April 25, 2019 Category: Retention
One of the best ways to improve your membership retention is to make your members feel valued and important. “But how?”, you might ask. Well, as we’ve discussed a few times already on this blog, customers are increasingly demanding personalised service from brands.
According to the 2018 Accenture Interactive Personalization Pulse Report, an extensive 91% of consumers are more likely to shop with brands who “recognise, remember, and provide them with relevant offers and recommendations”. An important part of what it means to
In our article on risk scoring, we’ve talked about the fact that certain types of customers may be at a greater risk of leaving than others. Once you’ve accurately identified which members are ‘at-risk’, the necessary steps to prevent these ‘at-risk’ customers from leaving can then be taken.
For example, consider a hypothetical member, Jane. Jane signed up for the gym a few months
Do you know how long each of your members has been with your gym? There are two reasons why you should. Firstly, there is strong evidence that rewarding loyal members directly results in a better retention rate – 82.4% of respondents said they would be “more likely” or “much more likely” to shop at stores that offered loyalty programmes. However, you can’t reward your most loyal members if you don’t know who they are in the first place!
Secondly, the sort of correspondence you want to have with a long-term member is going to look very different from a new member. With a new member, your main goal should be ensuring that they are settling in as well as they can. In contrast, a long-term member ought to be acknowledged for their loyalty. They should also be asked for recommendations as to how the gym could improve; long-term members’ experience at the gym over time can yield valuable insights, since they will be able to compare existing gym strategies with old ones.
Even though everyone who buys a gym membership is fundamentally after the same product (gym access), their purpose for wanting that product is likely to differ widely. For example, while some members may be complete beginners to fitness just starting out their health journey, other members may be seasoned athletes looking to develop themselves further in their area of expertise. By differentiating why various members use the gym, you can make your communications strategy more effective.
For example, it would be pointless advertising a coaching certificate course or a high-level personal trainer to someone who’s just started exercising. It would also not be effective to promote a beginner’s kickboxing class to a seasoned MMA fighter. In contrast, imagine targeted communications that acknowledge a member’s purpose at the gym (e.g. lose weight), and make a meaningful suggestion that can help them achieve that goal (e.g. an introductory class to good nutrition). Not only will members feel more supported in their fitness journey, but you may also be more effective at selling add-on purchases — a win-win situation!
Think With Google found that 63% of people expect brands to use their purchase history to provide them with personalized experiences. There’s good reason for this. The services that members have used in the past are a good way to separate one type of customer from another. In the gym context, this could mean distinguishing members that only use the free weights section of the gym from those that only attend group classes. You could even dive deeper into the data, and examine what sorts of classes people are attending.
Understanding what services your customer base is using is an important first-step to serving them better. Once you have that knowledge, you can assign more resources to more popular services, improving the quality of the service that you provide. In addition, you can make targeted promotions and incentives, encouraging people to try facilities or services they haven’t used before, but that complement their existing purchases. The more reasons that people have to use your gym, the more value you provide to their life, and the less likely they are to churn.
Finally, categorising your members in terms of their financial situation is an integral part of any personalised communications strategy. One big reasons for customer churn is a lack of sufficient funds.
For members who may be in more precarious financial situations, such as students or contract workers, one engagement strategy would be to offer these customers a flexible payments scheme or to give them the flexibility to ‘downgrade’ their membership to a discounted rate (with perhaps some reduced membership perks) when necessary. After all, many businesses already offer student discounts, so why not take price discrimination one step further? You stand to gain more from retaining a customer at a discounted rate over the long run, rather than losing them altogether. Additionally, by showing that you are able to work flexibly around your customer’s financial circumstances, your customers will feel cared about.
On the flip side, customers who are working professionals or who are otherwise financially comfortable shouldn’t be offered discounts, or monetary incentives (for referral programmes etc.), since they are likely to be more price insensitive. Other engagement methods should be used with them for greater effectiveness.
April 18, 2019 Category: Retention
Millennials, they do things differently.
Whilst many throw their hands up in despair at a generation criticised for being coddled and having no staying power, the reality is very different.
The truth is, there are certainly challenges when it comes to understanding how to market your gym to millennials and how to retain these tricky customers. But there are also huge rewards for those who get it right.
Just like the Baby Boomer generation came to define an era and became a massive source of revenue for canny marketers, the Millennial generation are in the process of transforming how the gym industry targets its offerings. How well they do this will determine how successful they are.
One of the big challenges gyms have to face when it comes to attracting millennials is price. One study found that over 70% of millennials think gym memberships are too expensive. Instead they’ve been drawn to the experiential appeal of outdoor endurance events like Tough Mudder, or the community vibe of cycling studio programs like SoulCycle.
The thing is, it’s not that millennials are reluctant to spend money, it’s that they understand that exercise doesn’t have to be a chore, and they expect high value in exchange for their money.
Millennials are super into fitness. In fact, millennials do more exercise than any other generation. A 2018 study by the Physical Activity Council found that nearly half of millennials participated in high-calorie burning exercise and only 25% were sedentary.
Not only that but fitness is more important to millennials than to any other generation. According to therapist Rachel Kazez:
“It seems like [fitness is] a more active part of their lives, something they do intentionally and as a priority rather than an afterthought. It also seems like they try to make it more enjoyable and colorful, many being willing to spend money on memberships and specialty fitness activities.”
This insight gives us an idea of how you can attract and retain millennials in your gym.
Psychotherapist Nathalie Theodore believes that, “While Gen Xers and Baby Boomers are still mostly working out to burn calories, millennials are turning to fitness as a means of making friends, meeting potential love interests and networking.”
She argues that technology and social media has lead to increased loneliness in millennials, who are now turning to exercise to connect with people and gain a sense of community.
The gyms that will succeed in retaining millennial members will be the ones that are able to make their facilities socially and culturally appealing to members in search of a sense of community and belonging.
Millennials are also more aware of the relationship between exercise and mental and physical wellbeing than any other generation. That’s why spa services like the Stone Creek health club have seen 12% annual growth in revenues, offering services like massage therapy and full body exfoliation treatments. A growing number of its members are millennials (adults aged under 35).
