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Memberships 101: Guide to Running Successful Memberships

4 steps to build a membership program that drives recurring revenue for your business.

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Why membership matter.

A large portion of service-based companies, like fitness studios and sports facilities, seek profit through memberships. Locking a customer into a membership results in a highly sought after business asset: recurring revenue.

Recurring revenue is typically collected from members in monthly or annual intervals, and can be expected to continue into the future. Because it’s certain to be received, recurring revenue is stable and predictable. Consistent recurring revenue often signals long term success and sustained profitability.

While membership models are common and popular among businesses that offer long term contracts, a recurring revenue strategy can work for many business types. Check out this resource to see if memberships are a good fit for your business.

If you’re reading this guide, you may be curious about the benefits of gym memberships for your business. We looked at our customers’ data to draw some pretty striking conclusions about the influence of memberships on business success.

We found that:

Membership-based businesses generated 89% more revenue than non-membership based businesses.
While businesses with memberships have an average transaction amount of $22 less than businesses without memberships, they transact 3x more.
Businesses who use memberships see 205% more transactions per month than businesses without memberships.

No matter your business size, fitness memberships help encourage your clients to commit to your business, and help you grow your bottom line. From how to structure your member benefits to how to price your memberships, use this guide to build a membership program that will drive recurring revenue for your business.

Step 1: Determine which membership model is the best fit for your business.

There are four primary sports business membership models. Each comes with its own benefits and drawbacks, and offers members different ways to improve their game.

Think about your current offerings, as well as how your clients consume your services. Do your athletes tend to participate in a mix of lessons, group training, and cage or court rentals? Then a training membership may be the best fit. But, if your business model is centered around a particular offering, such as private lessons, then a training membership may not be the best option. So, you might explore a service-based membership to grant access to a specific offering.

It’s important to remember that there is no “right” model for all businesses. Use this list to decide which gym membership model is right for yours.

Top 4 Sports Business Membership Models

Training Membership

A training membership enables members to pay a monthly fee which grants them access to a variety of events, including classes, lessons, camps, clinics, or training sessions.

Service Membership

A service membership enables members to access a certain number of classes, credits, or sessions per month. Credits are used to schedule specified services like lessons, classes, or training sessions.

Open Facility Membership

Commonly used by larger gyms and facilities, an open facility membership model allows members to access the facility at any point during open hours.

Team Membership

Unlike the other membership options, which are directed at individual athletes, a team membership is available to teams who train at your facility.

 

Check out the pros & cons of each membership model

Using a sports management software like Upper Hand allows you to fully customize your memberships to fit the specific offerings of your business. Whether you offer sport-specific training or operate out of a multi-sport facility, memberships can be easily adapted to you and your clients’ needs.

Step 2: Package your membership benefits.

Now that you know which facility membership model will be the best fit for your business, it’s time to start packaging your offerings within the membership. You know your members better than anyone, so these benefits can (and should) be uniquely tailored to your business offerings.

While there are countless ways to package your offerings, here are a few different gym membership categories that benefits fall into:

  1. Event Discounts
    • You can offer your clients a percent discount on any type of program, from private lessons to camps.
      • Example: If you typically offer cage rentals at your facility, offer a monthly membership where paying members get a 15% discount on those cage rentals.
  2. Session Credits
    • Give members access to a set number of credits each month to be allocated toward specific offerings (such as lessons or rentals).
      • Example: Looking at your client base, you notice that you typically see your athletes once a week for private lessons. Instead of making clients purchase one-off lessons, incorporate a set number of credits (i.e. 4) to be used each month towards private training as part of the membership fee.
  3. Retail Discounts
    • In addition to your traditional offerings/ services, you may also consider providing discounts on the gear in your pro shop.
      • Example: To encourage your members to sport your branded merchandise, offer your members a 15% discount on your retail items as part of the monthly fee.
  4. Exclusive Event Types
    • Offer members access to members-only events and exclusive programs.
      • Example: Host a skills training clinic exclusively for your “gold” members to add value through additional instruction or the opportunity to refine a specific skill. Only those members who pay for the “gold” level membership will be able to sign up and attend the clinic.

Think about your most popular offerings as well as your clients’ behavior, and mix and match these benefits to create your memberships. Be sure to clearly label your memberships, and limit your membership options in order to create the most positive client experience. Read more best practices about memberships here.

With Upper Hand, you can tie your sports membership benefits directly to the membership within the software. Discounts, credits, and perks are then automatically applied to a member’s account. In addition, credits and benefits are visible on client profile accounts, empowering members to have a strong pulse on their activities and investment.

youth sports registration

Step 3: Set up your membership pricing.

Once you’ve packaged your offerings into your membership (or membership tiers), it’s time to determine how you will price these offerings. Determining your membership pricing requires strategy. You want to ensure you convey the value of purchasing a membership over making one-off purchases without devaluing your brand. Just as there is no one-size-fits-all way to build a membership program, there are several different options when it comes to pricing your memberships.

  1. Monthly
    • The most standard membership pricing is a monthly membership, in which clients pay a fixed amount each month. This makes it easy for you to predict the amount of revenue you can expect, and it makes it simple for your clients to know how much they pay each month.

  2. Annual
    • Monthly memberships can also be easily adapted to an annual membership model. Similar to the monthly membership model, clients pay a fixed price. However, in this instance, the benefits are granted and paid for just once a year, rather than monthly.

  3. Pay-as-you-go
    1. A less common membership pricing model is a pay-as-you-go model. Under this pricing model, clients only pay for what they use. While some prefer this model because of the freedom and flexibility, it produces a more inconsistent stream of revenue.

In addition to how you will structure your pricing, there are a few other things to take into consideration regarding the pricing of your gym memberships.

 

Other pricing considerations:

  1. One-time join fees
    • This provides an additional opportunity to bring in revenue in order to “kick on” a client’s account. Adding a one-time join fee also encourages involvement from customers wanting to make sure they get the most bang for their buck.

  2. Commitment length requirements
    • In order to lock your members into your gym membership for a period of time, you may opt to require a commitment length. In order to get out of this commitment, members would be required to pay a cancellation fee.

  3. Sibling/ family discounts
    • If you have families or siblings that train at your business, you may consider offering a sibling or family member membership discount. This will be attractive for families with multiple athletes. For example, any additional sibling or family member is an additional $10 per month, rather than the full price of the membership.

  4. Senior/ student discounts
    • Depending on your target audience and client demographics, you can offer discounts or membership options specifically designed for special groups, such as students or seniors. For example, you could waive the join fee or offer a specific membership tier for these groups.

Step 4: Analyze your membership performance.

It’s good practice to regularly conduct audits of your offerings, and memberships are no exception. Just because you decide to set up your memberships in a particular way doesn’t mean that they can’t be adjusted based on feedback or usage.

We suggest that you let your memberships play out for a few months. Then, take a step back to see what’s working and what’s not.

Here are a few questions to ask:

  1. How many people are in my memberships?
  2. Which memberships are the most popular (have the most members).
  3. Are there any memberships that don’t have many/ any members?
  4. Which membership benefits are being utilized the most?
  5. How many clients have signed up for my memberships?
  6. How many members canceled in a given period?

 

By starting with asking yourself these questions, you can begin to refine your offerings, making your memberships the most valuable and attractive to your clients, while also helping stabilize your monthly recurring revenue. For more information about tracking your monthly recurring revenue, check out this resource, and download a free MRR calculator template today.

With Membership Analytics by Upper Hand, you can project future revenue and uncover membership trends with real-time membership data and dashboards. By understanding the specific factors that contribute to your recurring revenue, you can make decisions that help you hit and exceed your business goals.

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