The 2River Blog

September 1, 2017

Are You Using One of These 3 Technologies to Engage Your Customers?

Are you using one of these three technologies to engage your customers?

Text messaging and marketing automation tools are clear favorites for marketing and customer support professionals to engage their current customers.

Since 2013, 2River has surveyed advertising, customer service and marketing professionals in the United States about the tools and technologies they used to connect with their customers.

2River asks them what tools they use and how well the tools perform. 2River also asks them to identify emerging trends in their industry. The results of our 2016 survey are in.

Text messaging – a rising star

Of marketing and sales professionals who communicate with their customers via mobile text messaging, 49% find these tools to be extremely or very successful. Only 5% reported not being satisfied with text messaging to engage their customers.

This is a big change since 2013, when only about 40% of the marketing and sales professionals who used text messaging said it was extremely or very successful (compared to 49% in 2016). Also in 2013, 10% of survey participants using text messaging reported not being satisfied with it (compared to 5% in 2016).

Large businesses are jumping on this bandwagon — increasing their adoption of mobile text messaging for customer engagement. In 2013 only 51% of large businesses in our survey communicated with their customers via text messaging. In 2016 this jumped to 63%. Small and mid-size businesses may have been early adopters of text messaging, but large companies recognize that text messaging tools are key to a “mobile-first” communication strategy.

Marketing automation – a consistent winner

Marketing automation is still a winner. Of our survey participants who use marketing automation technology, 51% find these tools to be extremely or very successful to engage their current customers – on par with 2013 results.

Although the use of marketing automation has been relatively flat since we started the survey in 2013 (with 51-56% of survey participants using it), we see significant growth in the 2016 survey in the financial services and insurance industry. In 2013 only 55% of financial services survey participants reported using marketing automation. In 2016 81% of marketing and customer support professionals from financial services and insurance companies reported using marketing automation. This jump in usage has also followed a corresponding bump in satisfaction (69% reported it as extremely or very successful in 2016 – up from 40% satisfaction in 2013).

Online coupons – a fizzled firework

Satisfaction with online coupons continued a significant drop. In 2016 only 27% of the marketing and customer support professionals using online coupons for customer engagement were satisfied. This is a big drop from 2013 when 49% felt it was extremely or very successful. While hand-written coupons offering free Coca-Cola in 1887 may have launched 100 years of successful coupon strategies, the digital version does not look like it will have a similar century long impact.

Making customer engagement tools work

Regardless of which technology works for your company, the goal is to create a call to action. Each year, we hear stories of how marketing and customer support departments find successful ways to engage their customers. Successful techniques run the range from high-touch phone calls and in-store visits to high-tech outreach via social media, text and email.

As companies continue to use more customer data to pinpoint their customers’ needs and behavior, it is critical that marketing and customer support professionals access the right tools to engage and activate their customers. Knowing that certain types of customers are key candidates to purchase a new product is more effective if you also know which customer engagement technique is most likely to motivate them.

We believe successful companies will increasingly combine customer relationship management software, data analytics/AI and customer engagement tools to engage customers in relevant relevant ways across all communications channels.


The full research report from the 2016 Customer Engagement Tools survey is available at

August 1, 2017

How Do Businesses Activate Their Customers?

Data analytics continues to rise in popularity within the business community. It is increasingly common to see data science used in marketing, sales, customer support and risk departments.

These departments use data science to unify data about their customers (or prospects). This allows them to segment and understand their customers’ behavior. For marketing, sales, and customer support (and perhaps certain elements of risk), the end-goal of customer analytics is to activate an audience so that they do something.

How do businesses activate their customers? If internet searches are an indicator, it remains a battle between email and social media (just click on to see). But 2River’s annual survey of customer engagement tools and technology shows a more detailed story when you look “under the hood”.

Starting in 2013, 2River has surveyed advertising, customer service and marketing professionals in the United States about the tools and technologies they used to engage their customers.

2River asks them what tools they use and how well the tools perform. 2River also asks them to identify emerging trends in their industry. The results of our 2016 survey are in.

Social media and email marketing tools are far and away the most used tools for engaging customers. 70% of our survey participants use each technology. That is comparable to feedback we heard when we started this survey in 2013.

There was very little change in the use of text messaging and marketing automation tools (around half of our audience use each tool…about the same as we heard in 2013).