As gyms begin to adapt to the more sophisticated needs and interests of millennials and younger adults, they’ll reap major rewards. This is the largest cohort on the planet, worth $2.4 trillion globally. And a survey by the International Spa Association found that 60% of respondents are invested in their own personal wellbeing and 56% already attend spas.
We’re not suggesting you turn your gym into a spa, but introducing spa-like services like massage therapies, body treatments and so on may help attract more millennials to your fitness club.
The majority of
This is because millennials can be exceptionally loyal gym members if they believe they are getting a superb value proposition for their money.
Smart gyms are realising that it is possible to provide a space where a sense of community can be established, where people feel supported and nurtured in the club environment. According to Derek Brettell of The Club Gym:
“When we were building the club one of the most important things we wanted was for it to be a place where people enjoyed going. A place where people knew they would see familiar faces, be comfortable and feel supported. We wanted people to know that we cared and that they were more than simply a number to us.”
This sense of community can play a big role in gym retention.
You can foster community in your gym by doing the following:
If you want to engage and retain millennials then gone are the days of one size fits all exercise options. You have to start customising your fitness offerings to suit a wide range of members, and be willing to put the time into personalising exercise programs to individuals.
This means you can’t always operate on mass, sometimes it really pays off to focus on building smaller communities of gym members, because if you get it right your gym’s reputation will increase and that will do wonders for your Net Promotion Scores.
This brings us to how to handle fitness retention. You have to understand the diversity of millennials; this means operating at a niche level as well as looking at the bigger picture. Because of this you need a sophisticated and granular way to manage retention.
This helps you easily monitor and target different segments of your gym membership, pay close attention to their attendance and exercise patterns, and automate your outreach in a granular way. You can use retention software to monitor the Net Promoter Scores or your members. This means you can target promoters for referrals and upselling and you can focus on detractors by solving the pain points they are encountering with your gym.
At the end of the day, millennials are not strange creatures from another planet, they are young people looking for value, purpose, community and personal growth. The more you understand the world from their perspective the better you will be at offering them services that will keep them coming back for more.
April 11, 2019 Category: Retention
Understanding the factors which affect a gym member’s experience can help owners refine their retention strategies to ensure customers feel satisfied with the service as well as loyal to the brand.
There are many reasons that a person might feel motivated to join the gym. Most commonly these reasons are related to health and fitness, losing weight, toning up, and getting in shape. Though there are others such as gaining strength after an injury or training for a specific event. These initial desires are what inspires a person to sign up for a gym membership in the first place.
However, it is through a continued positive experience when attending the gym and by developing a relationship with the brand that ensures a customer’s loyalty and prevents them from becoming at-risk.
It is a customer’s satisfaction overall that will safeguard their continued membership and make it easier and more predictable for gym owners to identify those who are unhappy with the service. Focusing on customer experience and identifying any issues means that owners can drive their resources and energy towards improvement and problem solving to address customer need and boost gym member retention rates.
Understanding the customer experience is, however, just as much about focusing on what makes people remain gym members as it is about knowing why people leave, as virtugym succinctly puts it: “People can leave for a manner of reasons but usually, it’s because of something that can be controlled by you.”
From the moment a person begins to consider joining the gym, they start to move down a particular pathway. They will perhaps start to research different gyms and consider factors such as the cost of membership, the convenience of location, and provision of facilities. They may search for gyms that offer trial days; they may book a session to look around the gym and talk with staff members, they may try to find offers or discounts or certain flexibilities that make the membership more appealing.
Gym owners, therefore, have a significant opportunity to provide a positive experience, one that makes their facilities stand out from their competitors even at this early stage. The ease of use of their website, the helpfulness and availability of staff to meet with them or talk to them, and the first impression of the facilities all play a part. These factors can all influence not only a customers decision to join that gym in the first place but also provide a lasting impression that could stick with them as they continue to use it.
When it comes to member satisfaction, there are a number of factors that gym owners and their teams can control to ensure a member has a positive experience from the moment they arrive, to leaving the gym and even beyond.
As soon as a person arrives at the gym, their experience can be affected. Can they park easily? Are they welcomed warmly on arrival? Is it easy and straightforward to get into the gym? Ensuring that as soon as a customer steps foot on the premises, they feel as though they are being given personalised attention and that it is a seamless and hassle-free experience to begin their workout, is essential.
Provision of facilities also plays a significant part in member experience. Clean, contemporary and practical facilities are a must, and the higher the quality, the more likely a customer will be impressed. Standard gym facilities such as changing rooms and showers are essential but to stand out, gym owners should consider what other facilities could make their customers feel more appreciated. Social areas, drinks machines, a shop and cafe all add value. However, it is also important to remember the smaller details such as providing hand soap and towels, and making sure the toilets have toilet roll (!) that will make sure the member’s experience is even better.
Fitness technology improves member retention and so provision of the latest equipment is important. It is also crucial that gyms provide a sufficient number of each machine, as well as making sure that gym members understand how to use the apparatus to ensure that their workout sessions are constructive and useful.
Self-efficacy is powerful as this study found, so providing instructions and training on how to use gym equipment is a must. Doing so will again reflect well in a customer’s overall experience and feeling of satisfaction, being respected and looked after.
If members have to queue for machines, or if they become frustrated because they can’t work out how to use them they will start to doubt that they are valued as a customer. If the machines are broken or out of order, or if they feel as though the variety or standard of equipment is not adequate these could all be factors which create a poor impression, make members feel less invested in or cared for, and therefore increase the likelihood of them becoming at-risk.
Gym members who feel connected to the gym are more likely to feel loyalty towards it. If they don’t feel welcome, become self-conscious or uncomfortable or find coming to the gym to be an isolating or challenging experience they will be less likely to want to return. Staff members out on the floor communicating with members, motivating them, helping and advising them and giving them personalised attention can help gym members feel as though they are part of a community, creating a sense of connection and lowering the chances of them becoming at-risk.
