International Benchmarkingand Financial KPI's

Paul Kuebler, Co-Owner

Master Franchisee- Eastern Europe/Russia

Course Summary & Objective

o In this course, attendees will learn about Financial benchmarks and how they apply to clubs internationally. While this course will have some general KPI’s and benchmarking information, it will also focus on the indicators that we use internationally that seem to translate well from country to country and remove currency issues and differences due to having clubs in multiple jurisdictions.

o Take-away’s• Template for comparing several

financial performance indicators and how use the template.

• How to compare KPI’s from club to club and over time.

Financial KPI’s & Benchmarking

o Ways we benchmark- club vs. club; club vs. norms (GG and IRHSA); quarter vs. quarter, year vs. year

o Why benchmark?o Choosing KPI’s o Areas to use KPI’s that are not financialo Frequency of Reporting of KPI’so Examples used by our company

Accurate & consistent measurement

Essential to be able to compare between periods or clubs

Detailed description of KPI for financial people, check and recheck data until you are sure that they know how to compile

information properly

Areas to use KPI’s

o Membership Sales- MAL tracking stats, InTouch, results vs. monthly plan

o EFT collection and retention stats; overall retention o Orientation, Intro-pack, and PT- conversion rate statso Auxiliary sales- versus budget, vs. members, vs. prior

yearo Financial- versus budget, prior year- percent of sales o Employee performance- versus check list, versus

objectiveso Club inspections- versus checklisto Customer feedback- Medallia

Our KPI Dash Board

Go to File

Financial KPI’s

o Gross Income- % change from Prior Period (PP)o PT Net Revenue- % change PP; % of Gross Inc.o Marketing & Sales Expense- % change PP; % of Gross Inco Payroll- % change PP; % of Gross Inc.o Occupancy Costs- % change PP; % of Gross Inc.o EBITDAR-(Earnings before Interest, Taxes, Deprec., Amort., and Rent) - %

change PP; % of Gross Inc.o EBITDA- % change PP; % of Gross Inc.o Unit Sales-% change PPo Annual Attrition- percentage and % change from PPo Net Members- % change PP

Financial Benchmarking

  Financial Metrics Other Metrics

Club trailing 12 months Gross Income PT Net Revenue

Marketing & Sales Expense Payroll Occupancy Costs EBITDAR EBITDA Unit Sales Annual Attrition

Net Members

Ending March 31, 2014 % Change % Change

% of Gross Income % Change

% of Gross Income % Change

% of Gross Income % Change

% of Gross Income % Change

% of Gross Income % Change

% of Gross Income % Change % % Change % Change

Clubs                                  

CLUB A 13.8% 33.2% 10.3% 6.7% 9.8% 4.5% 16.2% 0.2% 15.5% -1.1% 39.9% -2.0% 27.7% 10.9% 39.6% 5.8% 10.7%

CLUB B 13.2% -2.0% 19.0% 2.0% 6.0% -2.6% 17.0% -4.2% 7.0% 38.5% 21.0% 12.0% 12.0% -13.1% 49.0% 1.7% -4.0%

CLUB C 3.5% 4.2% 13.3% 9.0% 4.0% 10.0% 11.6% 26.2% 20.7% 12.0% 27.4% -67.4% 6.8% 12.2% 62.8% -2.5% 9.9%

CLUB D 1.2% 25.2% 3.0% -12.0% 15.0% -0.1% 27.0% 1.0% 26.0% 1.0% 13.0% -2.0% 17.4% 1.1% 52.6% 3.3% 0.6%

                                   

AVERAGE 7.9% 15.2% 11.4% 1.4% 8.7% 3.0% 18.0% 5.8% 17.3% 12.6% 25.3% -14.8% 16.0% 2.8% 51.0% 2.1% 4.3%

                                   

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Financial KPI’sDefinitions 1 of 2o Gross Income(A) is the total revenue generated by your company from all sources within your 4 walls. This column is

calculated as A from the current LTM (1 Feb- 31 March 2014) period divided by A from the prior LTM (1 Feb- 31 March 2013) period, so it is only the percentage change from the two years.

o PT Net Revenue (B) is the total revenue generated from all forms of personal training, including small group training, less all direct costs, including payroll, associated with delivering the personal training. This allows a comparison of this metric between companies that hire and pay personal trainers as employees, and those who collect "rent" from personal trainers. This column is calculated as B from the current LTM period divided by B from the prior LTM period.