The least popular tool for engaging customers continues to be online coupons. Only 26% of survey participants in 2016 told us they use online coupons. This is a slide that continued over the past couple of years. In 2013 only 34% of our participants used online coupons.

Social media monitoring technologies was an area of significant drop off in this year’s survey. 64% of our audience in 2016 use technology to monitor social media in order to engage with their customers. This is down from 72% of our participants when we started in 2013. This trend may reflect a decreasing demand for tools to monitor social media as AI and analytics tools for social media marketing and ad placement have improved.

The full research report from the 2016 Customer Engagement Tools survey is available at

June 13, 2017

Small-business lenders need to think more like retailers

Shopping for small business loans has become an on-line activity. Like other on-line activities, customers expect convenience, security and service. In addition customers expect the same quality experience whether applying for a loan in-store, on-line, or mobile.

For small business lending, consistency across channels is particularly challenging. Small business owners are a unique borrowing customer. Neither credit scores nor cash-flow analysis are clear indicators of risk:

Credit-scores: Often small businesses mix personal and business credit together, making it appear the business owner is carrying higher than normal debt.
Cash-flow: While small businesses have cash-flow, their ability to show cash-flow is related to how much the business owners pay themselves.

Therefore many small business lenders focus their in-store lending processes on learning about their client, understanding cash flows, and ensuring that the requested loan makes sense.

These activities require due-diligence and time. This drives up the unit cost of the loan. Given limited staffing, this also takes away from other business development services and activities.

Small-business lenders need to think more like retailers. They need to embrace the changes in their customers’ behavior. They need to use technology to combine the flexibility of being small with the scale of being big.

Operations. It should be no surprise that over the past decade FinTech players have created technology to streamline business loans for on-line customers. Big banks are now creating or adopting this technology for in-store and on-line customers. Small and mid-size lenders are also exploring ways to use similar customer relationship and credit decisioning technologies to streamline their operations.

Customer Journey. The next step is to recognize that the customer journey is neither linear nor limited to a single channel. Customers expect that their lender is where they are. If a small business owner starts an application on-line, she will expect that if she comes into a branch or contacts a call-center, she will be able to pick up where she left off.

Personalization. In addition small business owners expect their lender to personalize recommendations. An in-store experience with a lending officer will identify the right loan products for the small business. Small business owners expect that on-line and mobile experiences will also dynamically recommend loan products and identify prices that appeal and work for the individual business.

Technology. Vendors have created technology products right-sized for lenders of all sizes. Technologies exist to integrate the customer information file with data-science to gain customers and improve customer lifetime value. This allows lenders of all sizes to focus on the right customers, at the right time, with the right message and loan product.

Small business lenders can learn from retailers’ playbook – but there is a historical difference. Retailers initially transformed their strategy in response to competitor’s activities. Small business lenders must transform themselves in response to their customers’ activities.

Originally written as a guest blog for AEO.

March 11, 2016

Tripping Points (IAD -> PVD)

As I have mentioned in past posts, I was fortunate to be invited to a friend’s REX Roundtable meeting to share some insights based on my consulting business’ analysis of about 1.5 million health club members. A club owners asked if I could summarize “tipping points” at which customer behavior changes. I am in the midst of some travel, so I thought I’d tackle a “tipping point” on each trip.

Tipping Point #2. Men and women are different. Yes, that is a blinding flash of the obvious and probably millions of words have already been written on the topic. But my observation is narrowly focused on how engaged your members are with your club, how that changes over time, and how those changes tend to differ for men and women.

Middle-aged members tend to be less engaged. (We have looked at several different ways to measure “engagement.” For this post, I am going to simply use average check-ins per week.) While specifics vary by market and by brand, we consistently see that members over 35 tend to check-in at a lower rate than their younger peers.

In some ways that shouldn’t be too surprising. As members reach their mid/late-30s and 40s, they are more likely to be married, involved in a professional career, starting and/or raising a family. In other words, there is a lot going on in the lives of your Gen X members right now.

This decrease in engagement is particularly true for members in their mid/late-30s and 40s who are in urban areas. These members also tend to report lower satisfaction with the “value” they receive from their membership. However our findings (and findings cited in other research) do not see increased attrition for these members…despite their lower engagement and lower perceptions of value.