The above points all tie into the fact that gyms must continually pay attention to the products and facilities they provide, their communication and customer service and how they can make customers feel valued and motivated. 81% of consumers are more likely to give a company repeated business after good service, and companies that prioritise the customer experience generate 60% higher profits than their competitors, so it is certainly well worth including these factors in your retention strategy.
Understanding the specific struggles that gym members face is crucial and gives owners better insight into how to solve their problems. For example, if a member cannot find a parking space, can’t get on a machine they want to use, or can’t book a class because it’s full, combined with more general issues such as feeling demotivated or not enjoying their workout they may struggle to feel positively towards the gym. In fact, it is proven enjoyment of exercise plays a significant role with studies like this one reporting that those who enjoyed exercise at baseline were more likely to stick with it.
These factors should be recognised and addressed to help provide a better service and boost member retention simultaneously.
Of course, while it is not always possible to ensure that a gym member leaves the gym in a positive mindset, there are plenty of things that gym owners can do and strategies that can be put in place to help make coming to and working out at the gym more of a pleasure than a chore.
Attending the gym should be a fantastic experience from start to finish, one where customers feel as though they are being cared for, looked after, and invested in. It’s not just about the obvious things; it’s the details that count and trying to help customers leave the gym in a positive frame of mind and reflect that the experience was a good one will encourage them to return time and time again. Being able to analyse and identify patterns that could lead members to have either a positive or negative experience is an essential way to help gym owners and their teams recognise when a member may become at-risk and improve that experience before it is too late.
April 5, 2019 Category: Retention
There are tons of tips out there on how to boost your gym membership retention. But it’s hard to find a guide on how to create a killer gym retention strategy. In this blog, we try and redress the balance by telling you how gyms came to design membership retention strategies that work for them.
Firstly, let’s break down the crucial elements that go into any gym retention strategy, and look at how you can optimise them for maximum retention. There are some core elements involved in building a solid member retention strategy:
Now, there is no one-size-fits-all gym membership retention strategy you can magically apply to your site. Each gym is different and your retention strategy will have to factor this in.
If you run multiple gym sites, the first thing to do is to get a solid understanding of the membership retention needs of each facility. Each gym will have a different set of customers, different priorities, and perhaps even different budgets and resources. What works for one facility might not work for another.
The first thing you want to do is take a look at your retention across all your venues.
Pull up your membership details and analyse which demographics are at risk of churning.
Here are some at-risk groups to consider:
You need to start categorising your member lists for a more targeted approach – it will help!
You should also monitor how effective your current membership plans are.
Segment your members by plan type and compare and contrast attendance rates. Send out surveys to see how members find their current plans. Action any feedback you can to make your plans work right for your members. Having an inappropriate membership plan is likely to end up with members leaving for one of your rivals. And you don’t want that, especially if you could have avoided this outcome by adjusting your membership offerings.
Sound like a lot of hard work? Well, the good news is that there are tools made exactly for this job, like Keepme which can automate this part of the process for you.
It’s important that you have the right range of workout classes and fitness programmes to suit your members’ requirements. It’s a good idea to send surveys finding out what your members want from your gym, and making any relevant changes so that working out in your gym is an attractive proposition for your members.
By now you should have an understanding of retention and attrition data across your gym location, and you’ve made all the infrastructural changes you can (if people are complaining about filthy changing rooms/ faulty air conditioning, etc., you should sort that out pronto).
The next step is to separate all this retention data into different risk groups. Although you should have an outreach plan that reaches every member, you should create content that specifically targets at-risk groups.
Running engagement campaigns is an ongoing process. Over time you should monitor whether your members’ retention scores improve or get worse, and change your campaigns accordingly. Often the problem will be that you’re not being targeted enough and your messages may be too
You are probably familiar with the concept of Net Promoter Scores (NPS), the measure of whether your members are “promoters” or “detractors” of your gym.
You should send out NPS surveys to your members and then segment
Detractors could then be sent to your outreach team for some TLC, whilst promoters can be used as contacts for testimonials, or to be part of a referral scheme, and so on.
As you can see, there are lots of factors that go into planning fitness membership retention strategies. At the end of the day, each gym’s strategy will look different. The tips in this article should help put you on the right track, as long as you look at your data in a segmented way and keep monitoring retention risks and NPS scores you will be able to come up with a strategy that gives your gym a head start on the competition.
March 28, 2019 Category: Retention
Has the introduction of group exercise classes improved gym member retention rates, and if so should gym owners and employees be encouraging members to join them?
In the past, joining the gym was a fairly solitary experience.
A person could sign up, and then they were free to use the equipment as and when they wished. However, there was little interaction between gym goers and staff (unless hiring a personal trainer), and the communication between members themselves rarely extended to more than a sweaty grimace as they queued for the water cooler.
Individuals were responsible for their workouts, set their personal goals and if they didn’t achieve them it was nobody business apart from their own.
Nowadays, however, the landscape of the fitness industry has changed dramatically, and gym members now face many choices. While there is still the option to workout solo, with the introduction of classes and group exercise sessions, it seems like almost every week there is a new trend for an exercise class that promises to give attendees their dream bodies in no time at all. But do these classes live up to the hype, and are they helping or hindering gym member retention?
Is it possible that the introduction of group exercise has helped to improve member retention rates? Or does choosing to participate increase possibility of failure, create confusion and a loss of ownership of one’s own workouts? Let’s examine the pros and cons of each:
Group exercises encourage members to do their best. Those who work out with peers around them are more likely to push themselves further, so their workout is more productive. People don’t want to be the first person to drop out or refuse to participate appropriately, and research demonstrates that the healthy actions of others do influence us. A study published in the Journal of Social Sciences found that participants gravitate towards the exercise behaviors of those around them.
Group exercises can be helpful to those new to exercise as they can try different kinds of classes out and see which ones suit them best. Group exercise gives people the opportunity to socialise while working out and gives newbies more confidence and knowledge without having to hire a personal trainer. A 2016 study published in the journal Obesity reported that overweight people lose increased amounts of weight if they spend time with their fit friends, and weight loss continues to grow the more time they spend together. People who workout in group sessions also feel more accountable to others and are therefore less likely to skip workouts and will keep coming back for more.
