Customer Service Principles to Boost Membership Retention

February 28, 2019 Category:

Customer Service Principles to Boost Membership Retention

Customer service plays an important role in improving membership retention – 73% of consumers said they would consider purchasing from a brand again if they had a superior customer service. In addition, customer experience is predicted to overtake price and product as the key brand differentiator by 2020. Put more simply, excellent customer service is a great way to distinguish your brand and what you offer from your competitors, keeping your members coming back for more.

“Don’t worry, I already provide great customer service”, you might say. However, do you know if this is really the case? Rather startlingly, Bain & Company found that while 80% of CEOs believe they deliver a superior customer experience, only 8% of their customers agree! To avoid this, this article will walk you through 5 important tips to improve your customer service and boost retention rates at your gym.

1. Make a good first impression

The first interaction you have with any customer is absolutely vital, since it will set the tone for all further engagements. People are prone to the halo effect, a form of cognitive bias where, if an observer likes one aspect of something, they will have a positive predisposition toward everything about it. If the observer dislikes one aspect of something, they will have a negative predisposition toward everything about it.

As such, start off on a sour note with a customer, and their entire impression of you will be tarnished by their bad first impression. You will have to work even harder the next time (if they even give you a second chance!) to convince them that your offering is worth their time and money. In addition, you may have to bear the consequences of them detracting your brand, since 95% of customers talk about a bad experience. In contrast, make a good first impression, and you are not only more likely to be forgiven by a customer for any future slip-ups, but also (and this is particularly the case for gyms) a happy first-time customer might commit to a long-term membership straight away as a result of their positive experience, guaranteeing their business for an extended period!

Many elements go into making a good first impression, such as being particularly welcoming to new customers, or ensuring that any queries or concerns they have are quickly addressed. The physical venue of the gym is also of vital importance, since customers will often interact with your physical space before they meet a member of staff: is your gym easy to find? Is there ample, affordable, parking? Is it clean and tidy? Even though a detailed look at making a first impression is beyond the scope of this article, one key aspect of customer service is strategically ensuring that your customers have a positive first impression of your brand.

2. Equip & empower staff members

In the context of online purchases, It was discovered that some of the most important factors driving good customer service impressions all entailed an issue being resolved as quickly as possible by a friendly, identifiable member of staff:

Econsultancy

(Chart Source: EConsultancy)

One great way to ensure that customers’ issues are resolved efficiently and simply is to ensure that your staff are equipped to do so. How can this be achieved?

The first step is to invest in employee training. An employee that has received adequate customer service training will not only know what the best decision to make in any given case is, but is also more likely to be calm and confident in high-pressure scenarios. In fact, household names like Disney and Zappos are well-known for the excellent customer service training that their staff members undergo.

In addition to being trained, staff must also be given the authority necessary for important client-facing decisions like payments, discounts, and on-boardings. While it may seem tempting to prevent staff members from having too much ‘power’ over the gym’s decision-making, unnecessarily restricting what your staff has the authority to do prevents them from efficiently handling customer concerns in a way that would benefit both your customers and your business.

3. Go beyond the call of duty

At the heart of positive customer service is each and every one of your customers feeling truly cared for and appreciated. According to research by Forrester, emotion was the #1 factor in customer loyalty across 17 of 18 industries studied. Furthermore, A Gallup study revealed that enduring relationships result only when companies pay attention to meeting the important emotional needs of their customers, not just providing faster service.

So avoid inauthentic, canned, interactions with clients and try to get to know them for the people they are, not just as cogs in the machinery of your business! This can be accomplished through acts like sending out personalised emails to check on how your members are progressing along with their fitness journey, sharing resources you know they will find helpful or interesting, or even something as simple as addressing your customers by name whenever they visit the gym or get in contact about their concerns. By going beyond the minimum acceptable standard of what one might expect from consumer service, you will not only improve your customer’s experience, but also alter the relationship between you and your customer to one emphasises meaningful engagement, omitting one of the several main reasons why customers churn.

4.  Measure customer satisfaction effectively

Finally, the most crucial aspect of providing good customer service involves regularly and effectively checking in with what your customers are experiencing. At the start of this article, I introduced a statistic that showed that there was a great gap between what CEOs believed they were offering their clients and what their clients experienced. In order to avoid this sort of information asymmetry, regularly assessing your customer’s satisfaction with your brand is vital.

There are a variety of ways to measure customer satisfaction, ranging from surveys, to the Customer Effort Score, to the Net Promoter System. Whichever you choose, understanding how your customers perceive the service you’re providing from their perspective will undoubtedly yield important insights. You can then regularly act upon these insights to provide good service – a fortuitous cycle that will result in improved customer service and improved membership retention!