Anecdotally we hear that these members value stability. Their intent is to re-commit to their fitness. Cancelling their membership would be a recognition that they are not going to re-engage.

These members also tend to have higher household income levels than members who are earlier in their careers. This higher income means that your membership fees are a smaller share of their wallet.

The combination of not wanting to admit defeat…and the ability to afford the membership (even if they don’t use it a lot), means attrition rates do not follow lower engagement for this particular group.

There are some differences between men and women in this group. Although they work out less than younger members, men in their mid/late-30s and 40s are more engaged than women.This seems to be particularly true around key milestone ages (45, 50, 55,…). These same men also tend to report higher levels of satisfaction with their fitness results.

So what do you do with this information. Find ways to help all of these members get re-engaged. Not only is it good for their health and fitness…but it is also good for your business. Remember, these members tend to have discretionary income. Helping them increase their engagement level can lead to increased Personal Training sales and other services that you provide.

How you do it will vary by club. Increasing the engagement level of these middle-aged members may require you and your staff to be flexible in order to accommodate the demands on their leisure time. For example more pre-work classes, weekend or after-work kids programming for a wider age-range of their children (not just pre-schoolers), 45min GroupEx at lunchtime so they can workout and get back to work,…

February 23, 2016

Tripping Points (JAX -> DCA)

I was fortunate last week to be invited to a friend’s REX Roundtable meeting. (If you are not familiar with it, REX Roundtables is a terrific organization that facilitates peer-based learning, mentoring and cooperation among small groups of business owners and executives within an industry.)

Anyway I was invited to share some general observations and insights based on my consulting business’ analysis of about 1.5 million health club members. The group I met with consisted of about 15+ owners of fitness clubs.

While talking, one of the club owners asked if I could summarize a couple of “tipping points” at which customer behavior changed. I thought that was an interesting question. I have a few flights over the next few weeks, so I thought I’d tackle a “tipping point” on each trip (especially now that I can keep using my phone to type even during take off!!).

Point 1. Customer behavior (at least for discretionary purchases and discretionary uses of time) seems relatively consistent. I recently read an article that cited “RFM” marketing techniques from the 1950’s . It stated that customer purchasing was most often predicted by the recency (R), frequency (F), and monetary (M) value of past purchases. In other words, the best indicator if a customer will buy your new product is if she has purchased many products from you and has purchased recently from you. (I am going to use the female pronoun in this post so I don’t have to constantly type “he/she” – these observations are applicable to men and women).

The same thing is true in anticipating member attrition in the fitness industry. A member’s frequency of work-out (e.g., average check-ins per week) and recency of work-out (e.g., days since last check-in) are the strongest predictors of a member’s likelihood of continuing or ending a gym membership.

That’s probably not too surprising. But what’s fascinating (at least to me), is the degree to which the importance of those factors vary based on a member’s tenure.

In other words, the recency of a member’s last work-out is a strong predictor if she will leave…but the actual number of days where you have high attrition risk varies significantly for new members v. long-term members. We break down tenure into 5 categories: New (0-90 days), Formative (90-180 days), Developing (180-365), Established (1-2 yrs), and Long-term (2+ yrs).

For a typical fitness club that has $40-$55 per month dues, we find a medium level of attrition risk in ‘New’ or ‘Formative’ members if she has not worked out in 10-14 days.

No, that doesn’t mean that in the 15th day she will walk in and quit. But after a 15 day absence her work out habit has been interrupted. There is now a much greater chance that she will not easily re-establish this habit. Her affiliation with your club is still rather new (kind of like the early stages of any relationship). So without an active work-out habit to reaffirm the value of her membership, she may not believe that the cost of membership is on par with the value she receives.

Fast-forward one to two years. A member has been with your club for over a year (e.g., an ‘Established’ member). Work and home-life get busy for our member, and she can’t work out for 10-14 days. Her work-out habit has been interrupted, but our research suggests that her attrition risk rises MUCH more slowly than if she were a ‘New’ or ‘Formative’ member.

Why? Well, there is still risk that she will not re-establish her work-out habit. But now your club has history with her. She has an affiliation with your club built up over 1+ years. Her view of the value you provide goes beyond her immediate work-out history. This broader view of value is sufficient for her to justify the cost of her membership.