A group exercise class can help those lacking in motivation feel encouraged and energised. The ‘we’re in this together’ mentality of a group exercise class means that participants are more likely to encourage one another, engage with one another and spur one another on to make it through to the end. The sense of satisfaction and achievement is also a shared experience which can help motivate members to commit to the class and continue to return to the gym to participate.
Researchers from the University of Southern California found that people who worked out with friends (or a spouse or co-worker) reported that they took more enjoyment in their exercise than those who worked out solo. The variety provided by the range of classes also mixes things up, keeping workouts fresh and exciting and helping members improve their health, fitness, body shape and strength in different ways.
Group exercise can have an adverse effect if people start to view the class as a punishment and a chore rather than a fun and social activity. If members begin to feel pressurised and guilty, this could be a recipe for disaster, and they may start to avoid the classes to negate these feelings.
Group exercise classes could also negatively affect retention rates if a member starts to feel as though they can’t keep up, or begins to compare themselves to others in the class. A study reported that exercising in mirrored environments could make some women feel more self-conscious.
Lack of individual attention
In group exercise classes instructors rarely have the time to give participants individual attention, and therefore there is the increased chance of injury if an individual does not perform an exercise correctly or pushes themselves beyond their limitations. The lack of personalised attention could also result in some participants not having their needs or goals met. Classes are usually created around the based common needs of everyone who takes part, and therefore there is less scope for members who wish to push boundaries beyond this.
Increased focus/ reduced distractions
Those who choose to work out in the gym alone may find that they have more focus than participants in a group setting. They can work on personal goals and don’t have the distractions of others around them so can zone in on their workouts and prioritise their unique fitness goals.
Classes can sometimes focus on just one area of fitness, those who choose to work out in the gym alone can take advantage of all the different machines to add variety to their workouts. If there is a particular area they want to focus on, they can choose the equipment and exercises to allow them to do so, rather than being dictated to by the class instructor.
Can workout at own pace and set personal goals
Group exercise classes cater to the needs of the masses where those gym members who have specific, individualised goals can create their own workouts to maximise effectiveness and achieve them at their own pace with no external pressure.
The solitary nature of just working out in the gym alone can have an adverse effect on members motivation. Without the social aspects and feeling part of a community, if gym goers don’t see their desired results they could quickly become at risk for cancelling their membership. They may feel less connected and loyal to the gym and therefore may find it less affecting to stop coming to the gym than members who feel as though they are part of a community and enjoy the social aspects of their workouts too.
By not getting involved in group exercises a gym member has no one to be accountable for their workouts other than themselves. There is no one to encourage them, nor anyone to make them feel guilty if they choose not to attend. This can result in those gym only members to slowly decrease their attendance until they stop coming altogether.
It shows that by encouraging gym members to attend group exercise classes, retention rates should improve. Therefore gym owners may wish to consider investing more time and resources into providing and marketing group exercise classes to their members and motivating employees to sell these classes to gym goers.
It is important to note, however, that there are downsides to group classes that could also result in a negative impact on retention, for example, if a member pushed themselves too hard and got injured or felt as though they couldn’t keep up and became demotivated. Therefore gym owners should take care when pushing group exercise classes onto members and should really target the right cohort when encouraging either group or solo
March 21, 2019 Category: Retention
A healthy membership retention rate is absolutely vital for any businesses’ success, especially in the increasingly competitive fitness industry. After all, acquiring a new customer can be up to 25 times more expensive than retaining an old one – membership retention doesn’t merely affect who walks through your doors, it also affects your bottom line.
Member loyalty and member retention are often seen as heavily synonymous. If members are staying with your brand, that means they’re loyal, right? Not necessarily. Membership retention measures whether or not an existing customer continues to do business with you. In contrast, loyalty measures a customer’s attitudes towards your brand. Do your customers actively prefer your brand over your competitors, or are you at risk of losing their business to that new business on the block?
Of course, there is still a relationship between retention and loyalty, since a loyal customer will almost every case also be a retained customer (barring factors such as a sudden inability to pay). Furthermore, there is a relationship between retention and rewarding loyalty – a staggering 82.4% of respondents said they would be “more likely” or “much more likely” to shop at stores that offered loyalty programmes.
It’s not hard to imagine why this is the case. When people are rewarded for loyalty, they feel appreciated, something that is being increasingly important in business – 68% of customers said they left a company because they believed that they were not cared about.
If customers are not rewarded for their loyalty, they have less incentive to be loyal, particularly in an industry like fitness where new competitors crop up every day with attractive deals designed to draw new customers through the door. A loyalty programme also helps to cultivate a sense of community and belonging in members. For instance, Harley Davidson customers, who call themselves “hogs,” frequently develop bonds with their community members. When customers strongly identify with a brand, they are less likely to switch to a competitor.
Loyalty programmes take many different forms. In its most basic form, a loyalty programme is a points-based system, such as UK supermarket giant Sainsbury’s Nectar Points scheme. However, many businesses are adding on to the classic model, providing special features to members as well as points. For example, the wildly popular Sephora Beauty Insider scheme, which has over 17 million loyal members, organises exclusive member events and makeup classes. The Starbucks Rewards™ scheme gives members free in-store refills and the ability to order drinks in advance. For a gym, non-monetary incentives like exclusive fitness classes and the use of special facilities like saunas or access to sports therapists could also be extremely effective. One might also consider pricing strategies that directly reward loyalty as another way to signal to loyal members that you value their business.
However, according to The Loyalty Report 2017, the average consumer is involved in 14 loyalty programs but only has the capacity to engage with half of them. Companies lose money on time and effort, and customers get no more value from the businesses to which they are “loyal.” Here are two important things to remember when designing a loyalty rewards scheme:
1. Keep it simple
If you can’t explain your loyalty programme to a customer in two sentences, it’s probably too complicated, and it will probably be ineffective. Keep things simple and easy to understand! For example, one H&M Club has designed their programme so that one point is worth $1. Structuring your rewards scheme in an easy-to-understand way means that customers are more likely to understand what’s in it for them, and subsequently more likely to engage with the loyalty scheme.
