Case Study: California Fitness Studio Drives Referrals With Digital Program

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b2beMerchant: b2be Sports & Wellness
Market: Chula Vista, California
Size: 1,600 members
Platforms: Perkville, Constant Contact, MINDBODY
Outcome: 1 to 2 new referrals per day
Bottom Line: By offering rewards for referrals, businesses can acquire new clients at a minimal cost.

When it comes to generating business and bringing in new clients, a company’s best advertising tool may be its current customer roster. Ninety-two percent of consumers in a 2012 survey by Nielsen said they trust “earned media” — like word-of-mouth referrals and recommendations from friends — above other forms of paid advertising. That’s an 18% increase since 2007.

At b2be Sports & Wellness, a high-end fitness studio in Chula Vista, California, Emmanuel Corona is looking to capitalize on this trend. The marketing executive has re-designed the way his company’s loyalty program operates, and partnered with Perkville to reward customers for referring their friends. “Most of our new clients come from word-of-mouth and from referrals,” said Corona.

Implementing the program
The more people a business has in its loyalty program, the more useful the program becomes. Corona’s first step in getting b2be Sports & Wellness clients to join his new program was to post about the platform on Facebook. “We have a fan page [with] about 2,000 fans,” said Corona. “So this was a very good way to communicate with them.”

Next up, Corona posted a flyer with an invitation to join Perkville in the gym, and used the member contact information he’s collected through MINDBODY to contact current gym members via email. “We also [sent] a separate email blast with Contact Contact, [and] we had a very good response.” Within three weeks of launching his new loyalty program, Corona was able to onboard 70% of his gym’s 1,600 members.

Producing results
Getting members signed up was only the first step in Corona’s plan. For the loyalty program to be successful, Corona needed to see results in the form of an increase in referrals. He decided to give current members one-day VIP passes that they could give away to friends, and gave out points when those friends came to visit the gym in person. “[Pass-holders] go to our front desk, they get a tour, and when they sign up we ask, ‘Hey, how did you get the VIP pass?’ If they say [they got it from] a friend who sent it through email or Facebook, we look up the client that referred them and give them points.”

Clients can redeem the points they earn for anything from free water bottles to personal training sessions and Pilates classes. Corona has also put together cross-promotions with neighboring businesses, giving b2be members the chance to earn $25 gift cards to local restaurants when they accumulate 450 loyalty points. (For reference, members earn 75 points for referring a friend, 25 points for joining the rewards program, and 1 point each time they come into the gym.)

So far, the plan seems to be working. Corona says he’s getting between one and two new referrals per day at the gym. “Those are very good numbers for us.” He plans on continuing with his current strategy, focusing on ways to increase referrals through online channels. He’s also planning on forging additional partnerships with local businesses, in the hopes that those businesses will direct their customers his way.

The Takeaway
Rather than focusing his budget on traditional advertising platforms — like TV, radio, and direct mail pieces — Corona is relying solely on hyperlocal tools as a way to promote his business and retain current customers. Digital marketing platforms give Corona a way to put his own customers to work, referring their friends to his business in exchange for rewards that cost his company very little.

These platforms also produce a measurable ROI. Corona doesn’t have to wonder whether the benefits of his efforts outweigh the cost (a concern he’s had when running media ads in the past) because Perkville puts the data right in front of him. At any point, Corona can see how many new referrals have come in through clients in the Perkville program, and he can compare the amount those new members are paying in monthly gym fees to the amount he’s paying in monthly fees to Perkville.

Stephanie Miles is an associate editor at Street Fight.

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Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.