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Presents: Key Performance Indicators: Managing The Metrics That Matter By Will Phillips. To download presentation and supporting materials: See Presentations on home page REXonline.org. Mature Clubs Plateau. Net Mbr Gain. 2002. 2006. Top 100 growth companies.
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Presents:Key Performance Indicators:Managing The Metrics That MatterBy Will Phillips To download presentation and supporting materials: See Presentations on home page REXonline.org
Mature Clubs Plateau Net Mbr Gain 2002 2006
Top 100 growth companies. • 36% aver. increase in REVENUES • 46% aver. increase in EARNINGS • Mostly from acquisitions and price increases
TYPES OF GROWTH • Organic Growth Rate • OGR for all international companies in existence at end of WW II to 2007? • <3%
Driving Growth • Get an Idea • Design Actions • Wait for Results
Working On ie.Improving • Get an Idea • Design Actions • MANAGE • For Results
To want to ACHIEVE is not enough. • If you don’t achieve the results, you are not a manager.
MANAGERS MUST MANAGE
Managed Planned Likely Now Future
For Those Who Manage • Achieving the first quarter’s results is the most important challenge of the year. • Achieving the first month’s results is the most important challenge of the quarter. • WHY? • Less time to make it up. • Demoralizing or Winning?
When Results Slip • Find the problem! • Try a solution. • Then another • Then another • Try everything ethical and legal.
Use Everything You Have: • Your education • Your experience • Your team • Your intuition • Your brains • Your Peers • AND ALWAYS USE THE NUMBERS
Using The Numbers • Start with a numbers plan • Set GOALS = Desired Results • For example: • New member sales • Retention • Marketing costs • Labor Costs • Cleaning costs • Et Cetera
Building Management Budgets • Done before the year starts! • Thought NOT projections • Commitment NOT compliance • Honesty NOT padding • Reality NOT hope
Budgets • Most businesses have poor budgets (CFO Jan 2007) • 50% of managers can’t explain the gaps. • 40% managers don’t log on to B&P
Measure the GAP • Planned vs. Actual • The GAPS are symptoms • The GAPS are not the problems • Do not manage the numbers • Manage the business
Set The Example • CEO must care about managing. • CEO must dig into numbers • CEO must ask about number performance • Daily, Weekly, Monthly • The more managers who MANAGE • The better the results
Okay-Surprises Happen • Then what? 1-Scale back costs NOW. • Sooner rather than later • Scale back far enough to create a reserve 2-Use the reserve to drive sales
The Goal • Comprehension of the numbers and what they mean. • How numbers reveal the business. • How managing the business drives the numbers
8-Celebrate 3rd 7 Problem Solve 2nd 3 Plan The Solution 6 Identify Gaps 1st 5 Track Progress 4 Take Action Seven Elements in the Management Cycle 1-Desired Results 2 Know Capabilities The Puzzle: Where Is Your Club Soft?
Do you spell out DESIRED RESULTS? • Are they based on CAPABILITIES? • Do you PLAN SOLUTIONS? • Take the necessary ACTIONS? • TRACK PROGRESS? • Identify GAPS? • Problem SOlVE? (see FitProBusiness p.17) • CELEBRATE?
To MANAGE: Understand 3 Numbers • What drives revenue? How does my work impact it? • What drives costs? How does my work impact it? • (See FitPro Business p. 10 for 100% Profit Margin on Every Pound Saved) • What drives EBITDA? How does my work impact it?
What Drives Club Profits • No single number appears to be causal in EBITDA greater than 25%. • Based on 14 independent clubs over 14 years. • EBITDA = Earnings before you subtract out • Interest on loans • Taxes • Depreciation • Amortization
For EBITDA of 40% or more: • Above average work in FOUR AREAS: • Member Gain • Attrition • Cost Per Sale • Payroll as a % of Total Revenue
Key Performance Indicators • Top Management Team • Sales • Attrition • Cost of Sales • Labor percentage of turnover • What are the KPIs for Each Dept? • Each Employee?
If every does not have KPIs: • How do they know the score? • How can they play the game?
Mature Clubs Plateau Driving NON DUES REVENUE R E V E N U E Driving SALES 2002 2006
For Revenue Growth • Set NDR Goals • And manage them for results
Expand Products-Services • For revenue growth • Have margin criteria • Sources of Club NDR • Personal Training • Classes • Court time • Lessons • Leagues • Media income • Supplements?
