Presents: Key Performance Indicators: Managing The Metrics That Matter By Will Phillips

1. Presents:Key Performance Indicators:Managing The Metrics That MatterBy Will Phillips To download presentation and supporting materials: See Presentations on home page REXonline.org

2. Mature Clubs Plateau Net Mbr Gain 2002 2006

3. Top 100 growth companies. • 36% aver. increase in REVENUES • 46% aver. increase in EARNINGS • Mostly from acquisitions and price increases

4. TYPES OF GROWTH • Organic Growth Rate • OGR for all international companies in existence at end of WW II to 2007? • <3%

5. Driving Growth • Get an Idea • Design Actions • Wait for Results

6. Working On ie.Improving • Get an Idea • Design Actions • MANAGE • For Results

7. To want to ACHIEVE is not enough. • If you don’t achieve the results, you are not a manager.

8. MANAGERS MUST MANAGE

9. Managed Planned Likely Now Future

10. 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?

11. When Results Slip • Find the problem! • Try a solution. • Then another • Then another • Try everything ethical and legal.

12. Use Everything You Have: • Your education • Your experience • Your team • Your intuition • Your brains • Your Peers • AND ALWAYS USE THE NUMBERS

13. 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

14. Building Management Budgets • Done before the year starts! • Thought NOT projections • Commitment NOT compliance • Honesty NOT padding • Reality NOT hope

15. 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

16. Measure the GAP • Planned vs. Actual • The GAPS are symptoms • The GAPS are not the problems • Do not manage the numbers • Manage the business

17. 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

18. 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

19. The Goal • Comprehension of the numbers and what they mean. • How numbers reveal the business. • How managing the business drives the numbers

20. 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?

21. 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?

22. 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?

23. 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

24. For EBITDA of 40% or more: • Above average work in FOUR AREAS: • Member Gain • Attrition • Cost Per Sale • Payroll as a % of Total Revenue

25. Key Performance Indicators • Top Management Team • Sales • Attrition • Cost of Sales • Labor percentage of turnover • What are the KPIs for Each Dept? • Each Employee?

26. If every does not have KPIs: • How do they know the score? • How can they play the game?

27. Mature Clubs Plateau Driving NON DUES REVENUE R E V E N U E Driving SALES 2002 2006

28. For Revenue Growth • Set NDR Goals • And manage them for results

29. Expand Products-Services • For revenue growth • Have margin criteria • Sources of Club NDR • Personal Training • Classes • Court time • Lessons • Leagues • Media income • Supplements?

30. Share The Success • Incentive Plan: Simple, 10%, 6-8x/year • Side Games • Equity: Real or phantom

31. Two Types Of Growth • Bigger • This presentation • Better • Small Giants by Bo Burlingham

32. 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

33. Thank YouWill Phillips To download presentation and supporting materials: See Presentations on home page REXonline.org

34. Part I is done!Part II :-Managing the four factors

35. 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

36. Growing Sales = Growing Skills • Daily sales training • Info Call • Qualifying • Touring/Quoting • Presentation • Objections • POS Referrals • Lead Management • Weekly sales meetings

37. 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

38. 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 _______/_______

39. 1-Net Member Growth • Sales person Goals • Begin with Personal Goals • Plus Business Goals • = Monthly Weekly and Daily Goals

40. 1-Net Member Growth • Sales Person’s History • Four Percentages: • Prospecting • Proposing • Closing • Quoting • Average sales size • Calculate Needed Leads • = Monthly Weekly and Daily

41. 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

42. 1-Net Member Growth Prospect Tracking • Weekly Prospect Planner • Sales lead tracker • Self Development • Feedback &Planning • Resources in house • Outside training • Sales • Personal development

43. 2-Attrition Attrition • All customer loyalty is emotionally based • Customer loyalty is based on ? • Customer Acquisition

44. 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.

45. Attrition • Early member behavior = • Retention

46. 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

47. 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.

48. 1-Net Member Growth 2. Even better is labor £ per user. -Calculate over 3 -5 years. -Trends? -Insights?

49. 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

50. 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.