2. Offer a personalised experience
Increasingly, customers are demanding personalised services. Think with Google discovered that 63% of people expect brands to use their purchase history to provide them with personalized experiences. Every demographic is different, and you must first know what your customers actually want. If you don’t, there is likely to be a mismatch between the rewards you offer and what would actually incentivise your customer base to stay loyal.
Rewarding loyalty can be an extremely effective way to boost customer loyalty, and consequently, customer retention. Take the time to assess what sort of loyalty rewards scheme will work best for your demographic, keep it as simple as possible, and you’re likely to see great improvements in both loyalty and retention.
March 15, 2019 Category: Retention
“The Keepme product captured my full attention from the minute I first heard about the concept. The service delivers on every aspect of members communication, engagement, and retention that I have worked towards over the last fifteen years.”
Nasta comes to Keepme with 15 years of experience in the retention management field. Most recently, Nasta worked as Director of E-Commerce & Marketing for UK gym chain, Xercise4Less, where he helped to drive the gym’s ambitious expansion programme around the region. Previous positions have seen him as COO of Retention Management LLC, and Sales Director for Matrix Fitness.
Nasta combines his expertise in consulting with many other relevant skills, such as public speaking at core fitness industry events (The 2018 IHRSA European Congress & The Scottish Leisure Network Group), implementing effective loyalty/ rewards schemes and improving communications & engagement with health club members. Nasta’s knowledge and commitment to retain members within an industry that faces challenges to achieve a consistent retention strategy, is inspiring. His passion, experience and work ethic will be an asset for Keepme, and we are thrilled to have him on board.
March 7, 2019 Category: Retention
Artificial intelligence (AI) has, in recent years, continued to develop and infiltrate many aspects of the fitness industry and will continue to do so for the foreseeable future. Be it through sales and marketing, customer service, or data collection, the influence of AI is extending its reach and affecting how gym owners and other fitness industry operatives create more meaningful retention strategies to keep existing members renewing their gym membership contracts time and time again.
The Encyclopedia Britannica definition of AI is “the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings.”
However, in reality, the term AI is much more fluid then this and, over time has been adapted and modified to better match the goals that a particular system is designed to achieve.
But how does the fitness industry make use of this technology? And is it necessarily a good thing?
People who join the gym are interested in their health and fitness and self-improvement. For a gym to be invested in AI and to be willing to utilise this new technology to improve their systems, to gather data, to inform them on customer satisfaction, and to tailor their service to better suit the needs of the individual is likely to appeal to gym goers across the board.
The implementation of AI in the fitness industry can not only serve to attract new members with its shiny, hi-tech promises but also convince longer serving members to continue to use the gym as they see it reacting to their ever-evolving needs.
According to Gartner Inc., only 2% of businesses in 2017 used virtual customer assistant (VCA) or chatbot technology for customer service and support, but by 2020, this figure is expected to increase to 25%.
AI can also be used to gather intelligence on messaging interactions, phone conversations, gym attendance records, and other communication between a club and its members. This information enables marketing teams to identify when customers might be at-risk and to act by creating personalised incentives to draw customers back in and keep member retention rates high.
Gyms are also beginning to see how the application of AI could be used to offer virtual personal training programmes to members, lowering the cost for them of hiring an actual personal trainer while giving them a similar option for customised workouts and even individual motivational strategies delivered in a virtual form.
By using a mobile app, gym owners can gather data on how individuals workout – which machines they use and how long for as well as other useful information such as their heart rate. This data can be used to devise bespoke training programmes as well as other nutrition and fitness advice tailored to the individual.
As AI continues to improve members can expect even more specific advice, for example when coupled with motion sensing technology, suggestions on how to improve movement to make the most from a workout are possible. This kind of personalised experience is likely to help members remain motivated and engaged in their workouts and renew their gym membership when the time comes.
Wearable technology and connected fitness machines will allow trainers to get real-time information on gym members activities both inside and outside the gym. This data again can be used to help identify less engaged gym members and to flag up at-risk members thus informing retention strategies to help keep those members motivated.
The development and refinement of AI opens up a whole wealth of possibilities in the fitness industry increasing productivity, gathering and analysing unprecedented amounts of data and taking over routine tasks which could free up gym owners and their employees to spend more time improving customer experience.
However, there are some drawbacks. For a start implementing AI doesn’t come cheap, and for low-budget gyms purchasing the necessary equipment and systems to apply any meaningful AI into their club may, for now, be out of reach.
It is also important to note that humans crave human contact, communication, and company and the importance of face-to-face interaction with customers cannot be underestimated. As Mina Chang writes for Forbes: “you do business with people, not entities. The beauty of communication is found in the nuance that’s only felt in face-to-face conversations.”
This sentiment rings true for gym members who rate having no gym buddy, lack of guidance and feeling out of place as their top three reasons for wanting to quit, problems that are hard to rectify without human contact.
AI certainly has its place in the fitness industry, and it is up to health club operators to strategise how they can implement the technology available to them to best effect.
If they can successfully implement AI systems to automate the more routine conversations or demands that take up employees valuable time, while simultaneously gathering data to improve facilities and offer personalised experiences they could have the best of both worlds. Intelligent, productive systems that inform sales and retention strategies in addition to a team with more time to be out there communicating, motivating and engaging with customers and providing that irreplaceable ‘human touch.’
February 28, 2019 Category: 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.
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.
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:
(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.
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.
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
February 21, 2019 Category: Retention
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.
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.
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.
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.
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.
February 4, 2019 Category: Retention
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
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.
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:
With insights into the profile of your customers, you will be able to develop marketing and communications strategies that effectively meet your demographic.
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:
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.
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.
January 25, 2019 Category: Retention
With the average person checking their phone 80 times a day, it is not surprising that an increasing number of gym owners are implementing strategies to utilise this kind of technology in their clubs.
The potential for wearable technology to motivate, challenge and ignite a competitive spirit in gym goers is extensive, and the use of such devices could lead to a notable increase in member retention. Not only that, but the opportunity to capture data and use it to identify and target at-risk customers is also considerable.