For the scenarios described above, we have seen the member’s attrition risk rise twice as fast for ‘New’ or ‘Formative’ members who have not checked-in as we have seen for ‘Established’ or ‘Long-term’ members.

So if you are using a “30-60-90 day report” to make calls to members that have not checked-in much, split that report into two groups – (1) members that are in their first year with you and (2) members beyond their first year. Try different timelines for contacting each group (e.g., calling the first group after short absence, calling the second group after longer absence).

Also try different messaging. The first group wants a work out habit – that is how she assesses the value your provide. Help her re-establish this habit quickly – GroupEx, complimentary work-out for a friend, etc can all help her change behavior and come back in. The second group wants a work out habit too, but there is history. Ask what she has done in the past and what she liked…use that to help identify other similar programming.

Well that’s it for this flight. Stay tuned for another “Tripping Point” soon.

Feel free to share feedback with me at

February 9, 2016

A whale of a fishing story in the fitness industry

I talked with a club owner the other day who told me of a group of low-price fitness clubs that reportedly have average annual attrition of under 30%. While in some industries, the prospect of losing around one-third of your customers seems crazy, in the fitness industry, that’s not bad. In fact anything under 45% annual attrition is really good for the style of clubs commonly referred to as ‘high volume, low price’ (think $20 per month).

So anyway, I kept talking with this particular club owner to learn more about these remarkable clubs. (I must confess, I thought I was hearing the equivalent of my neighbor’s fishing stories, which always seem a bit too good to be true). What he told me next helped clarify my confusion. The clubs had been in business for over 15yrs.

That’s an important piece of the story. Member attrition for new customers is typically much higher than attrition for long-term customers.

In fact we have looked at several million member records as part of our consulting work and we typically see attrition in a member’s first 18 months that can be twice as high as attrition after a couple of years of belonging to a club.

Why? A new member does not have the same affiliation with a club as a long-term member. Your club is not yet a routine part of that new member’s habit…nor is it an embedded part of her monthly spending. In fitness, as with many industries, there are lots of reasons why long-term customers are more loyal and have less churn than new customers.

So back to our fishing story. After 15 years, these clubs most likely had built up a significant portion of their membership base who had been with the clubs for many years. With a large portion of long-term members (leaving at a very low rate) and a smaller portion of 1st year customers (leaving at a high rate), the AVERAGE attrition could very well be around 30%. But of the members leaving each year, I would bet the majority of them had been with the club under 18 months.

So what do you take from this? Look at your customer attrition based on how long they have been with you (e.g., members for one year or less, one to three years, more than three). How many of your departing customers are relatively new? I bet it will surprise you. If so, think about pro-active ways to engage these customers.

Remember if you can keep them past the one year mark, they are much more likely to stay with you for a long time…then you can spend more time fishing with my neighbor .

September 26, 2013

Got attrition problems – then fix them. Today.

The following post is part of a series of observations based on applying data analytics to the health and fitness industry…

The past three posts of this series identified common “levers” that gym owners and operators can pull to improve member retention. These levers range from long-term activities to ones you can do today. As a review these include:

  • broaden your brand to emphasize health and wellness to recast club membership as a health cost vs. a recreational one
  • streamline your members’ contracts as they come up for renewal to add features that make it convenient to remain a member
  • mitigate seasonal ups and downs by catering to segments that bump your summer numbers and retain “New Years Resolution” members into the Fall
  • understand your members and the “add on” services they use to identify your best customer segments and customize your offerings to meet their needs

These findings are based on 2River Consulting Group’s analysis of millions of data elements from U.S. clubs’ membership and billing databases. This article is focused on helping owners and operators determine the best way to get started – either with a set of quick-turn, low cost options or with longer-term investments.

1. Don’t wait until a member quits to start your retention efforts. Take a proactive approach to retention rather than try to “save” a customer when they come to you to quit. For example create financial incentives for your sales staff to walk around the club, interact with members, and encourage a member to try personal training or new summer programming that your club is offering. Sales staff typically have the interpersonal skills to get to know a member, understand his or her goals and enrich the experience through additional services that will help reach those goals.

