October 31, 2019 Beth Cadman
Membership Retention – DO’S and DON’TS
A healthy membership retention rate is absolutely vital for the success of any business venture in the fitness industry. Here at KeepMe, we’re committed to help you improve your customer retention rate. In this blog, we’re going to do a quick summary of the “Do’s” and “Don’ts” of improving your gym’s retention rates.
1. Employee behaviour
| ✔ Friendly, approachable staff members | ❌ Unfriendly, cold staff members |
As Sir Richard Branson said, “the way you treat your employees is the way they will treat your customers”. Take one second to reflect on this, and ask yourself – how are you treating your employees?
As Sir Richard Branson said, “the way you treat your employees is the way they will treat your customers”. Take one second to reflect on this, and ask yourself – how are you treating your employees?
We know that the attitude that your employees have, has a strong impact on how they interact with your customers, and this in turn, has a big role to play in sustaining healthy customer retention rates. After all, 82% of people say that they’ve stopped doing business with a company because they received poor customer service! By focusing on creating a positive work environment for your employees, you will be creating a trickle-down effect that will improve the experience for your customers as well – making them more likely to stick around for the long-run.
2. Gym culture and environment
| ✔ Welcoming, inclusive gym environment | ❌ Impersonal, hostile, gym environment |
One of the biggest drivers of membership retention is customer engagement. Gallup Research shows that customers who are fully engaged represent a 23% premium in terms of share of wallet, profitability, revenue, and relationship growth over the average customer. One great way to keep members engaged is to create a sense of community.
Some easy steps to create a welcoming, inclusive gym environment are getting to know members by their name, and having meaningful conversations with them. Other ideas include celebrating members’ birthdays each month, running group classes, creating an online community, or even organising member-only parties like the London gym mogul, Gymbox! The possibilities, as they say, are endless.
3. Show your long-term members they’re valued
| ✔ Rewarding member loyalty | ❌ ‘Punishing’ member loyalty |
This may seem obvious, but how loyal your members are to your brand matters for membership retention. But if gyms want their members to remain loyal, they need to show that they value and appreciate members that do so. So, does your gym have a loyalty scheme? It should!
Loyalty programs encourage customers to remain engaged by giving them rewards for their loyal patronship – think coffeeshop stamp cards. In the absence of a loyalty scheme, long-term members may feel undervalued — even punished — for being loyal, since most gyms often tout introductory or newcomer promotions.
4. Unique customers deserve unique communications
| ✔ Targeted communications strategy | ❌ Generic communications strategy |
Customers don’t want to feel like just another number on your profit line. As Think with Google discovered, customers are demanding a more personalised form of service, and businesses that meet that demand are being rewarded handsomely for it – 90% of organizations that invest in personalized consumer experiences say that it significantly contributes to increasing business profitability!
Therefore, one of the keys to maintaining a healthy gym membership retention rate is delivering the marketing and communications services that will best resonate with segments of your membership base. With the use of sophisticated Artificial Intelligence technology, it is now easy for businesses in the health & fitness industry to meaningfully target and engage their customer base. Has someone been skipping the gym a lot lately? Send them an encouragement email. Someone new to the gym? Drop them a line asking if you can help them with anything. How about a loyal customer? Send them an incentive to refer their friends and family.
Although advice about member retention can sometimes feel vast and overwhelming, customer retention strategies ultimately boil down to these four categories. Isn’t that neat? Now, all you have to do is make sure you carry out all the do’s and none of the don’ts!
October 24, 2019 Beth Cadman
Should your retention strategy be the same across all outlets?
A single, unified retention strategy that can be rolled out across multiple outlets and teams could be the most powerful way to keep retention rates high.
Delivering an exceptional customer experience is a tried and tested idea that has been proven to work. However, in this digital age, where customers are inundated with choice and competition is fierce, they have more power than ever before. Harbouring customer loyalty and keeping retention rates high should be top of the agenda for any business, as dismissing a brand or switching from one to another has never been easier.
A study by Harvard Business School reported that increasing customer retention by even 5% could increase profits by 25–95%. However, a recent CMO survey found that nearly half of CMOs don’t expect to improve their retention rates in 2019.
Customer experience is key to improving member retention rates
To give your customers exceptional experiences, you must first know your members experience, and then you must curate a retention strategy that is malleable and flexible. The better a gym can do this, the more tailored, unique, and personal their approach will be, and therefore, the customer will feel respected, listened to, and valued, thus increasing their likelihood of committing to their membership and the brand as a whole.