Everything You Need to Know about Net Promoter Score (NPS)

February 21, 2019 Category:

Everything You Need to Know about NPS

Ever since Frederick F. Reichheld identified ‘Net Promoter Score (NPS)’ as the ‘one number you need to grow’, it has become one of the most prominent customer loyalty metrics in business. The NPS asks important questions that every business leader should know: how satisfied are your customers, and how likely are they to recommend your business or service to someone they know? In this article, we’ll explore the ins-and-outs of NPS, answering all of your questions about what NPS is, how to calculate NPS, and how to take advantage of its power.

What is NPS? How is it calculated?

The NPS is used to measure customer satisfaction. A tangible snapshot of how well a company is meeting consumer expectations, it provides helpful insights into how an enterprise can serve their customers better, or, alternatively, maintain high levels of customer satisfaction.

Here’s how it works. Customers are asked this question: “On a scale of 0–10, how likely are you to recommend [brand] to a colleague or friend?” Then, based on their responses to this question, customers are classified into one of three categories: detractors, passives or promoters.

‘Promoters’ are loyal customers who will not only consistently buy from a brand, but who will also urge their friends and family to do the same. ‘Passives’ are customers who are relatively satisfied with the service they’ve received, but who may patronise another company if given the opportunity. Finally, ‘detractors’ are customers who are actively unhappy with the service they’ve purchased, and who may tarnish the brand’s reputation through negative word-of-mouth.

The actual NPS score is calculated by taking the percentage of customers who are promoters, and subtracting the percentage of customers who are detractors, like so:

P – D = NPS

In theory, anything above 0 is a good NPS score, since a positive NPS indicates that you have more promoters than detractors – an indicator of potential growth. However, it is also important to benchmark yourself to your competitors, since average NPS scores vary across industries. A recent study across 109 companies in the Wellness and Fitness sector yielded an average NPS score of 77. If this figure is accurate, it would indicate that a gym or fitness facility needs to attain an NPS score close to 77 to remain competitive.

Why does NPS matter?

More than two thirds of Fortune 1000 companies use the NPS metric, a testament to how important NPS is for businesses. In addition, Bain and Company research has found that companies that achieve long-term profitable growth have a NPS that is 2 times higher than the average company.

A well-executed NPS strategy will also result in all-around better customer retention. Your NPS score gives you a clear and tangible assessment of how satisfied your customers are with the services you are providing. The score is also a good indicator of your customer retention rate – the more promoters you have relative to passives or detractors, the more likely you are to observe high membership retention rates and see membership growth via positive word-of-mouth.

Most importantly, NPS systems follow-up customer’s assessments of their willingness to recommend the brand with enquiries into the main factors that influenced their response. This is called key driver analysis, and looks into the specific areas of customer service that impact (or, indeed – drive) customer experience the most. Driver analysis is crucial for improving customer satisfaction and retention. With knowledge of what your key drivers are, you can focus company resources on what customers find the most important. This will allow you to be more effective in improving the experience of customers who are dissatisfied with your service and solidifying the support of those who are satisfied. This is crucial, since according to a study by consultancy Walker Information, customer experience (CX) will overtake price and product as the key brand differentiator by 2020.

Now that we’ve given you the run-down on what NPS is, here’s are two important points to keep in mind when executing your NPS strategy.  

Ask the right questions at the right times

How you conduct your brand sentiment surveys matters significantly in NPS strategy. For example, CustomerGauge discovered that phone interviews have some of the highest response and retention rates, that shorter surveys (2-6 questions) resulted in a 5.3% increase in response rate, and that customer retention increased 5.2% if customers were surveyed every quarter. In addition, utilising both relationship and transactional surveys resulted in a 4.9% average increase in retention.

If you’re going into an NPS strategy for the first time, be mindful of the details of how you’re surveying your customer base – they could make or break your data collection. If you’re already running an NPS system, re-examine your data collection strategy to see if there are ways to improve it.

Ensure answers drive action

Part of the beauty of NPS is that it gives you actionable data. Thus, it also follows that the effectiveness of NPS relies on you acting swiftly and decisively once the data collection and data analysis stages have elapsed. Within NPS systems, acting on feedback received is called ‘closing the loop’. There are many ways that one might set about ‘closing the loop’. Here’s one simple example:

Once you discover who your respective promoters, detractors, and passives are, design targeted communication strategies for each of these categories of customers. A strategy that works to address the gripes of a detractor will have a negligible effect on solidifying the loyalty of a promoter. Similarly, a detractor should not receive messages encouraging them to tell their friends about your brand; they will only say negative things! In contrast, a promoter should be encouraged in their ‘evangelistic’ efforts.

Even though NPS systems are powerful, they are only so if you’re willing to take a hands-on approach to business. The 2018 NPS® and CX Benchmarks Report found that 90% of companies close the loop in some way, and enjoy higher retention as a result of their efforts. However, companies that don’t close the loop increase their churn a minimum of 2.1% per year – yikes!

