In an ideal world, clients would turn up to every single session without fail, but inevitably, life happens and they will (hopefully only) occasionally need to cancel.
The question then, what sort of cancellation policy should you have in place that will ensure your revenue and class numbers are not constantly fluctuating?
1. Putting the Basics in Place
At the very minimum, a business should have a 24-hour cancellation policy.
Although some businesses may what a longer or shorter time frame, it is important to remember that the idea of a cancellation policy is to have time to re-sell the booking, product, or service.
Alongside the cancellation policy ensure that any passes you sell or vouchers you offer have an expiry date or time period attached to them. For example, if you are selling a block of 10 class passes (the favourite number for fitness businesses), do they need to be used within a set time frame (e.g. 10 weeks) or three months?
2. The Quarterly Approach
You may decide that filling places on a continual basis is not suited to your business and decide to get clients to pay quarterly upfront for a block of several weeks, usually around 10-12.
With this method, clients sign up for a block with, for example, 10 sessions over 10 weeks (which could run conveniently alongside the school term) at the same time on the same day(s).
We this method:
- You would not generally offer refunds as the client is paying for a specific time slot which is convenient to them (i.e. fits their schedule rather than yours).
- You know exactly:
- How many spaces you have available;
- How many spaces you need to fill; and
- When your spaces are sold out.
3. Allowing for Flexibility
For many businesses a formal, fairly rigid, cancellation policy will form a sound business strategy. But, for some, a more relaxed approach may be more appropriate, it being largely dependent on the relationship you have with your (current pool of) clients. Remember your client base will change over time and, therefore, your cancellation strategy may need to change.
Some businesses will not charge a client for a service or product that they do not receive, others will charge a small to medium (disincentive) fee – anything between 10% and 50% of the original price.
An ideal (or opportunistic) time to check for any conflicts that could lead to a client cancelling is during the initial consultation and/or during the induction process. Although you are unlikely to change the time of a session for just one client, if several make note of the time/day of a specific session, this business intelligence can be used to modify your timetable and reduce cancellations.