A whale of a fishing story in the fitness industry

Customer attrition analytics can be confusing until you dig into the numbers.

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 customer attrition analytics studies. 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 .

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