While some operators think that because of this, creating different strategies for different studios is the best approach. However, it is arguable that this could lead to inconsistency and confusion and actually result in the delivery of lousy customer service which could affect the reputation of the brand. Even a single poor customer experience at a studio has the potential adverse affect for the overall brand, even if their customer satisfaction rate is high. If a person has a negative experience in a particular location and chooses to write about it online, the whole brand could take a hit because the internet doesn’t have physical boundaries, and operators need to be ever mindful of that.
One retention strategy to rule them all!
Therefore, creating an overarching retention strategy could be the most beneficial. Doing so means that gym members can expect the same level of customer care wherever they go. This means that if a member were to move away, they would be more likely to stay loyal to your gym and continue their membership in their new location. Similarly, for those members whose membership allows them to work out in any number of your outlets across the country, they will be presented with what is familiar and given the same service and attention that they have come to enjoy when they visit their regular gym, thus boosting their loyalty to the brand overall.
Of course, different studios do require separate incentives, and these will be determined by researching the customer base and adjusting offers and programs established by the results of such investigation. A discount for high-intensity workout classes, for example, may not work as well in a studio where the majority of members are aged 60+ as in one where they are in their twenties. However, the overarching strategy for rewarding loyalty through incentives should be the same.
However, aligning all teams and outlets under one strategy does make sense if a business hopes to keep delivering the same level of exceptional customer experience and care. Devising a singular retention strategy that can be rolled out to all studios means that there is greater fluidity and congruity, and all employees across all departments are working towards clear goals and a single vision and they have the tools and strategies to enable them to achieve these goals and realise this vision.
A study from Accenture revealed that 89% of customers get frustrated because they need to repeat their issues to multiple representatives. If gym operators have a retention strategy that is the same across all outlets, it is far more likely that there will be a protocol in place for how to deal with particular problems and complaints and therefore customers won’t have to continue to seek different advice and answers from various team members. Everyone will have the same answer, and it should be one that solves the customer’s problem, satisfies their need for answers and leaves them feeling as though they have had a genuinely positive customer experience.
One of the main reasons customers leave a business is because they feel ignored. Some 68% of customers stop doing business with a company due to the feeling that the company was indifferent toward them. By making sure that a solid retention strategy is in place across all outlets can ensure that customers feel as though they are being heard, wherever they are.
Another significant benefit from creating one retention strategy is that all the research and findings can be analysed together, and all resources can go into creating one compelling and effective strategy rather than some clubs doing a bit in one area, and others doing something different. Using a single platform such as Keepme to gather all information, and store all data means that the creation of a more unified and powerful retention strategy will be so much easier.
A solid retention strategy to retain and cultivate customers across the board is imperative. By creating a streamlined, integrated plan that still retains the flexibility to be moulded and tailored to individual needs and desires gyms will be at their most effective, and keep customers committed to their membership and loyal to your brand.
October 3, 2019 Beth Cadman
Contract vs. Pay As You Go: Members Who Commit To Staying
Should gym operators focus on persuading members to sign up for longer contract lengths, or is pay as you go better for retention? A careful combination might be the best way.
Understanding what effect membership plans have on gym membership retention rates can provide a useful insight to enable operators to market one or the other more strongly, and should be considered when devising a smart retention strategy.
There are, of course, benefits to both members and the club to offer different membership types. Most gyms can charge more if they offer a ‘drop-in’ or pay as you go service. However, convincing members to sign up for a 12-month contract means that the business has greater financial security and can forecast and make budgeting and growth plans more easily.
So how does each membership type effect retention rates?
Let’s investigate.
The 12-month contract
Those who commit to a 12-month contract, be that by paying a monthly fee or paying the entire sum upfront, naturally have a higher retention rate than those who only pay from month to month or simply pay each time they visit. This, of course, is understandable as if a person feels tied into a service that they have committed to pay for for a particular length of time, they are more likely to use it to get their monies worth.
Persuading members to sign up for a 12-month contract can give operators more stability and financial security, and because this is the standard for many gyms, there is less likely to be much resistance if dealing with an engaged and motivated member.
However, it is important to acknowledge that offering flexibility and freedom in a members contract can also work well. Members who don’t feel ‘trapped’ and who see going to the gym as a choice that they are fully in control of, rather than an activity that they have been coerced into are perhaps more likely to remain motivated and inspired to continue. Exercise quickly becomes unenjoyable if a person feels as though they are being forced into it against their will.
