24 Hour Fitness: Ancillary Revenue Streams vs. Your Business Model

Installing ancillary revenue streams is a potentially outstanding way to increase your company's annual gross, but be mindful of where you focus your attention, especially if it tends to be primarily on the bottom line. By definition, ancillary revenue streams are not your company's primary source of income; they do, however, affect your business model, and not always in the way you would like.


I belong to 24 Hour Fitness and I love their gyms. With more than 20 clubs in the Denver Metro area, I can almost always find a location that conveniently fits into my day. The employees are polite and helpful and they greet you by name every morning [by design, I'm sure], the equipment is well-maintained and there's lots of it, and the price isn't too bad either. Since I'm there every day and because I'm in my brother's wedding soon, I decided to try their tanning package so I'm not blindingly pale in my dress. Despite being a huge fan of the brand, here's what I found with their a la carte tanning option:

• In order to purchase an unlimited monthly package I have to sit down with a sales rep and complete the process, which I was told consists of a few forms and "first and last month's payment." When I asked how you pay the first and the last month of a one-month tanning package, the down-to-earth front desk employee laughed and said he wasn't really sure.
• Because I don't have an extra 45-minutes to tool around with a sales rep before work in the morning I decided to go with the 10-tan package which required only my credit card and a short health release form.
• There are 4 stand-up tanning beds at the location by my house. Apparently only one of them is functional because when I finished my workout and went to the desk to request a tanning session I was told that it would be an 8-10 minute wait because someone was in it.
  
• The beds are located along the wall next to a bunch of machines. So, once I finish my workout and get undressed, I have to tan and then put my sweaty workout clothes back on to walk to the locker room. A smarter set-up would have been to enclose the small area and include walkways on either end so that you could get to the lockers without having to go back through the gym, and you wouldn't need to get fully dressed again.
• The first time I went I stayed in for the max 12 minutes. It seemed very quick, so the second time I set my stopwatch. The 12 minute tanning session is actually only a few seconds over 8 minutes, which is why I found the bed to be largely ineffective. When I asked the employee why the beds turn off two-thirds of the way through the session he told me that they know the timers don't work. Really?
  

24 Hour Fitness is a gym that has tanning beds, and not a tanning salon. However, if your business model includes supplementary income from ancillary revenue streams, then those revenue streams should be aligned with your primary business model and should meet or exceed the standards you've set for it. Not doing so can not only negatively affect your overall goals but will almost certainly eliminate the potential to make your additional revenue streams successful.

bk