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The Business Plan: Part 21 - Key Performance Indicators

The previous Business Plan blog discussed hiring and training front desk employees for your affiliate gym. Now that you have done the hiring and training, you need to know how to measure an employee’s performance.

It's a common problem with small businesses that employees are hired and rarely fired, compared to large companies, because of the time and effort it takes to replace them. Most employers don't take the time to measure an employee’s performance or give the employee a clear understanding of exactly what is expected of them. Setting up clear job duties and objectives, coupled with clear performance measurements will greatly increase the job satisfaction and productivity of your employees and greatly benefit your organization.

We have found that the best way to measure and motivate employees is through implementation and consistent use of Key Performance Indicators (KPIs). KPIs are created for every employee and job position in our facility, and are used to evaluate the success of activities we find valuable, and to measure our progress towards strategic goals. The KPIs are not pie-in-the-sky goals – they represent minimum standards that we expect from our staff, and have determined to be of value towards our profitability and ability to effectively manage our boxes. KPIs are measurements of outcomes, not goals or tasks. KPIs are the Rx of our business.

To establish KPIs write a list of goals for your affiliate Gym. Then write down outcomes your front desk need to achieve for you to hit those goals. For Example: A goal could be to hit 500 members by the end of the year. Meanwhile, it’s January 1 st and you’re at 300 members – so you need to net 200 new members this year to hit your target. Factoring in attrition, you need to sell 30 memberships a month to net 17 new members. To achieve this goal, your outcomes need take into consideration: number of new memberships sold, types of memberships sold, and retention of members.

Keep in mind that KPIs shouldn't be stretch goals for your employees, they are the minimum requirements expected of them . Minimum, meaning your employees need to hit or exceed these goals, and anything less is unacceptable. Each of the KPIs will be weighted differently based on importance, and a bonus should be paid if the employee meets or exceeds the goals. Here are the 6 KPIs that we use to measure our front desk staff to make sure we are achieving our goals:

  1. Membership Sales: Every employee has their own membership sales goals. The goal can be monthly, quarterly or yearly. Take into account what shift the employee works and the month of the year when coming up with the goals. January is your best month, so March shouldn't have the same goals as January. I prefer to set monthly sales goals as it's easier to spot and correct arising issues. If you prefer to do quarterly or annually, come up with the minimum number of sign-ups they should hit taking into account your good and bad months.

  2. Conversions Ratio: We measure the number of 1st visits (new people) for the month and how many of them were sold (memberships/class packages/pre-paid memberships). Simple Division of: Sales/New Visitors. This KPI allows you to measure the performance of your staff to make sure they are selling. Our Minimum Conversion Ratio is 35%, so for every 10 people that take a class, 3.5 people should buy something.

  3. Type of Memberships: We offer two types of memberships: A 3 month minimum commitment and a 12 month contract. Our goal is to create stable cash-flow so we push to sell 12 month memberships, making this an important KPI.  Goal- 12 Month Memberships must be > 55%, 3 Month Memberships must be < 45% of total memberships sold.

  4. Cleanliness: Cleanliness of our facility is important so we make this a KPI. Random spot checks are done throughout the month to ensure that the front desk staff are doing their duties.

  5. Conversion of 3 Month Memberships: Our 3 month memberships go month-to-month after the original term, goal is to convert them into 12 month contracts. The job duty of the front desk staff is to call people in their 3rd month and sell them on the 12 month contract. Calling members is measurable duty, therefore it is a KPI. The goal is to convert >35% of the 3 month memberships into 12-month contracts.

  6. Yelp Reviews: We love Yelp reviews as it helps to bring in new 1st time visitors. It's the duty of the front desk staff to get >1 Yelp Review per month.

Take some time and come up with KPIs and goals for your gym. It is proven that productivity and job satisfaction increases when employees have a clear understanding of what is expected of them. In the next blog we will discuss weighting the KPIs for a total of 100%, as some are more important than others, as well as a bonus for employees who meet or exceed their KPIs.

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Maxwod is a commercial-grade fitness equipment store. Shop affordable commercial grade fitness equipment designed for commercial gyms, affiliate gyms, garage gyms, and more. Maxwod carries a full range of rigs and racks, strength and conditioning equipment, and cardio fitness gear. Maxwod is not associated or affiliated with CrossFit® and/or CrossFit Inc. We make no claims to provide items directly from or endorsed by or approved by CrossFit® and/or their licensing companies. Maxwod is a collection of fitness equipment stores and an authorized re-seller of fitness equipment.

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