o PT Net Rev Change: This column is calculated as B from the current LTM period divided by A from the current LTM period. o Marketing and Sales Expense (C) is the total of all direct and indirect costs, including advertising, marketing payroll, sales

payroll, commissions and management, associated with generating Gross Income. This column is calculated as C from the current LTM period divided by C from the prior LTM period.

o Marketing Change: This column is calculated as C from the current LTM period divided by A from the current LTM period. o Payroll (D) includes all payroll, other than payroll related to the delivery of personal training that was deducted in arriving

at B, payroll paid to sales in C, and any head office payroll. This column is calculated as D from the current LTM period divided by D from the prior LTM period.

o Payroll Change -This column is calculated as D from the current LTM period divided by A from the current LTM period. o Occupancy Costs (E) include rent, utilities and any other charges, such as CAM or taxes, that are passed through by a

landlord under the lease. This column is calculated as E from the current LTM period divided by E from the prior LTM period.

o Occupancy Costs Change This column is calculated as E from the current LTM period divided by A from the current LTM period.

Financial KPI’sDefinitions 2 of 2 o EBITDAR (F) is earnings before interest, income-related taxes, depreciation, amortization and rent. It is a measure of

operating income that attempts to exclude the effects of financing decisions, including the decision to rent or buy the space from which the business is operated. It also normalizes for the differing income tax levels of various locations. This column is calculated as F from the Current LTM period divided by F from the prior LTM period.

o EBITDAR Change This column is calculated as F from the current LTM period divided by A from the current LTM period. o EBITDA (G) is earnings before interest, income-related taxes, depreciation and amortization. It is a measure of cash flow

from the business in its current location, since rent is subtracted from EBITDAR to arrive at EBITDA. This column is calculated as G from the current LTM period divided by G from the prior LTM period.

o EBITDA Change This column is calculated as G from the current LTM period divided by A from the current LTM period. o Unit Sales (Z) is the total number of non-short-term memberships sold by your company. This column is calculated as Z from

the current LTM period divided by Z from the prior LTM period. o Annual Attrition % (H) is calculated as the total number of members who cancelled in the LTM, divided by the membership

total at the beginning of the LTM period. Eg., a group with 100,000 members on 1 February 2013 that loses 40,000 members during the twelve months ended 31 March, 2014 would have Annual Attrition of 40%. Short-term memberships of three months or less should not be included in the membership balance or counted as cancelled members when they leave.

o Annual Attrition Change This column is calculated as H% from the current LTM period divided by H% from the prior LTM period.

o Net Members (J) is the change in the membership balance from the beginning of the LTM period to the end of the LTM period. Eg., a group with 100,000 members on 1 February 2013 that has 110,000 members on 31 March 2014 would have +10,000 Net Members. This column is calculated as J from the prior LTM period divided by J from the current LTM period. In this example, that would result in a Net Members % ∆ of 10%. Short-term memberships of three months or less should not be included in the membership balance or counted as cancelled members when they leave.

Membership KPI’s

o Team and Individualo Leads, Referrals, WI’s, Calls,

Appts., Shows, Saleso Calls/Op ratio-o Calls to Appointment ratioo Show ratioo Close ratioo Renewal % trailing twelve months.

Membership Activity Log KPI's (In Touch)

How did you do yesterday? 2Sales (Membership & PT)

Are you ready for today? 3Appointments

Are you ready for the week ahead? 2Appointments (day 2-7)

Do you have enough leads? 84Added this week

Membership Opps Added 26 Month to date

Opportunities Added 11 309

Leads Added 6 187

Referrals Added 4 68

Walk-Ins Added 1 54

Calls Made 26 Month to date

Total Calls 130 1,979

Calls to Not Visited Guest 63% 59%

Calls to Missed Guest 29% 22%

Calls to Members 8% 19%

Calls to PT Leads 0% 0%

Sales Appts 26 Month to date

Sales Appt Added 3 93

Sales Appts 2 90

Guests for Memberships 26 Month to date

Total Guests 5 181

Showed-Up Sales Appt 1 69

New Walk-Ins 1 54

Drop-In Guests 3 58

Total Guest Sales 1 76

Membership Sales Breakdown 26 Month to date

Closing Percentage 20% 42%

Total Membership Sales 1 97

Leads 1 59

Referrals 0 36

Walk-Ins 0 2

Make Sale 26 Month to date

Referrals Added/Sale 4 0.7

Orientations Booked 5% 7%

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EFT Billing KPI’s

o New Sales vs. Budgeto % Cancelled to EFT runo % Failed to EFT runo % increase on net EFT runo % Collected (after manual

