Is It Worth It To Pursue 90 Day Collections Through a Third Party?

The fitness industry is becoming increasingly competitive. With multiple gym options available around the corner, reputation and retention are key. For fear of ruining their reputation, some gyms have decided against pursuing members to pay their balances after 90 days. Owners are afraid members will complain on social media, or have a negative experience and never return to the gym. Those that opt out of collections often say they are hoping their former members will eventually rejoin the gym. However, our research has shown that when collections are done properly they will actually drive retention, strengthen the relationship between the gym and its members, and drive down AR to contribute to the bottom line. This can all happen without hurting the brand and reputation of the gym. 

RETENTION

At first thought, it may seem that trying to collect on past due balances would drive away members. After all, nobody likes to end up in collections. However, by not holding people to the commitments they agreed to when signing their contract, you are enabling zero accountability and members need accountability to reach their healthy lifestyle goals. Collections are an opportunity to remind people about the gym. It is an opportunity to remind them of their commitment and goals. The collection agency can specifically ask people if they want to return to the gym. It is an opportunity to remind them of their commitment and goals. The collection agency can specifically ask people if they want to return to the gym. When the front desk accepts collection payments, they should also try to reinstate the member. Our research has found up to 30% of those paying collection balances every month will resign with the gym. 

RELATIONSHIPS

Using a 3rd party to collect can help develop a strong relationship with your members. Many members receive letters or calls from 3rd party agencies and reach out to the gym to resolve the issue. This gives you an opportunity to the “good guy”. You can help the member feel special and waive fees or give them a deal to incentivize reinstatement. This shows the member how much you value them are willing to work with them. The right agency should not be charging you extra fees for waiving fees or reinstating your members. These practices help you develop your relationship with your members and increase revenue. 

INCREASING THE BOTTOM LINE

By collecting on past due balances through a 3rd party, you are driving down AR. With some members rejoining, your revenue increase with each month’s draft. Both of these factors help you earn money without increasing time or effort from your staff. Your team can help members that come in to pay their balance or rejoin without spending lots of time emailing and calling on old balances. 

BRAND and REPUTATION

Lastly, by using a professional 3rd party collection group, your brand and reputation will not be compromised. The agency should be able to customize their efforts that lets members know how much you value them and want to help them come back to the gym. Members should still be treated with respect despite being past due. 

In the event of an escalated issue, you should also be able to remove members immediately from collections without any charge. Being proactive about this deescalates situations before people ever think to take their complaints to social media. This practice will protect your brand and your reputation in the community.