Studies have shown that 50% of new members on monthly contracts end their gym membership within eight months of signing up. This equates to around a $6 billion loss of revenue for the fitness industry each year. If gyms, therefore, can better understand what makes previously engaged members lose interest and ultimately leave the gym, the financial benefits are significant.
Now, more than ever, customers are results-driven, and impatient too. They don’t want to wait to find out their progress. They call for instant information on demand, whenever and wherever they are.
Health clubs are in a particularly favourable position to explore the possibilities of wearable technology and offering the use of wearables or tracking apps during workouts and classes could see customer retention rates soar.
In this article, we explore the potential that wearable technology and tracking apps could have on member retention and why club owners should seriously consider implementing the use of these devices as part of their member retention strategy.
A gym member who is accountable for their workouts and motivation needs to be able to assess their performance. Wearable technology can track progress during exercise, summarise post-workout performance and can compare this with historical performance data. This enables gym goers to take responsibility for their own fitness goals, to feel a sense of accountability, and to compete with themselves. They become active and involved in their own fitness and, as a by-product more engaged and motivated to continue.
Shawn Potocki, the owner of UFIT Personal Training in Hamilton, New Jersey, agrees that the use of technology keeps clients more interested in their workouts:
“My clients definitely feel more accountable when wearing a heart rate monitor or another forms of wearable technology. This is especially true when they are doing workouts on their own. The technology helps them keep track of their progress.”
Technology that allows members to set goals and track progress gives them ultimate control and means they actively participate in their workouts rather than being a passive bystander – and doing so naturally has a positive effect on member retention as more engaged members are less likely to feel demotivated, stop going to the gym and eventually end their contracts.
The number of people using social media increased from 0.97 billion in 2010 to 2.62 billion in 2018 and is set to rise even further in the future. Fitness clubs have realised that combining social media and wearable technology creates digital communities, increases socialisation, and encourages members to view workouts as something social, enjoyable and fun.
Gamification is the use of game elements and game-design techniques in non-game contexts to engage people and solve problems. Enabling gym goers to communicate with one another and compete with one another via wearable technology gamifies the process and encourages friendships to form.
People who feel that they are part of a community when attending the gym, and who view going to the gym as a social activity are less likely to leave, so encouraging these communities to develop as well as a sense of friendly competition can see member retention rates increase.
Gyms can promote communication and competition via the use of social media, apps and wearable technology pitting members against one another, creating virtual leadership boards and even setting competitions themselves such as ‘who can burn the most calories’, ‘who has come to the most sessions’ and so on. Seeing other members engaged in such a way could also influence those who are less engaged and encourage them to become more involved.
Wearable fitness trackers that can be linked up to gym equipment can turn both individual workouts and group exercises classes into a game, not only motivating members to push themselves harder but simultaneously increasing the sense of community at the gym. This feeling of belonging coupled with an increase in engagement in their workouts means members are also more likely to reach their personal fitness goals, increasing levels of satisfaction, motivation, and desire to continue.
According to Soreon research, the use of wearable technology in the healthcare sector is only going to extend, with a predicted increase of investments into the healthcare sector from $2 billion in 2014 to $41 billion in 2020.
The vast amounts of data gathered from apps and wearables can provide gym owners and their team’s crucial information that can help influence membership retention strategies and can be key to answering the problem of how to improve customer retention.
The information gathered from these devices can indicate which members are at higher risk of cancelling their membership, enabling staff to intervene and influence with measures to try and turn them around, be that through 1:1 attention and motivation techniques or through offering an incentive to stay such as free classes or personal training sessions.
Sending out reminders for classes that might interest members based on the data collected from wearables, as well as training tips and push notifications could also help to encourage at-risk members to continue using the gym. Using apps that inspire people to set their goals and track their progress when not at the gym such as inputting meals or additional workouts can also provide valuable insights into whether members are having trouble sticking to their goals – and if they are offering advice and support could help them get back on track.
Whether the gym is part of a multinational chain or a small local business, club owners are beginning to realise that improving member retention rates is key to their continued success, and the benefits of using wearable technology can play a meaningful part in this. Be it attendance, in-club spending, workout progress and fulfilment, or rating the facilities and customer satisfaction overall, all this data can be collected, analysed and used to improve customer experience from every angle.
Integrating wearables and tracking apps into the fitness experience and using this technology to gather individual membership data provides a powerful insight into how engaged customers are. This gives gyms the opportunity to become an essential part of members lives, improve their experience, increase motivation and offer them incentives, all of which will inevitably result in higher member retention rates and steady, sustainable growth.
December 29, 2018 Category: Retention
As Kotler stated in his 1994 article, “The key to customer retention is customer satisfaction.” The core of any effective membership retention strategy is creating a positive experience of your brand for your customer. Such a positive experience often entails two main components.
The first component involves providing excellent customer service. It was found that 73% of consumers would consider purchasing from a brand again if they had a superior customer service. The second component is creating a sense of community. Humans are social creatures, who desire a sense of belonging. At gyms, members who’ve made a friend at the gym in the last three months are 40% less likely to cancel than those who haven’t.
Some common ways that gyms attempt to improve customer service and create a sense of community in a gym include group classes, the gamification of member experiences, and strategic communication. However, there is one commonly overlooked aspect of gym management that, if well-managed, can drastically improve both customer service and customer’s sense of belonging in a gym – its employees. In this article, I’ll explore the important role that gym employees play in customer satisfaction and customer retention strategy.
The experience that gym staff have of the company that they work for, from higher management to the brand itself, has a strong impact on the membership retention rate of that company. Besides your customers, the best advocates for your business are your employees themselves.
It was discovered that leads from employee advocacy are 7 times more likely to close, and customers referred by an employee advocate have a 37% higher retention rate. In addition, brand messages get re-shared 24 times more frequently when shared by an employee as opposed to the brand. This phenomenon is bound to be further magnified as the Internet grows in popularity as a source for recommendations, and more websites like Glassdoor (a website where employees and former employees can anonymously review companies and their management) emerge.
