5 Reasons Why Direct Debit is a Better Payment Model for your Tennis Coaching Programme
TRANSCRIPT
Hello and welcome to the Tennis Business Academy Podcast. This is episode number 12 and today I want to talk about Direct Debits.
More specifically I want to give you 5 reasons why running your coaching programme on a Direct Debit model is better than running it on a course by course model.
And not only that, but I will also tell you out of those 5 which 2 are the reasons why I couldn’t imagine running my coaching programme any other way other than through a Direct Debit model.
But before we get into it, let’s make sure that we’re all on the same page and just quickly define what I mean by Direct Debit model and course by course model.
So, a Direct Debit is an instruction from a customer to their bank that authorises a particular company or organisation to collect a certain amount of money every so often.
If you run your programme via Direct Debit, that means that when a new player signs-up you’ll ask them to fill in a form that authorises your business to collect a certain amount of money from their account - usually every month - to pay for their or their child’s coaching lessons.
Once the customer has filled in the form and authorised the transactions they will happen automatically until the customer decides to stop attending the lessons and cancels their membership.
So, that’s the Direct Debit model.
The course by course model works in a slightly different way.
In the course model a player is only signing up for a set number of weeks, let’s say 12 as an example, and will pay for the course upfront in a one-off payment.
In this scenario the player only authorises that one payment and your business will not be able to collect any future payments automatically.
This means that once the 12 weeks are over, if the player would like to continue with the coaching they will need to repeat the process and sign-up and pay again for the next course.
They’re signing-up course by course, hence why I have called the course by course payment model!
Ok, hopefully that makes the difference clear.
And with that out of the way it’s time to go through the 5 reasons why I think Direct Debits are better.
1) Less admin time for the customer
Using a Direct Debit model means that the customer only has to fill in a form once when they sign-up and that’s it.
The only other job they will need to do is to cancel the membership whenever they decide that they don’t want to be a part of your programme any more.
With a course model, people will need to keep re-signing up every single time.
Now, let’s be honest here, signing-up to a course shouldn’t take ages. As long as your booking software is easy to use, it should be fairly straightforward and quick to sign-up to a course.
Receive an email, click the link, fill in the card details, click sign-up, done.
Still, as a customer, if you or your kids have been playing for years and you are committed to keep playing for the foreseeable future, it’s still a pain to have to remember to do it every so many weeks.
Especially if you consider that your customers are probably being asked to do the same job for their kids’ football lessons, cricket lessons, piano lessons, ballet lessons, or whatever else their kids happen to be into.
It’s just one more job you’re giving your customers that takes time away from everything else they could be doing.
And while I certainly don’t think that it’s the end of the world to ask a customer to fill in a form every so often, the Direct Debit model still wins by requiring less admin on the customer’s part.
Which brings us to reason number
2) Less admin time for your business
In a Direct Debit model your customers won’t be the only ones saving on admin time - your business will too.
If you run courses, then that means that you will need to create new courses every so often. Once a course finishes another one must start. And you’ll need to spend time adding it to your booking system.
If you have a good booking system this will hopefully not take ages as you should be able to duplicate courses, change the dates and off you go.
Unless, of course, you have a fairly large programme to manage and then it might still take a while even with duplicating courses.
But regardless of how quickly you can set up new courses in a course model, in a Direct Debit model you don’t need to spend any time doing any of that.
In a Direct Debit model all you need to do is to set up the memberships once and then let them run.
No more admin time required other than that initial set up. People can then sign-up for the right membership for them and that’s it.
They can start attending the sessions they want to, without you or them having to spend time creating and signing-up to new courses.
3) Less effort chasing payments
In a Direct Debit model, payments will be taken upfront and automatically - usually every month, although it could be any frequency you choose really.
This means that there is virtually no time spent having to chase payments from people who have forgotten to sign-up or who have ‘forgotten’ to sign-up, if you know what I mean.
Contrast that with the course model, where you’re almost guaranteed that someone will not have seen the emails you sent, or bothered to click the link or who genuinely just forgot about signing up.
And the larger the programme you manage, the larger the number of people that you will have to chase for payments.
And that’s a cost for your business, whether you think of it that way or not.
And not to mention the fact that it’s hugely frustrating to have to chase people again and again, especially when they keep attending lessons without paying like nothing is happening…
4) Upfront cost for the customer
This is a less obvious and perhaps more debatable benefit of the Direct Debit model.
The idea is this, when you run your coaching programme on a monthly Direct Debit the customer needs to pay for a month upfront. About 4 weeks worth of cost for the customer, let’s say.
But when you run it on a course model then the customer is usually asked to pay for the whole course upfront.
And the courses tend to be longer than just 4 weeks. Usually around 6 to 13 weeks, from my experience.