This article should’ve told you all you need to know about NPS. If you’re serious about improving your customer retention rate, get started as soon as possible on implementing and executing an effective NPS strategy – it’ll be worth the investment.

Risk Scoring – A Crucial Part of the Retention Puzzle

February 4, 2019 Category:

Risk Scoring – A Crucial Part of the Retention Puzzle

The verdict is out – anyone who wants to run a successful and sustainable business should be focusing on retention. After all, it costs five times as much to attract a new customer than to keep an existing one, and increasing customer retention rates by 5% increases profits by 25% to 95%. Poor retention is a particular problem for enterprises in the health and fitness industry. In this article, we’ll discuss the practice of risk scoring. Risk scoring is the act of analysing the potential loyalty of a customer or segment of customers, and is an essential component of an effective retention strategy.

Some customers or customers segments are inherently more prone to churn than others. This is expressed in patterns of customer behaviour, with some patterns indicating a higher probability to churn than others. However, without a risk scoring system, it is extremely difficult to identify these behaviours, and who high-risk customers might be. It is even harder to proactively take the necessary steps to prevent these ‘high-risk’ customers from leaving. An effective risk scoring system will not only identify who high-risk customers are, but will also be able to do it in a timely fashion for your to make the necessary changes before it is too late.

About risk scoring

The practice of risk scoring assesses the probability (or risk) that a given customer or segment of customers will churn, ceasing to do business with you. There are a variety of factors that come into play in determining the risk of a particular customer or segment of customers churning. While the specifics will vary between contexts, some factors that are likely to be important include how often they attend the gym, their purchase history, and how long they have been a member of the gym.

Risk scores can also be aggregated. Aggregating risk scores is particularly helpful for individuals who run several clubs or facilities at the same time. By comparing clubs’ overall risk scores, it is easy to tell at a glance which clubs are doing better than others at retaining their members and to swiftly respond to that information.  

In addition, most risk scoring systems will also be able to segment your customer base based on their risk scores, and provide you with a visualisation of the composition of your demographic relative to these segments. Here’s an example of two personas that you may see in your gym:

  1. ‘John’ refers to a customer with a low risk of churning. He’s been a member of the gym for a few years, regularly attends the gym, and has even brought some new clients to the gym through referrals.

  2. ‘Jane’ refers to a customer with a high risk of churning. She signed up for the gym a few months ago, but does not attend the gym regularly. In addition, she is coming close to the end of her fixed membership period.

With insights into the profile of your customers, you will be able to develop marketing and communications strategies that effectively meet your demographic.

Risk scoring in retention management

One of the best ways to utilise risk scoring in retention management strategy is through the practice of micro-segmentation marketing and communication. Micro-segmentation refers to the practice where customers are divided into niche personas or ‘segments’ based on several specific characteristics such as demographic information or behavioural attributes.

Micro-segmentation marketing, in turn, refers to a marketing strategy that creates “hyper-focused campaigns” to accurately satisfy the needs of each of these varying types of customers. This strategy is incredibly effective because one of the best ways to retain high-risk customers is to meaningfully engage them and help them to understand the value of what your business offers. Remember ‘John’ and ‘Jane’? Here’s an example of how two different types of strategic communication could be developed based on their risk scores:

  1. Since ‘John’ has a low risk of churning, we do not need to spend too many resources on ensuring that we keep his business. He is very likely to be retained even if no action is taken.

  2. Since ‘Jane’ has a high risk of churning, more resources should be spent on attempting to retain her as a customer. Jane should be sent a special offer to encourage her to stay on with the business, and customer service officers ought to meaningfully engage Jane to better understand her needs.  

Technology and risk scoring

In this article, we’ve discussed two simplified examples how risk scoring can work to improve your membership retention rate. However, in reality, the various personas you find in a given facility are bound to be more numerous, and the precise communications strategy required more nuanced and sophisticated. Indeed, risk scoring is a very complicated, and potentially tedious process for human hands. The work necessary to carry out accurate and effective risk scoring as a part of retention strategy is exorbitant, and unfeasible for most businesses.

Fortunately, predictive analytics, big data, and other sophisticated technologies have been shown to be effective at risk scoring in some industries. Should a business in the health and fitness industry implement a fitness-specific risk scoring technology, they are bound to see their retention rates quickly improve.    

Conclusion

It is crucial to understand how effectively you are (or are not) retaining your client base. In their 2018 NPS and CX Benchmarks Report, CustomerGauge discovered that “a shockingly high” number of companies can’t report how many customers they are losing annually, with 44% of respondents and 32% of senior management not knowing their retention rate. This is unacceptable. Tracking and managing member activity is a vital component of managing a business and sustaining membership retention in the health and fitness industry. Risk scoring, which we’ve discussed today, is an important part of getting to grips with your member demographics and, accordingly, improving your business’ membership retention.