2. Say “thank-you” and “I’m sorry”. At a member’s one-year anniversary offer a personal training session to show your appreciation (these type of “add ons” increase engagement and retention and might create a new, long-term personal training customer). If a member does call to cancel their membership, counter-offer with a lower-frills plan with decreased payments. It may keep your member – and maybe they bought more membership than they really needed in the first place.

3. Measure sales performance for customer retention as you do for customer acquisition. Your sales team is motivated to identify and convert prospects into members. Why not also have sales staff that are responsible for “re-selling” a membership when someone wants to quit? If you use a call center everything is measurable. Sales representatives are assessed (and compensated) based on measures such as, “net-revenue per call” and “net unit per call” (both of which are negative numbers). If there is no call center, “churn per store” could be an objective measure (in a club it is harder to count the number of interactions like in a call center, but you can tie departing customers to a specific club). In either case consider using sales people to be responsible (and rewarded) for retention.

4. The same retention strategy does not make sense for all members. Most likely a small percent of your members account for a large percent of your dues revenue. For your business, it is critical to know who these members are and to retain them. You can afford to invest more in a rewards program or personalized services if it retains more of your most profitable members. There are commercial, turn-key technologies at a range of price-points that help you to implement a targeted retention plan – many of these options have a proven track-record in the fitness industry. They include:

  • “pay-as-you-go” rewards programs that allow members to earn points by using additional services, referring friends, or talking about your club on social media,
  • billing and member management systems with integrated business intelligence and member-outreach services,
  • customer relationship management software that includes digital communication and loyalty benchmarking.

5. Pilot a retention strategy that focuses on a member’s first 12 months. The challenge with retention strategies is that you may not know how you are doing for a while. We recommend an incremental approach. Look back over your membership and sales records and determine how many members you lose in their first six months of membership (50, 100, 500). Set an initial goal of retaining 5%-10% of these members for just one extra month. Try different techniques (such as those listed above) to see what works for your club and your members. At the end of the seventh month, see if you have met your goal. If so, expand the program (it will begin funding itself); if not, try again with a different technique.

While it may be tempting to immediately turn to a technology solution, we recommend you focus on your people and processes first…then focus on technology. You will find this creates buy-in within your organization. You will also be better able to articulate your needs and expectations to your technology partner. This approach ensures your people, processes, and technology are aligned to create value for your business.

September 23, 2013

A focus on customer experience as seasons change.

The following post is part of a series of observations based on applying data analytics to the health and fitness industry…

2River Consulting Group’s data-driven analysis identified four factors contributing to fitness club member attrition and retention rates: broad economic conditions, contract design, member experience/utility, and seasonal impact. In February, we discussed macroeconomic effects and last March’s post used data to show all contracts are not created equal when it comes to member retention.

This month, we focus on the members themselves and using data to better understand them, especially how they use your facility and the services it offers and how much they spend. A little knowledge about your members’ activities in the gym can give you a lot of insight into who are your most valuable customers and how to keep them coming back month after month.

Attrition costs more than you think. Most club owners understand that retention is a serious problem industry-wide and in their own clubs. But 2River has discovered that it is worse than you think. After analyzing millions of data elements from U.S. clubs’ membership and billing databases, we discovered that the fitness industry, like many industries, has a very small percent of members that a high percent of revenue – one large operator had 20% of its dues revenue from coming from 5% of customers.

Our numbers also show that it is hard to replace high-paying customers; most new members are initially paying just basic membership fees. Replacing cancelled memberships is not a simple one-for-one proposition, so identifying and devising ways to hold on to current big-spenders is vital to your bottom line. Get to know your members and what they want, for example…

  • Our analysis found that demographics differed across corporate-plans, health insurance plans and general membership – differences in age, gender, facility-usage, and spending.
  • We also saw different characteristics between members that use multiple products and services and those that stick to the basic membership.
  • We also discovered how different programs and services appealed to different demographics. As an example, for a brand of U.S. clubs we found that their individual personal training appealed more to women than men by 2 to 1.
  • We also saw that while members of health-insurance sponsored plans were a generation older than the average membership population, their use of use of products, services and programs has similar characteristics as the overall membership base.

Based on these types of findings, we were able to work with the ownership group to develop a set of retention strategies – each tailored to appeal to specific segments of their membership. These types of strategies are a win-win. Clubs keep members enrolled and dues flowing while members enjoy a more enriching and customized club experience.