This means that the customer is being asked to pay a much bigger sum all at the same time.
Now, you can look at this as a positive. I’m getting my customers to commit to making a larger purchase and that is a good thing!
And on the one hand that does make sense.
But on the other hand the bigger sum will almost definitely put some people off signing up in the first place.
Let’s take an example. Let’s say that you charge £10 per lesson - just to keep the maths easy.
If you charge for 4 weeks upfront then a customer needs to pay £40 to join the programme.
But if you’re charging for a whole 13 week course, then that would put the cost for the customer at £130.
That’s not a small difference, especially if the player happens to be new to the sport and to your programme.
So, to me it makes sense to break up the cost into smaller, more manageable chunks for the customer, with a view of being able to more easily attract new players.
5) Default position for the customer
This is a slightly trickier one to explain, and I don’t really have a good name for it.
Default position for the customer sounds a bit weird, but I haven’t really been able to come up with a better description for it.
But in any case let me explain.
What I mean by this is that in a Direct Debit model, the default position for the customer is renewal.
Meaning that if the customer does nothing, then they will renew for another month and another month and another month.
The path of least resistance is to renew.
On the other hand, with the course model the default position for the customer is cancellation.
Meaning that if the customer does nothing when the course ends, then they won’t re-sign up and will stop playing.
The path of least resistance is to cancel.
Now, I’m not suggesting that everyone on a Direct Debit model will renew and that everyone on a course by course model will cancel!
There are far more important things than that that you need to be doing to keep customers coming back for more.
You know that and I know that.
But still, I think it’s worth asking the question: do I want to put obstacles in the way of people continuing to play, or do I want to make it as easy as possible for them to continue playing?
To me the answer is a no-brainer. The fewer obstacles, the better.
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Ok, so that covers the 5 reasons
But before I explain which 2 are the really important ones for me, let me say this.
You can set up and run a successful coaching business with any payment model you choose.
The success of your business will depend on many more important factors than how you decide to charge your customers.
In fact, you probably know at least one successful coaching programme that is run with Direct Debits and I’m going to go on a limb here and say that you definitely know successful programmes that are managed on a course by course basis.
But just because you can be successful either way, doesn’t mean it’s all the same.
Your business will have a different feel depending on how you decide to charge customers. Your customers will interact with it differently, and you’ll have different admin tasks to address and complete.
So, while you can most definitely build a successful business with any payment model, I urge you to sit down and really think about which model might benefit you the most.
Which model will work best for you.
Which brings me to the 2 reasons why I couldn’t imagine running my coaching programme any other way, other than through Direct Debits.
And these 2 reasons are reason number 3, the fact that with Direct Debits I don’t need to spend time chasing payments and reason number 5, the fact that customers renew by default without me having to get involved.
Let me break these down.
When it comes to the renewal by default, my take on this is that it’s much easier for a customer to individually manage theirs or their children’s payments and memberships, than it is for me to manage everyone’s sign-ups and payments.
Or in other words, I don’t want to have to have to guide, or even corral, if you will, 50, 100, 150, 200 or however many players into opening an email, clicking a link, going to a sign-up page, filling in their card details and signing-up again.
And I most certainly don’t want to have to do it over and over and over again. 3 to 6 times every year.
I look at this as a massive waste of time and resources. I think that my time could be much better spent!
But guiding people to the sign-ups isn’t even the end of it!
If everyone signed-up when you asked them to, it would take time, but it wouldn’t be the end of the world.
After a few tries you’d have the email templates ready, and it would be like a copy and paste job from one course to the next.
But I know from experience that this isn’t how it works.
No matter how many of your players are really good and sign-up on time, there will always be someone who doesn’t.
And now you’re stuck chasing them and having awkward conversations where a kid has already attended 2 or 3 sessions of the course and their parents haven’t paid yet.
And I don’t know about you, but I’ve always hated these conversations.
So I don’t want to subject myself to them. At the very least not regularly!
So, for me personally these are the 2 reasons why I do run my coaching business on a Direct Debit model.
Because I don’t want to have to spend time and effort chasing payments and because I want customers to renew by default, rather than the onus being on me to have to guide them to the sign-up page every single time.
And running the programme on Direct Debit will all but eliminate these tasks, so that I can spend my time on more important and valuable things.
And that’s all there is to it, as far as I’m concerned. I guess you could say that I’m a simple man!
Ok, I hope that this was useful and I hope that you’ll take some time to think about the best payment model for your coaching programme, if you haven’t spent some time doing that yet.
And that’s it for today’s episode. As always I’ll be back next week with another instalment of the Tennis Business Academy Podcast.
Until then and thanks for tuning in.