A focus on customer experience as seasons change.
Observations based on applying predictive analytics to the health and fitness industry.
2River Consulting Group’s predictive analytics 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.
Set retention strategies tailored to your customers.
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.
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