Short Term Capital Strategy - Sell Lifetime Memberships

Feb 19, 2020

 by Josh Braden
Want to upgrade your space, buy new equipment, pay off some debt or take a vacation but a little short on cash?
Ever thought about selling Lifetime Memberships???
Sounds crazy I know!! I am here to tell you that you can, should and will be extremely surprised at who takes advantage of the offer! When I owned my CrossFit affiliates we would always sell 5-lifetime memberships each year either right before Christmas, when members are in the buying mood or during tax time when most get a chunk of change back on their returns.
I have been talking to a ton of new owners the last few weeks and several are in need of some upfront cash… some need it just to pay the bills, upgrade the space or to hire a new coach…if you are one of those owners here is how I handled those situations.
How did we do this you ask??
We offered it as a special to only 5 members each year at a rate of 36 months of their current rate. So if you charge $150 for your monthly membership you would offer it for $5,400 and they get a membership for life!! We always had more takers then the 5 members but we held our ground at 5 because you have to replace their monthly if you plan to spend the upfront cash, so monthly cash flow does not suffer. We used this influx of capital to pay for unexpected expenses, leasehold improvements, family vacations, new equipment upgrades, and to stack more cash in the bank for a rainy day.
Some owners will ask why would you ever do this because in the long game they would pay you so much more… well yes and no… We knew our numbers very well and knew that the average member-only stayed with us for 18 months. Yes, some 4-6 years… others a few months… but the average was 18. Knowing that if we can get 36 plus months upfront why not do so?
Especially if you need cash now!
You get the cash you need and the member becomes one of the few Lifetime members!
I would value-stack the offer to make it much more appealing. I offered a swag package that was exclusive to lifetime members only. They would get a shirt, sweatshirt, and a nice water bottle that had a special lifetime member-only logo and 10% off any specialty classes offered in the future. The members wore it with pride!! Year over year we would sell out faster and faster. One year I did not even send out a promo email because they were already sold. The email was simple… we have officially sold out of the lifetime memberships this year. We have also offered it at a 10% discount when we moved from 3000 sq ft to 6000 sq ft because we needed the cash fast.
We added a few items to the contract for this membership.
  1. 99-year contract
  2. Absolutely no refund of any kind, even if they move or injury.
  3. 5 days to cancel agreement - help with the above and buyer remorse. We required to pay by check or if they had a credit card with rewards we could use that but always try for a check… save on fees. Also depending on your merchant processor, they may not allow transactions that high so make sure you check with them first.
  4. Lifetime membership is good for your location or any other location you may open in the future. Just gives them the warm and fuzzies.
  5. Add anything else you may think could come up.
If you are going to offer this promo… offer to everyone via email and announcements in class. Give a firm deadline for the end of the month, make sure to give 2-4 weeks. Be flexible depending on the person… I had several say I want it but can’t run my card till X date. However, I always would get their verbal or written acceptance of the offer.
Then I would send an email or private message to anyone that has bought a year paid in full in the past. Explain to them how awesome they are and when their year comes up to explain how the offer would work for them. If they where in the middle of the year paid in full I would simply credit 6 months towards the lifetime membership so they are not out anything.
Then as soon as I would get the acceptance of 1 membership I would push out to everyone via email, social media, and the announcements board that 1 has been sold and only 4 left… This created more scarcity and excitement. Usually selling the first one was the hardest but once people see them being sold the others went extremely fast.
NEVER judge a book by its cover! I sold a family lifetime membership to a family that would come in with dirty clothes, work boots and drove modist cars. I would have never thought in a million years he would pull out an American Express and pay over $11,000 for membership. He looked at me and said… well, I have been working out my whole life, I love it here and in the long run, it will save me a ton of money. Another one was a stay at home mom, that was working out with us from the beginning. Very quiet, shy and would leave as soon as the class was over. She paid over $4000 with a check... Come to find out they are farmers and when she mentioned it to her husband it was an immediate yes because it saved them money and then they did not have to worry about the monthly expense when revenue was a little leaner. So you just never know! If anyone shows interest follow up with them several times till they say no or “I wish I could but can’t at this time”.
At the end of the day, you have members that absolutely love you and the gym. So they are glad to help you out, save money, and truly become a brick in the wall.
If you're doing this because you need short term cash then it's only a short term band-aid. We would need to figure out a longer-term marketing and operations strategy.
Josh - FitHive