collection) to EFT runo Net rejections as percent of

EFT run

EFT (Direct Debit) KPI Tracking Jan/2014 Feb/2014 Mar/2014

Sale (heads) - budget 46 46 46Sale(heads) 42 47 41Sale % to the budget 91.30% 102.17% 89.13%Cancel (heads) 12 17 12Cancel % to the EFT run 1.40% 1.91% 1.31%Cancel % to the sale heads 28.57% 36.17% 29.27% EFT Run Heads - total (sent to bank) 856 890 915 EFT Run Revenue - total 85,600 89,000 91,500 EFT Run Revenue - actual collected amounts 78,600 82,100 84,400 Rejected Heads from EFT Run 70 69 71 Returns / Rejected Revenue from EFT run 7,000 6,900 7,100 Returns / Rejections in EFT Run Revenue (%) 8.18% 7.75% 7.76% Initial Fee Revenue Collected 7,350 8,225 7,175 Initial fee for 1 new sale 175 175 175 Manual collection - Recovered Revenue 3,000 3,500 3,700 Manual collection - Recovered Heads 30 35 37Manual collection - revenue per head 100.00 100.00 100.00 Heads - rejected not recovered 40 34 34 Revenue - rejected not recovered 4,000 3,400 3,400 Lost (rejected not recovered) Heads in % 4.67% 3.82% 3.72%Lost (rejected not recovered) Revenue in % 4.67% 3.82% 3.72% 10 Month Anniversary Members (month by month) 50 33 49 TOTAL EFT Heads at end of month (input from MP Report) 890 920 949 TOTAL EFT Heads at end of the month (formula from table) 890 920 949 Total EFT members not in current month EFT Run 56 60 54 TOTAL EFT MEMBERS IN CURRENT MONTH RUN 856 890 915 Total EFT Run Revenue Collected for the Month (no initial fees) 81,600 85600 88100Actual % collected from total sent to the bank 95% 96% 96% TOTAL EFT Revenue Collected per Month 88,950 93,825 95,275 Not canceled in heads 35 37 39Debt in Revenue (Not Writen Off) 6,850 8070 7490

New Member (MOB) KPI’s

o % of Intro packs (IP) to new members sold- goal 30%

o % of IP used-goal 80%o % of IP converted to PT client-goal

20%o % of orientations (free) booked

(not IP clients)-goal 20%o % of orientations used-goal 50%o % of orientations converted to PT-

goal 20%

2014 Intro Pack and Fitness Orientation KPI's January February March AprilNo. of New Members 105 83 No. of IP Sold in heads 26 26 in percentage (goal 30%) 24.76% 31.33% #DIV/No. of IP Used in heads 26 18 in percentage (goal 80%) 100% 69% #DIV/0!No. of IP Converted to PT in heads 10 3 in percentage (goal 20%) 38.46% 11.54% #DIV/0!No. of Orientations Booked in heads in Intouch 0 0 In Heads in IP Folder (sayd yes) 0 3 Total in heads 0 3 0 0in percentage (20%) 0.00% 3.61% #DIV/0!No. of Orientations Used in heads (w/out Intro Packs) 0 2 in percentage (goal 50%) 67% #DIV/0!No. of Orient. Converted to PT in heads 0 1 in percentage (goal 20%) 33.33% #DIV/0!

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Budget KPI’s

o Actual versus budgeto Actual versus PYo Actual versus forecast

(revised budget)

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Employee Performance

o Versus checklisto Versus Objectiveso Annual reviews

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Club Inspections

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Customer Feedback- Medallia

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o Benchmark against our clubs and all clubs

o Take into account cultural biases

o GM calls or emails all responses

o Positively received by members

Thank you for your attention- Please fill out surveyPaul J. Kuebler- Int’l benchmarking & financial KPI’s

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