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Go Away, Just Keep Paying Me
written by Allan Branch on November 5th, 2009
You'd think a health club's best form of advertising would be thin, healthy members but they really don't care about their members' health. In reality if their whole member roster showed up, they wouldn't be able to fit everyone inside the building. Their business model is betting that you don't show up and utilize what you're paying for.
My Dad's friend owns an Outback steakhouse, in the months leading up to Christmas they make 10% of their annual gross revenue by selling gift cards. Even more surprising is that only 35% of these cards are ever used by the recipients. Obviously, the profit margin on gift card sales are huge.
Credit card companies sign you up for a $35.99 per year "credit/id fraud alert" plan and hope you forget about it. You might notice an odd charge on your statement, but you'll probably forget to call and cancel, so they charge you for another year.
These type of businesses get you signed up and then try to keep their billings under your radar. But why? Why can't a gym call if your attendance is lacking and invite you back? Maybe even offer a free trainer for a week. A restaurant should call the recipient of an unused gift card and offer them a free dessert if they use their gift. Why you ask? Showing your customers that they're appreciated and loved is long tail. Keeping them locked in a few more months is a fleeting way to make money.
7 Responses to “Go Away, Just Keep Paying Me”
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The health club business model is some crazy backwards shit. They put on their nice faces and tell you all about how great the gym is and how you’ll love coming there. But you both know, the biggest favor you can do them is to buy an overpriced massage and milkshake and never come in again.
There’s no incentive for them to get you in the door once you’ve paid your membership. Fewer members using the equipment means that it’ll last longer.
Andy you’ve missed the point, there is a great reason to get you back in the gym. Word of mouth is still the most powerful form of advertising. Helping your members lose weight and get in shape is great advertising and should be the reason they want you to come back and work out consistently.
Well said. This is fundamentally about providing more value than you take in.
Businesses that do not provide more value are not sustainable and eventually end up dead.
I honestly believe most companies don’t care about the customers anymore. They only care about how much money they can make from us.
For instance, banks LOVE it when customers are late paying for their loans because they can collect those lovely interest charges. Shouldn’t the bank be working on hard to ensure their customers pay on time? The answer should be yes but they don’t make money from on time payments!
It does make some sense from a profits perspective to treat your customers with respect. They’ll like it and you’ll gain repeat business. But imo that’s only a nice side effect.
You should treat people well because it’s Right. If money can only be made by making the world a worse place then it’s not worth having.
Banks are actively encouraging older folks to switch from using checks to using debit cards. The reason? People who use debit cards get significantly more overdraft charges because they don’t keep registers/balances.
I hate that crap.