If you’re reading this post you’re most likely involved in SOME sort of recurring revenue business. And I’m just going to assume that you have auto-debit systems set up with your members.
Of course this is one of the first things you should do when starting a bootcamp/pt program/etc… I mean, you don’t want to chase for checks or cash at the end of every month.
However, I’m getting more and more fed up with EFT… and I may just stop offering it.
Let me explain..
..the overall EFT concept sounds great – sell someone on a 12-month commitment so you’re ‘sure’ you’ll be getting that $ for the next 12 months…
But if you’ve been doing this for a while, and especially when you start getting more clients, you just KNOW some of these payments are not going to go through.
And I don’t know about you, but I just HATE finding out that not all payments went through for the month.
I literally just can’t STAND it.
But above all that, when you have that bootcamp/pt client that just stops showing up, WHILE they’re on EFT, and no matter what you do to get him/her back nothing seems to work… you can almost ‘feel’ that cancellation request coming in.
And even if it doesn’t come in, you almost want to cancel FOR them since you want to avoid any future headaches.
So I think I came up with something to avoid that ‘fear’ of payments not going through. It’s really basic, but ever since I started using it I feel way more relaxed as it 100% guarantees your income.
Here’s what you do:
- Offer your monthly programs as usual, but offer an INSANE discount on a paid-in-full membership (in my bootcamp I offer 12 month pif.. and if they can’t do that I’ll pitch a 5-month pif).
- In your sales consultation, steer the prospect towards that pif in any way you ethically can. Throw in awesome bonuses like free grocery store tours, monthly coaching calls, nutrition seminars, even make a physical nutrition booklet to give out
- Get the pif, collect the money, then deposit that money into a separate bank account that you can NOT touch
- If you did a 12-month pif, arrange with your bank that every month 8.33% of the total amount in your account gets transferred over to your regular bank account (one twelfth of 100% is 8.33%)
- Sit back and relax as you now have TRUE guaranteed income for the next 12 months.
I know this is super simple, but I can’t tell you how relieving it is to avoid the whole ‘collecting’ issue with EFT. And yeah, since you’re giving a discount your monthly income from the pif will be slightly lower… but it’s SO worth the peace of mind.
Hope this made sense – and let me know if you have any questions below. Thanks so much for reading, talk to you guys soon!
Michael Duivis
Could not agree more Mike – brilliant post – I love to over-deliver and get big sale UP FRONT. Forget recurring revenue, I’m into high dollar value transactions now. And once they have paid off their training for the year, your clients will be much more apt to consume other products and services. This is EFT 2.0. Again, brilliant post and props to Sam for having this here. Sam, what’s your take on this???
Simple, easy, and you’re paid. I love it!
Way to think outside the box Michael. The wheels in my head are definitely turning. Thanks for this
Michael – LEGIT, homie!
I train athletes and their season is approx 3 mos in length so we offer 3 month memberships EFT or in full w/discount.
The ONLY option after that is 1 year and ONLY PIF.
I had a kid bail at the 6 month point once while on EFT for 1 year and I said never EVER again.
The good thing is I don’t NEED eft b/c I have the internet biz which has steady daily income, but for the trainer, i would go w/EFT and PIFs and as cash flow improves move more towards PIFs
This is a KICK ASS blog for anyone!
BOOM!
I was JUST thinking that monthly EFT was overrated. Thanks for reaffirming and extra insight!
In some states it is illegal to collect upfront dues for month than a month up front. You have to be bonded to do so.
Not using EFT and collecting PIF means you better be good at budgeting your $$. The few issues you cite for moving away from EFT are minor. If I have to deal with one or two payments not going through or cards expiring it’s no big deal.
For those that disappear I keep billing them unless they ask to get out of it. If their card gets cancelled for whatever reason, I’ll contact them & remind them they are under contract. For some it works and they actually come back and start taking the classes again. For others, they don’t respond. Most of the times those that don’t respond weren’t a good fit anyway and were a drain on the class.
It seems like we stopped running after checks and cash W/EFT and now we are running after credit card numbers. For the most part EFT works well, but PIF is also another great option. Great post Mike.
My solution is to make it a must that clients give you a void check so that your billing company is drafting straight from an account rather than a credit card. This way the only way the payment won’t go through is if there isn’t enough money on the account.
They can still give you CC info, but you get the void check as back up.
Make it a staple of doing business with you.
This will not only cut down the amount your billing company charges you for fees, your cc rejects will go down like crazy!
Luka
I personally DO NOT like to be a bill collector. So I ALWAYS incentivize and get a PIF.
If they can’t PIF then I make sure to get the first and last month down to deter from early termination.
I can’t agree with Luka more. People cancel or lose credit cards BUT they almost NEVER change their checking account.
So we get both forms of payment.
AWESOME BLOG POST! Credit cards are a pain to deal with each month…So over the whole EFT thing too!
Thanks Mike!
Great post Mike! We do PIF discounts as well and it works great! It gets old after trying to contact someone for two weeks to collect a payment. Love your points, keep the good tips coming!
Thanks for all the comments guys
– Dave, yes not focusing on EFT at all would be a little foolish. And if you’re going mostly for pifs than yeah you better be good at balancing your income -that’s why I recommend just turning the pifs into your own little eft by depositing the pif into a seperate bank account and taking 8.33% out of it every month.
– Luka that’s a great tip, I didn’t even know that about the voided checks. Definitely going to start collecting those more now.