membership program that offers multiple purchase levels. He does have some value to offer at each level (classes, exclusive events). The current pricing model is one that's basically pay as you go. The problem is that the company isn't profitable even though they receive about 5 new customers per week from word of mouth alone.

    II'm still trying to figure out how much work this will require and what rate to charge for this type of project. Could you give me a ballpark figure?
  • Posted by Jay Hamilton-Roth on 5/27/2015 at 2:17 PM Accepted
    Ultimately the price is based on the perceived value of your work (what is the lifetime value of a customer to your client?). Since this is work you haven't done before, you'll be doing a fair bit of learning. If you were to bill out 40hrs/wk x 4wks, what's that number (use it as a guidepost - you may have to ratchet it down to account for learning ramp-up)? My hunch is that you'll create a plan, and then once it's in the marketplace, you'll need to fine-tune it, and support it through marketing initiatives (more than just word of mouth). So, you have two projects: creation and launch. If you do a good job at creation, then launch may be the ongoing project cash cow for you.
  • Posted on 5/27/2015 at 6:37 PM Author
    Thanks, Jay! I have a lot of research to do. I've already asked if he plans to do any marketing which I will be doing once this is launched. Right now, I need to focus on the plan and launch.
  • Posted by mgoodman on 5/28/2015 at 10:52 AM Accepted
    Regarding the pricing strategy: There isn't much that's useful in published research. Each situation is unique, and it's impossible to pre-test all the various options. So the best thing you can do is rely on the gut reaction of marketers who have been through the drill before. When you have enough dents in your helmet then you can be an expert too. :)

    Regarding the fee: Do NOT charge by the hour or the day. You are not selling time. You are selling expertise.

    The fee should be an amount that is commensurate with the value of what you plan to deliver. What is your input worth to the client? If your contribution generates 5 additional clients per month, and if the lifetime value of a new client (to your client) is $5,000, then arguably your contribution is worth up to $25,000 per month. (5 new clients x $5,000 lifetime value per new client = $25,000.) If the client doesn't think you are worth that, then you haven't done a very good job of establishing your value. (OK, so maybe you reduce the fee by 25-30% to reflect that there is some uncertainty.)

    Working on an hourly basis isn't fair to you or the client. It motivates you to work inefficiently and take longer than necessary. It also encourages the client to short-change you on the information you need to do a good job, because it costs him/her money when you spend time learning what you need to know. Besides, is your work worth less if you deliver it quickly?
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