Enhancement Fees vs. Increased Dues
September 20, 2010
Have you heard about enhancement fees? We’ve recently been getting confused calls from clients asking about them. Does our software do it? (YES) Are other clubs doing it? (YES) Do they work? (YES) How come green and yellow make blue? (NO IDEA) Enhancement fees are a hot topic and a dilemma: Do I increase my dues or do I charge an annual enhancement fee? The answer is…
First, let me explain what they are. (And no, it’s not why Bob has a smile on his face). Enhancement fees are annual fees charged to all members specifically to upgrade or enhance the facility.
So, why not just increase dues across the board? First, many members are comfortable with a one-time payment of $36 (for example) rather than a monthly increase of $3. This has become even more so as the number of low cost options in the marketplace increases.
Second, this sudden cash infusion can (and should) be used to improve your facility, buy new equipment, add new classes, etc. In an ideal world, members should see value for their money. And you should promote it. If you get a new treadmill with the money, have your front desk staff mention it to members at check-in. If you add some new weight equipment, put signs around the club.
If you add a new class, introduce the instructor and consider attaching a whole bunch of balloons to them.(Although maybe not. Too many helium balloons and they might get caught in the rafters.)
Third, enhancement fees give you a reason to talk AND ENGAGE your members. Craig Annis from Vanguard Key Club (http://www.vanguardkeyclubs.com/) has it right on. Craig’s clubs are completely unmanned, 24/7 clubs. (He franchises so if you are interested in speaking with him, go to his website). Craig first asks his members to suggest what new equipment they want to see. He then conducts a poll for members to vote on how they should spend the money. Craig smartly engages the member, gives them a sense of ownership, and rather than buying on his personal preference, he ends up with something that is high impact!
So what’s the downside…
The first and most obvious is it could awaken the sleeping giant…aka all the members who forgot they are members. They are more likely to notice a $36 charge than a smaller $3 increase.
Second, YOU WAKE THE SLEEPING GIANT.
Third, some owners have charged the enhancement fee, pocketed the money, and hoped nobody notices. This is a bad practice and be aware, members will often leave from this bad experience.
So, the answer is, done correctly can create fantastic goodwill among your members and it’s worth evaluating. Done poorly? Well let’s just say you will need a lot of green and yellow crayons…cuz the results could make you BLUE 
Get, Keep, and Know your members with MoSo
September 20th, 2010 2:31 pm
Interesting article. Just started reading your blog and I appreciate your thoughts. I do have a question for you or anyone on this topic? Do clubs refer to them as “enchancement fees” when communicating them directly to their members? Or has anyone been calling them something else? I’m wondering if anyone has found a successful marketing term for it. (Maybe Enhancement fees is that success).
Hey Tyler,
Thanks for reading the blog!
I haven’t heard them referred to as anything other then enhancement fees . . .if anybody knows of another term, and you have had success with it, please feel free to comment!
- Hossein
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I have heard them referred to as Facitlity Improvement Fees or Facility Enhancement Fees. I think the descriptor makes it easier for members to draw the connection that the money is going to be used to make the facility better for them. Also some other best practices I have seen include an entrance sign describing the changes/additions which may be coming including equipment pics and/or fabric or tile samples.
In private clubs, members are “assessed” when the club decides to make improvements that require additional capital. This makes sense for private clubs in which the members share ownership of the club, so the owners should pay for improvements. In commercial (for-profit) clubs that are not jointly owned by the members, I guess the term “assessment” doesn’t quite fit – the members don’t have an ownership stake in the club, and they don’t have the corresponding long-term commitment…
Many clubs call this an annual maintenance fee and tell their members this is for the maintenance ot the club & equipment.
I got this email from Rich Caro and I thought I should share it with everyone. For those that don’t know Rick is a long time industry insider and I think one of the best resources in the entire industry. I should also mention he sits on the BOD of Motionsoft.
- Hossein
We need to be careful on certain issues that have legal implications. Clubs have been sued while others have had complaints lodged with the Better Business Bureau and a few even contacted the State Attorney General’s Office. Membership contracts did not provide a club right to do so. Or, the language was not clear. Notice provisions were not adhered to nor even thought about by clubs.
Others labelled the fee differently and did not present it accurately. Enhancement fee may be for non-capital items, but the “oral contract” in the letter that indicates the fees are forthcoming should spell it out.
I disagree with the generalizations about “sleeping dogs”.
Thank you all for reading and commenting on the blog. Many of you have written to me directly and I certainly encourage you to do so but I do want to take a moment to lay the ground rules for commenting on the blog:
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