Share The Success • Incentive Plan: Simple, 10%, 6-8x/year • Side Games • Equity: Real or phantom
Two Types Of Growth • Bigger • This presentation • Better • Small Giants by Bo Burlingham
Resources on Line at REXonlne.orgSee Fit Pro under Presentations on the home page • Key Performance Indicators • http://www.rexonline.org/showbriefs.php?action=keysuccess • Review and Action Planning Sessions-RAP • http://www.rexonline.org/showbriefs.php?action=rapmeet • Profit Driven or Profit Drifting • http://www.rexonline.org/showbriefs.php?action=manprofit • Increasing Workflow Productivity • http://www.rexonline.org/showbriefs.php?action=workflow • How To Stop Fire Fighting and Start Solving Problems FitPro Business Show issue p.10 • Managerial Moment of Truth • by Bodaken and Fritz for coaching managers to close GAPS. • Ultimate Customer Survey
Thank YouWill Phillips To download presentation and supporting materials: See Presentations on home page REXonline.org
Company Generated Leads Signage Location Web TV Radio Magazine Direct Mail Outreach Piggy Back Mailings Wheel License Plate Portable Sales Kiosk Self Generated Leads POS Referrals Customer referrals Cold Calls Former customer calls Lead Boxes Hangers On the street passes Be backs Former Members Class visits Seminars Networking Presentations 1-Net Member Growth Growing Sales = Growing Leads
Growing Sales = Growing Skills • Daily sales training • Info Call • Qualifying • Touring/Quoting • Presentation • Objections • POS Referrals • Lead Management • Weekly sales meetings
1-Net Member Growth Managing Selling • Individual Sales Person Goals • Financial and Time Implications • Business Sales Goals • Sales Funnel • Monthly-Weekly and Daily Sales Goals • Actuals • Diagnosis by the numbers at noon • Daily Sales Problems Solving • Daily Training-Role Playing-Coaching
1-Net Member Growth Each Sales Person: Every Day Goal / Actual • Club Leads: CL _______/_______ • My Leads: ML _______/_______ • Total Leads: TL _______/_______ • Appointments: A _______/_______ • Presentations: P _______/_______ • Sales Size: S1 _______/_______ • Sales: S _______/_______ • Sales Size: S2 _______/_______
1-Net Member Growth • Sales person Goals • Begin with Personal Goals • Plus Business Goals • = Monthly Weekly and Daily Goals
1-Net Member Growth • Sales Person’s History • Four Percentages: • Prospecting • Proposing • Closing • Quoting • Average sales size • Calculate Needed Leads • = Monthly Weekly and Daily
1-Net Member Growth Manage These KPIs • Inspect what you expect • Daily • Use to • keep sales people focused daily • diagnose training needs • identify coaching areas
1-Net Member Growth Prospect Tracking • Weekly Prospect Planner • Sales lead tracker • Self Development • Feedback &Planning • Resources in house • Outside training • Sales • Personal development
2-Attrition Attrition • All customer loyalty is emotionally based • Customer loyalty is based on ? • Customer Acquisition
2-Attrition • Use the single question survey. • How likely are you to refer someone to us? • Then dig for WHY????? • Stop trying to manipulate retention by irrelevant research on who stays.
Attrition • Early member behavior = • Retention
3-Cost Per Sale Cost Per Sale • Promotional Effectiveness • Measure Calls 10 days after promotion • Measure walk ins 10 days after promotion • Web Effectiveness • Measure Calls / downloaded passes • Sales Person Effectiveness: • Self generated leads per week • Quoting ratio : call to appointment • Closing ratio: appointment to sale
4-Labor Cost Labor Costs 1. Because revenue changes can mask labor productivity changes, a better measure may be labor pounds per member. • This is the real ratio to manage in terms of improving productivity in lowering the poubnds per member to deliver the value the member wants to pay for.
1-Net Member Growth 2. Even better is labor £ per user. -Calculate over 3 -5 years. -Trends? -Insights?
4-Labor Cost 3. Reduce hours where staff does NOT deliver value: -face to face with members -Phone to members -fixing equipment or facility -cleaning
4-Labor Cost • How often does a staff member sit around? 5. What 10 things are staff trained to do, WHEN there is nothing to do? 6. Analyze staffing schedules for overlap? Payroll vs. schedule.