How to answer the dreaded, “Initiation fee” question

“I cannot give you the formula for success, but I can give you the formula for failure–It is: Try to please everybody.” — Herbert Bayard Swope

This is a very common question in our industry. I’d venture even more common today with our prospective members finding it necessary to closely manage their budgets due to the collateral damage of this pandemic.

But before that, you should know that people are extremely good at subconsciously picking up on very minor nuances in body language. So if our membership staff doesn’t know how to answer the initiation fee question immediately when asked, generally their mannerisms, tone, body language, etc.. will betray them and tend towards hesitancy. This in turn starts to feel like they’re just making up excuses. Which sounds even more like a slimy-sales pitch.

An IMPORTANT tip in ANY sales-related activity in your facility

When asked any question by a prospective member, any reluctance, hesitancy, unsureness, scrambling-for-an-answer, stuttering, etc… from our sales reps will always breed scepticism in your prospective members. If they begin to feel like we’re providing half-truths they will typically walk. It is much better to say, “I am not sure, let me find that answer for you.”

Now to answer the question AFTER I this next part

There IS going to be a difference in the “for-your-own-knowledge” answer, and the what-we-will-relay to our prospective members’ answer. Not because we are hiding anything of course. Simply because they are not really asking us for an audit of how that money is going to be spent. They just want to know how this fee does, or does not, translate into value for them personally.

First, the bad news

No one wants to pay anything for anything. Don’t take it personally. You will likely never give a prospective member an answer to this question that will somehow flip this into a positive.

So WHY historically are initiation fees charged? Most operations had set an initiation fee initially as a way to offset their, “new-member acquisition costs.” Honestly, I have not seen this specific stat post-Covid, so take this with a grain of salt… I believe the 2020 IHRSA State off the Industry report stated that the average new-member acquisition cost was $121 (like 99% sure). That $121 is made up of all our marketing costs, dues/fees discounts, promotional giveaways, freebies, etc…that was spent to create awareness, interest, and finally action.

Finally, here’s MY answer I like to give:

Prospective member: “Why is there an initiation fee?” “I will join today if you wave the initiation fee.”, “Where does my initiation fee money go?”

Me: “If it meant earning your business today, of course I would waive the initiation fee! It may not sound like good news today of course, but by having an initiation fee we can keep our monthly membership dues lower for all of our members. As you no doubt are aware, every year our operating expenses go up around 4 – 7%, as I am sure your bills do also! The initiation fee allows us to not nickel-and-dime you every year by raising your dues 3 to 5 dollars per month every single year.”

This works best of course IF YOUR FACILITY IS NOT upping our dues every year.

IF YOUR FACILITY DOES raise your rates each year, simply edit the language to something along the lines of, “…helps keep us from raising your dues as high as X or Y every single year.”

Again, no one is going to get excited about this, BUT they can and will work the math in their head and realize, “Ok, if I pay X initiation fee now, I won’t have to pay upwards of an additional $30, $40 or $50, $80 per year, each year after this one in dues increases.”

Rephrase it any way you want. “We are able to keep dues $10 – $15 a month lower for you by charging a one-time Initiation fee on new memberships.”

IF THEY THEN STILL SAY, “I’m not joining if I have to pay an initiation fee”: You have two options at that point…

1. Let them go!You RARELY want to charge one member a lower initiation fee or monthly dues payment than the very next member UNLESS there is a clear difference in the value of the perks/access/program options, etc… Anything other than that and we just scream sleazy sales process. This will eventually erode value and trust.

Or…

2. Make an “In-Kind Value” offer. Me: “John Doe, as I mentioned, I would lower it for you if I could. What I can do however is provide you with a free orientation session(s) with a personal trainer to get you started. These sessions are typically $X per hour. I can ALSO give you…(free locker rental, guest passes, massage, tan, etc…) So as you can see, the initiation fee may be $50 but I can provide you with $150 worth of programs/added-value/stuffs to help get you started. How does that sound?”

Another important note;  This only works if you HOLD SOMETHING BACK from your marketing materials and standard offers. Make sure you have empowered your staff with giveaways and other value-adds they can offer without your approval. If your offer has everything possible included in it right upfront, then you have nothing to fall back on. Try to always have a, “Well one more thing” moment in your pocket.

Me: “If it means earning your business today, I can provide your spouse with a one-month pass, valued at $75 to come along with you for this first month. How does that sound?”

LAST important note I swear: Try to choose an offering that has both a HIGH perceived value and a LOW actual expense. Like guest passes.

Success isn’t a happy accident my friends.