This means that how your employees feel about your brand has an influential impact on how your customers feel about it. Studies have found that studies have found that companies with high employee engagement scores had twice the customer loyalty than companies with average employee engagement levels. It should be no surprise, therefore, that according to a Hay Group study, engaged employees can cause companies to grow revenues twice as much as companies with lower engagement levels.
However, one cannot assume that their employees are reflecting their brand in a positive light. A startling close to 50% of employees in North America are actively discouraging those they communicate with from purchasing from or working for their employer.
Thus, in order to achieve healthy membership retention rates, employees of the company must first be engaged and motivated. Here are some ways that you might go about doing that.
The most straightforward way to find out what would motivate and encourage your employees is, simply, to just ask them. Never underestimate the power of creating an open channel of communication between employees and managers, particularly in organisations such as gyms, where gym owners and upper management rarely interact with gym staff on a day-to-day basis.
Find out what your employees enjoy most about their jobs, and what they enjoy least. If there are complaints that come up again and again, consider making some organisational changes. This process doesn’t have to be impractical or time-consuming. It could take the form of something as simple as feedback forms for employees to anonymously submit their thoughts about the company. If your employees feel heard, they’re more likely to feel valued by the organisation, which will, in turn, make them feel more connected to the company, and motivated to work hard.
It may seem tempting to ‘incentivise’ greater employee productivity through measures such as forcing employees to work for commission or to ‘incentivise’ better employee-customer engagement by mandating that employees engage with a certain number of customers every work day.
However, such strategies are fundamentally misguided, and will harm, rather than help, employee motivation. Dr. Paul Marciano, a Ph.D. from Yale University, found that the typical reward-and-punishment model is extremely ineffective at motivating employees. Instead, a whole variety of other factors including supportive feedback, respect, and empowerment are much more effective.
So, instead of constructing rigid organisational structures intending to compel employees to be more motivated and provide better customer service, how about investing in them instead? For example, employees of the health and fitness industry like personal trainers and group fitness instructors often have to invest large amounts of money into getting the necessary fitness qualifications to teach and improve in their career. A gym who wishes to invest in their employees could consider starting a ‘talent development fund’ to subsidise some of these training costs. This not only will make staff immediately feel valued, acknowledged, and supported, but will also improve the quality of service that they (and consequently, your gym) can provide to customers.
Once you’ve succeeded in winning over your employees, don’t forget to connect them with your clients. 70% of customer perception of a brand is determined by experiences with people. For example, encourage your employees to interact with your clients on social media once they’ve left the gym, or create fun social events in the gym space that are open to both clients and employees. This will not only link up your strongest brand advocates (employees) with your customers, but will also foster a sense of community for both customers and employees alike.
In this article, we’ve explored the importance of the role that employees play in ensuring high levels of customer satisfaction and customer retention. So, the next time you’re looking for brand ambassadors, don’t forget – they’re right under your nose!
October 30, 2018 Category: Retention
Low-cost gyms are dominating the fitness industry. In 2015, the number of members at “budget club(s)” grew 69%, while the growth rate of “mid-market clubs” stagnated. As of June 2017, there were more than 500 low-cost gyms in the United Kingdom alone, accounting for an estimated 35% of all gym memberships, and offering membership rates from as low as £8.99 per month.
Besides cheap membership rates, low-costs gyms often share more than one common characteristic. Fernandez et. al. (2017) discovered that many low-cost gyms shared multiple characteristics, like running on very little manpower and offering a “gym-only proposition”.
However, the characteristics that make low-cost gyms so successful also create unique challenges with respect to membership retention. This article uncovers the challenges low-cost gyms face in retaining customers, and suggests that the right technology can meet these challenges head-on.
The business model of low-cost gym facilities can be summed up with one phrase: the essentials. Besides doing away with rarely-used facilities like cafés and saunas to maximise workout space, many low-cost gyms also allow gym members to access the facility without requiring a staff member to let them in. For example, the U.K.’s largest low-cost gym chain, PureGym, has an access system in which each member has a unique PIN code, and international gym giant Anytime Fitness provides members with electronic key fobs for around-the-clock access.
Since low-cost gym facilities depend on a low-manpower business model, they observe substantially lower recurring operational costs than traditional gyms, which depend heavily on staff members being present on-site. These cost savings can then be passed on to the consumer through attractively low membership fees.
However, the same systems and operations that make it possible for low-cost gyms to offer cheap memberships also present severe challenges in terms of membership retention. We know that gym memberships are often cancelled when members experience low engagement, lack in motivation, or lack sufficient funds to continue with the membership. Members of low-cost gyms are unlikely to drop-out due to not being able to afford the membership fee, but they are particularly prone to experience both low engagement and low motivation.
Consider the average new member at a low-cost gym. This member is likely to sign up, make payment, and receive their gym access information through the Internet. When they visit the gym for the first time, they may not encounter a single staff member, since, as previously mentioned, most low-cost gyms have enabled staff-free access. Finally, since many low-cost gyms also tend to have non-binding membership contracts, that same member could cancel their membership as easily and as quickly as they signed up – all without meeting a single member of staff face-to-face. This lack of meaningful engagement between customer and company inhibits the sort of community-building that we know improves member retention rates, and transforms the gym into a mere physical location, entirely substitutable for the next best option. In addition, a lack of member engagement also means that the gym is deprived of an avenue to find out their customer bases’ sentiments and needs. This makes it almost impossible to identify which members are at risk of terminating their membership.
Members of low-cost gyms are also prone to experience low motivation to exercise, which in turn makes them more likely to terminate their membership. Because it costs so little to join a low-cost gym, the sunk cost (incurred costs that cannot be recovered) for the average member is very low in comparison to a mid-range or luxury gym. A member of a mid-range or luxury gym may, in the absence of all other motivation, continue working out as a result of sunk-cost effect; they’ve spent a lot on their gym membership and want to get their money’s worth. However, the sunk-cost effect is negligible in cases of low-cost gyms. The aforementioned lack of engagement that members of low-cost gyms experience also hampers motivation because it results in a lack of accountability for the average gym member. After all, if a member at a low-cost gym stops turning up, it is unlikely that anyone would notice.