Similarly, if a person can no longer afford to pay the monthly fee, and has the flexibility to pause their membership for a while, they may be more likely to return to the gym when their income increases again. Those who have committed to a 12-month contract they can’t get out of, who then fall upon hard times, may end up feeling extremely resentful towards the gym when they have to continue to pay even though they are struggling to afford it. This could lead to a negative association, and even if they then become more affluent and can afford to rejoin, may refuse to do so because of the negative experience they underwent the first time.
Membership types – the figures
According to a study, numbers indicate that members who commit to 12-month membership agreements have a higher rate of retention than members who join month-to-month without any commitment. The research shows that those who pay month-to-month decrease significantly beginning at three months.
What is interesting to point out, however, is that the same study also revealed that of the 1.47 million memberships sold, 80% of these are month-to-month plans, and only 20% are 12-month agreements. This indicates that month to month contracts remains a more popular choice for people and that they do crave options, get-out clauses, and flexibility in their memberships. However, being given that choice, then makes it much easier to leave – and they are reminded of that possibility every month when given the option to renew.
The maths makes this even more plain to see. In short, those who have a month by month contract have 12 chances to leave every year, while those who sign up for a 12-month contract only have one chance. As a gym operator, it’s easy to see which odds are more attractive when trying to boost member retention rates.
In terms of revenue, however, it might not make a great deal of difference. Since the more attractive option to entice new members appears to be the month by month payment option, selling a greater number of these membership types could offset losses made when members do quit. What it does mean, however, it that gyms have to fight each month to find new members, where those who are signed up to a 12-month contract remain secure, for the time being.
Better sales techniques = better retention rates
The truth of the matter is that the more you can sell to a member, the better the chances are of them remaining committed to the gym. Joining fees, longer contract lengths, added extras, higher price points – these are all challenging to sell. However, if a salesperson is able to get a potential member to make that commitment, once they have signed on the dotted line, they will be more motivated to ensure that they obtain value from that commitment.
So should operators push for 12-month contracts?
It is important, as always, for gym operators to gather data, research member behaviour, and offer tailored marketing plans, personalised memberships, and flexible options if they wish to optimise retention rates. For example, focusing on customer service, on excellent orientation and onboarding procedures can help to ensure a member remains more committed. Encouraging members to attend the gym more frequently and create a routine can also help to boost retention. In fact, doing so means a member is likely to stay an additional six months longer than one who visits the gym on a more ad hoc basis.
Certainly, operators have begun to change their business models, and brands such as The Gym Group and PayasUGym use these flexible contract types as one of their main benefits to entice members away from bigger gyms who want to tie them into a longer contract length.
Research from energy firm JD Power in the utility sector revealed that billing and payment factors could account for 20 percent or more of total customer satisfaction scores. Making sure that the payment process is smooth and error-free is, therefore, imperative. By paying attention to how much time the team spends correcting payment errors, gym owners can get a clearer idea of whether payment experience is positive or poor.
It also might be worth considering and revising systems for chasing those customers who fail to pay. Debt collection should be handled sensitively and if not done so could trigger a backlash from upset members, which could then damage the reputation of the gym.
Providing flexibility is also crucial. While collecting monies via direct debit is the preferred option, it could be well worth gyms offering different payment offers to suit various cohorts of customers, such as allowing members to pay on any day in a given month. Being sensitive to different members budgets can also help operators come up with a range of membership plans to cater to everyone. Offering different types of payment plans and lower-cost memberships can encourage members to commit for longer, and can also foster customer loyalty from a broader range of members. The rise in popularity of fitness passports which offers those who sign up access to a wide variety of gyms and other health and fitness facilities in their local area is also a consideration that gym owners should consider buying into.
Pushing for a 12-month contract can have a positive psychological effect too. If a member signs up for this length of time, they start their gym-going feeling committed to attending longer term. Statistics show that if a gym-goers attend more sessions when they first join, they are more likely to continue to use the gym going forwards.
There are pros and cons for both contract, pay monthly and pay as you go options, and it is important for a gym to be able to calculate how to achieve the best balance for optimum revenue and retention. While the evidence seems to suggest that longer, fixed-term contracts tend to improve rendition rates, month to month contracts to appear easier to sell. Gyms must be careful not to push too hard for one at the expense of the other, and as always it is by engaging with members, listening to their needs and investing time and resources into understanding their behaviour that gyms will provide unique, satisfying fitness experiences and retention rates will remain high.