Got attrition problems – then fix them. Today.
Observations based on applying advanced 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.
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.
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.
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.
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.
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.
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