Increase Revenue Just by Taking a “Chit”

August 24, 2010

Growing up I wasn’t a member of a country club. (I did belong to my local pool.) But I had a friend who belonged to a country club and I remember going with him to the pool, walking up to the concession stand and ordering just about the entire menu (can you say gooey French bread pizza!), and instead of paying for it, he simply had to sign a piece of paper, a chit ( def: Chiefly British, a signed note for money owed for food, drink, etc ) ! It was at that exact moment that I knew without a doubt what I wanted to be when I grew up…a chit signer!

“Put it on the Underhills…”

Fast forward twenty years. I’m still not a member of a country club but I do belong to a gym (and yes they do use our software). And like most gyms they have a small pro shop (you know locks, socks, and batteries) and a juice bar. And nothing gives me more joy and happiness then walking up, ordering my blueberry smoothie with a protein shot and rather then paying cash, or check, or money order (which I save for ordering my Time Life Books), I simply give them my member ID and they charge it to my account.

There are risks for gym owners who allow members to charge items to their club account and then bill them at the end of the month. The biggest risk is that the member has no intention of paying for the things they buy and at the end of the month you are stuck holding the bill. So how do you overcome this?

Now, most club management software offers some variation of club accounts but since this is my blog and they have no sense of humor (Paul I kid ‘cuz I love) I’ll focus on some of things our software can offer our client to protect them.

First, it’s important to be picky about who and how much credit you extend. As with anything, start small. Pick members who have been with you a long time. Extend credit limits that are manageable. Start low, maybe $40 a month…and be wary of anybody charging things to the Underhill’s account (Fletch fans, anyone?).

Second, be picky what you allow to be put on a club account. I would suggest you stay away from service items (personal training, message, etc) and focus more on products initially.

Third, when you’ve reached a point where you have a good handle on the account process (i.e. you feel comfortable with everyone taking a chit) it would be time to extend larger amounts of credit, and to more people!

Finally, one item that we do offer in our software is the ability to finance high ticket items. Rather then selling a 4-pack of personal training, consider selling a 48-pack and make the member give you a down payment of maybe 20%. Again the goal is to get members to spend money AND remain members.

If you want to learn what NOT to do with credit, may I suggest a call with any bank that got caught up in the housing crunch?! In the meantime, you can find me at the snackbar eating my French bread pizza, happy as a pig with chit!