Overcoming Gym Membership Retention Struggles in Low-Cost Gyms

Discover the challenges faced by low-cost gyms in retaining customers and how technology, such as AI and automation systems, can revolutionize the industry. Learn how AI-driven CRM and gym management software can personalize the member experience and improve retention rates.
October 30th, 2018
Overcoming Gym Membership Retention Struggles in Low-Cost Gyms

Updated November 9, 2023

Low-cost gyms are dominating the fitness industry. In 2015, the number of members at “budget club(s)” grew by 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.

To put that in more tangible terms, according to Statista, in 2018 low-cost gym memberships exceeded 2.5 million compared to 200,000 in 2011.

Besides cheap membership rates, low-cost 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 regarding membership retention. 

Low costs, low manpower, low membership retention

Despite the continued success of this low-cost, no-frills approach to fitness centers, it is not without its challenges.

By removing the ‘human’ elements from the gym to maximize fitness space, the amount of human interaction drops. No cafe, in-gym store, or even a front desk to welcome members means members can come and go without speaking to a member of staff.

For example, the UK’s largest low-cost gym chain, PureGym, has an access system in which each member has a unique PIN code, allowing access 24/7.

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. This suits certain members, and most low-cost gym members recognize that low membership fees also mean compromise. However, for the operators themselves the lack of contact makes it difficult to build the relationship. Or create a gym community.

Without this regular interaction to keep members engaged, retention rates start to become a problem.

The Low-cost Member Experience

We know that gym memberships are often canceled when members experience low engagement, lack motivation, or insufficient 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. However, gym members are prone to both low engagement and low motivation.

Consider the member experience for the average low-cost gym member. They sign up, make their first payment, and receive their access credentials all over the internet and over email.

When they visit the gym for the first time, they are unlikely to encounter a single staff member. Said staff members won’t even know they have a new member coming to the facility.

Not least because new members could arrive at any time, on any day. 

But it also depends on the expectations set by gyms on staff. If their roles are limited to running classes and operational tasks then interacting with members is a low priority.

Finally, low-cost gyms rarely have fixed terms in their contracts. So members can cancel their membership without even attending the gym, let alone seeing a member of staff. 

This lack of meaningful engagement between customers and the company inhibits community-building. Something we know improves member retention rates. 

The absence of a gym community transforms the gym into ‘just another gym’ and is entirely substitutable for another. More importantly, a lack of member engagement also makes it harder to learn its customer base’s sentiments and needs. 

Membership Retention

This lack of insight into member behavior makes it almost impossible to identify which members are at risk of terminating their membership. This is exacerbated by members of low-cost gyms being prone to low motivation to exercise. This, in turn, makes them more likely to terminate their membership. 

Because it costs so little to join a low-cost gym, the sunk costs are minimal, making it easier for members to walk away. Memberships average £10 per month for a low-cost gym, compared to five times that for a mid-range gym. And they don’t have to navigate a difficult cancellation process. They can just walk away. 

Members of mid-range or luxury gyms, in the absence of all other motivation, continue working out because of the 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 membership engagement and no-frills membership experience also hampers motivation. They lack the same sense of belonging or accountability that other gym members experience. After all, if a member at a low-cost gym stops turning up, it is unlikely that anyone would notice.

Managing Membership Data

These challenges make a lot of the traditional membership engagement strategies ineffective. 

For example, onboarding new members can drastically improve both short-term and long-term membership retention rates. However, onboarding every new member entails a sizable team of staff that many low-cost gyms lack. 

Moreover, as many low-cost gyms are open 24 hours, onboarding could happen at any time of the day or night. That would require sufficient staffing to be available too.

Similarly, strategic communication with at-risk members, and creating personalized member experiences seem unrealistic for low-cost gyms. 

However, what low-cost gyms do have is a lot of data. Because the basics are handled by technology, such as electronic entry, these operators have a lot of insight. Especially when it comes to the comings and goings of their members.

They will have data on who is attending, when, and how frequently members visit. 

Booking systems for classes are usually digital as well so operators have data not only on how many members attend but who attends.

This information is powerful, particularly when harnessed by a membership engagement solution. Consolidating this membership data allows low-cost gyms to create personal touchpoints that enhance the membership experience.

Moreover, attendance data can be used to determine which members have a greater churn risk. By feeding member data into a predictive model, it can determine with a high degree of accuracy, which members are going to cancel.

Enhancing the Member Experience

Because this data is readily available and easy to analyze, low-cost gym operators can quickly and easily put a nurture sequence in place to change that behavior.

By using the first-party data operators have in terms of activity and interests, as well as any zero-party data supplied at sign-up, they can create relevant campaigns that will make members feel seen.

Considering low-cost gyms can often create the opposite experience, that delivers a huge amount of value.

In reality, low-cost gym operators can deliver as much value as a luxury gym, it just needs to use the data. And not be shy about asking for more.

Net Promoter Scores (NPS) is a globally recognized measure of audience satisfaction. They can be used to quickly determine the overall satisfaction of your members. 

If the gym is getting more detractors than promoters then something needs to be done. Similarly, sending out surveys to members helps low-cost gym operators understand their audience better.

Aside from getting a clear understanding of how members feel about the gym, operators will start to understand their members. This zero-party data can be used to engage with members about the things they care about.

It can also serve as a way to drive class bookings, membership upgrades, and any other ancillary sales that the gym may offer. 

By utilizing a membership engagement platform, with marketing automation, a low-cost gym can generate a member experience as personalized as a luxury gym.

Operators can use their engagement technology as a proxy for the role usually performed by staff members on the gym floor.

Technology might even be able to be more effective in understanding customers’ needs than staff members since it is free from human error and available around the clock. 

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