It is obvious, therefore, that many traditional strategies or gateways to improve membership retention inherently conflict with the low-budget gym’s business model. For example, on-boarding new members can drastically improve both short-term and long-term membership retention rates, but on-boarding every new member entails a sizable team of staff that many low-cost gyms lack. Similarly, strategic communication with at-risk members, and creating a personalised member experience seem unrealistic low-cost gyms.
That is, until you fully consider the power of technology.
Many low-cost gyms already incorporate technology in their operations. After all, the automated member access systems at most low-cost gyms run on fairly sophisticated data and technology. In fact, these automated access systems may already hold substantial amounts of crucial member data, such as the number of times a particular member has attended the gym in the past month. This sort of information is powerful, particularly when harnessed by the right technology.
For example, Machine Learning and Artificial Intelligence (AI) can utilise existing data to identify which members are at higher risk of terminating their membership, which locations (if a gym owns several) are more likely to see member attrition than others, and even provide custom class or product recommendations to members based on their gym activity. In fact, online fitness marketplace PayAsUGym has recently taken a step in this direction, signing a partnership deal with customer data expert InfoSum to gain greater insight into their customer base and to improve their customer retention rate.
With the right technology, a low-cost gym can generate a member experience as personalised as that at a luxury gym by acting as an intermediary between client and company – a role typically filled by staff. Technology might even be able to be more effective in understanding customer’s needs than staff members, since it is free from human error and available around-the-clock. Bye, bye, low retention!
October 28, 2018 Category: Retention
Membership retention should be top priority for any business aiming for long-term success. 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%.
One of the factors that affects membership retention rates is pricing strategy. In this article, I’ll discuss the current pricing strategies popular in the health and fitness industry, and suggest three strategies to improve membership retention rates.
Pricing speaks volumes in this industry. When a gym or health centre sets its prices, it is also involuntarily committing to a model of business that prioritises either attraction or retention.
Statistically, it is well-established that 44% of companies focus on customer acquisition as compared to 16% that focus on retention. Taking the United Kingdom as a case study, virtually every commercial gym giant offers free trials of at least 1 day in length. For example, Virgin Active, Anytime Fitness, Fitness First, and Nuffield Health all offer free trial schemes of varying lengths. Other household names like easyGym and PureGym also promote offers which reduce joining fees for new customers. In addition, many gyms promote lower membership rates for new members. These establishments are all following a pricing model that intends to bring in new customers with eye-catching offers.
However, this pricing strategy also sorely misses the mark. The optimal strategy for a firm in the health and fitness industry is to focus its resources on retaining existing members rather than attracting new ones. But current behavior communicates to both existing and prospective members that the business cares more about its new members than its existing ones. After all, the old members aren’t the ones getting discounts and membership benefits.
Jill Avery, a senior lecturer at Harvard Business School, adds that this sort of pricing strategy also is likely to attract the ‘wrong kind’ of customer – “deal seekers who then leave quickly when they find a better deal with another company”.
‘Okay’, you might say. ‘The status quo hasn’t quite got it right. But what would an optimal strategy for membership retention look like?’ In the next section, I suggest a few general principles to guide a retention-focused pricing strategy.
Have you ever received a stamp card from a coffee shop? If you have, it probably sounded something like this: ‘buy 9 coffees, and get the 10th free’. If you’re lucky, you may even have experienced the sweet satisfaction of turning in a completed stamp card at your favourite coffee joint, and subsequently claiming a free drink.
That feeling of excitement is why so many coffee shops have this sort of loyalty scheme. When you feel rewarded for your action (in this case, consistently getting your coffee from one particular shop), you are more likely to associate enjoyable experiences with that same shop. You are motivated, through such an action-and-reward mechanism, to stay engaged with the shop you are patronizing.
And it’s not just coffee shops that play the ‘loyalty card’. International clothing brand H&M has H&M Club, a loyalty program that gives regular shoppers reward points for their purchases. These points can then go on to redeem “offers, services, events and much more”. Sainsbury’s, the second largest chain of supermarkets in the United Kingdom, also runs a similar program with their Nectar Points scheme. In fact, everyone seems to agree that rewarding loyalty matters. Except, strangely enough, the health and fitness industry, in which loyalty programs are not the norm.
If you’re a health and fitness operation, making loyal customers feel valued will not only improve their experience of your brand, but will also solidify their commitment to your business. Some techniques to make long-time customers feel valued include allowing for members to pay incrementally lower monthly rates depending on how many years they’ve stayed with you, or for long-term members to get perks that new members don’t, like a free towel service and refreshments.
This will not only improve membership retention rates but could even have the happy consequence of attracting new members through word-of-mouth recommendations from your ever-growing loyal and satisfied consumer base.
In a recent article, Harvard Business School professor John Gourville discussed the psychology of pricing. He discussed the case study of an “average health club” who is faced with the challenge of ensuring that they both attract and retain their member base (sound familiar?). Gourville suggests that the owner of a health and fitness business should actually make members pay monthly, rather than yearly, in order to improve membership retention rates.
This seems odd at first. Surely, making new members commit to a year of payments upfront is better, since it eliminates the ability for them to ‘drop-out’ every month. However, the psychological element behind payment means that a monthly payment cycle incentivises people to exercise more regularly than a yearly payment cycle. This, in turn, means that members of your health and fitness facility members are more likely to reap the physical benefits that they signed up with you in order to achieve, and will motivate them to continue on with their membership beyond the first year.
Thus, knowing when to charge is just as important in pricing strategy as knowing how much to charge.
Finally, one final important element that is necessary in pricing for retention is a sensitivity to your target demographic. Every business has unique needs and a unique demographic. You know your business better than anyone and are better placed than anyone else to figure out what sort of pricing strategy will work best for your members. Do your members value flexibility or costs-savings? Do they use all your services, or would they prefer paying for one at a time? Find out, and then work towards your demographic.
After all, at the heart of all of my suggestions is one simple principle: if your consumers feel valued, they’ll stick with you for the long-run.