Understand the value of products, programs and additional services. How often a member uses a club is a good initial indicator of retention. However, the fact that many clubs have a large segment of dues-paying members that do not use the facility regularly demonstrates attendance alone cannot predict attrition.

On the other hand, looking at additional services members use – such as individual and group personal training, tanning, sports and recreational leagues, childcare, etc. – can tell you quite a bit about their likelihood to maintain their membership. Our analysis identified a clear link – as members use more “add-on” services over the life of their membership, they are almost 20% more likely to remain a member. So, selling personal training or nutrition counseling packages is more than a one-time bump in your revenue – it could drive up your retention rates significantly.

How does the season effect a member’s engagement and attrition? Fall is right around the corner and the weather is beginning to cool off. We would be remiss not to address seasonal effects on retention.

Our analysis is generally consistent with other published findings that have found only a limited seasonal effect on membership. Unsurprisingly, New Year’s resolutions do create lower attrition and higher growth in membership at the beginning of the year. Many clubs continue lower attrition into the summer months as their summer programming (e.g., camps) and pool memberships attract new members and retain current members. (Our analysis has seen some minor variations in attrition in the summer as families travel or students return home – but those are special cases.)

It is during the second half of the year when attrition rises – as summer programming and promotions end and the busy school year and holiday season begin. This is also around the time when new, “New Years” members reach their sixth month mark and lose their resolve. It is vital for club owners to keep this predictive calendar in mind when developing retention strategies.

September 19, 2013

How much is a “pound” of retention worth?

Almost every industry faces the challenge of acquiring and then retaining customers. The cost of acquiring a new customer typically wipes out much or all of the profit from the first year. In some industries it is not until the third or fourth year of renewed membership that a company begins to make a profit.

So why then do many of us put such a premium on the “sale” i.e., getting new customers? Why do we put less resources towards retention? Retaining a customer, whether you are in professional services, health & fitness, insurance, or many other industries is simply not as glamorous as finding new ones (perhaps it is a desire to be hunters instead of farmers).

The challenge of customer attrition is not just the lost revenue. There is also the challenge of “churn” i.e., a departure of customers. These departing customers might leave a wake of negative opinions with your other customers or on social media.

There is also the complexity of your client base turning over every two to three years. Old customers leave and are replaced by new ones. The new ones might have a very different set of needs and a very different buying pattern.

Business owners might find they need to reposition themselves and their products in the market to meet the new need – that can be expensive and complex. Health club owners might find after two years the underlying population of members has shifted to a different demographic. Insurance carriers might find that due to turnover within a company (or lack of turnover), the group that they are insuring looks very different than when they originally did the underwriting.

Exhibit 1: How easy is it to acquire & retain your customers?

For all of these reasons, business owners and managers need to shift the scale to create balance between customer acquisition and retention. Exhibit 1 shows a simple framework for thinking about customer acquisition and retention – the price to acquire a customer and retain a customer is either “high” or “low.” As a business owner, I understand the temptation to focus on clients that have both a low acquisition and retention cost. But that is a limited view.

We must invest in the acquisition and retention of our clients proportional to the lifetime value of that client. Next post…we will discuss different techniques to use data analytics to determine your acquisition and retention strategy.

September 15, 2013

So many industries, so many similarities…

2River was pleased to speak at the 2013 LIMRA Insurance conference in Philadelphia this past week. We spoke on the use of predictive modeling across industries and how this trend affects the insurance industry.

It was clear from participating in many of the industry-specific workshops that the insurance industry faces similar challenges and concerns as many other industries 2River has the opportunity to work with. Below are some highlights:

Industries are in a time of change. As a result, many senior leaders’ biggest concern is leading their organization through significant organizational change without alienating their workforce or their customer.

Individual consumers are at the center of many industries’ growth strategies. Companies across industries do not know the end-customer as well as they need to.
Retaining customers is a critical lever to generating profitable growth. Companies across industries put a premium on acquiring new customers. But that often forces them to pay less attention to building loyalty and investing to retain current customers.

Innovation is easy to talk about but hard to do. Keeping an eye out for “tangible” innovations in a local market or in a different industry is one way to begin a detailed conversation. Whether a company will create a novel business model or a unique bundle of services, there is huge value to introducing a tangible improvement and testing it aggressively.

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