November 28, 2019 Danni Poulton
There’s been a massive boom in people using fitness tracking devices, from Google Fit to FitBit. Encouraging your gym members to use SMART wearables can actually increase gym retention. Let’s look at how this can be done.
One of the major reasons people quit the gym is that they’re not seeing progress. Part of the problem is not knowing how to tell if progress is being made.
To do this it helps to be able to make incremental measurements of progress and set realistic goals accordingly. This is where SMART wearables can really help you improve gym retention.
There’s been a significant rise in the use of wearable technology to monitor fitness and activity levels.
From people using apps like Google Fit to measure the amount of steps they take per day, to the success of the Fitbit smart watch, fitness tracking wearables are on the rise.
Forward thinking gyms are not missing the trick to integrate wearbles into their facilities.
According to Chuck Morris of Team 85 in New Jersey, USA, the secret to gym retention is “accountability”:
“Wearable technology separates what a person thinks they did from what they actually did… Without technology, the numbers are like a vapor – hard to touch. Wearables make those numbers tangible and make the goal a person is trying to accomplish much more realistic.”
By being able to monitor metrics they would never have had access to before wearable tech, gym goers are able to experience a sense of achievement and progress on a very granular level.
This sense of progress and winning makes people much more emotionally invested in their gym membership as they can feel that they are hitting their goals. This increases the chances members will stick with your gym.
We’ve written about how setting personal fitness challenges is a great way to improve gym retention, and wearable tech make this even easier to achieve.
Wearables are also a great way to keep solo gym members motivated. Research shows that people who work out in groups or with gym buddies are more likely to stick with your gym.
The benefits of smart wearables are clear, so how do you encourage takeup of fitness tracking tech in your gym community?
For a start, you should make it easy for members to obtain smart wearables via your gym.
You could build a relationship with a provider of smart wearables and secure discounts which you can offer to your members. This in itself can be an incentive to join your gym.
Even if you don’t have an official relationship with a wearables vendor, you can still evangelise about this tech to your members in your marketing content. Write a decent email about the benefits of fitness trackers and send it to your members.
One of the big upsides of wearable tech is that it gamifies fitness, creating mini rewards for members. It’s even possible to create leaderboards to encourage friendly competition amongst gym members. Talk about all these benefits and perks to your members.
If you are offering personal training, the trainers can use the data collected from wearables to help support gym members achieve their goals. The possibilities are endless.
Encourage your gym floor staff to talk to members about whether using a fitness tracker is right for them. It’s important for your gym staff to build strong relationships with your members. This creates emotional and social reasons to keep returning to the gym and makes members feel valued and supported. These are important member retention factors.
Some gyms are even using the data collected from wearables in their group fitness programmes to monitor member performance over time. When combined with a supportive and inclusive approach to fitness coaching, and a focus on people setting personal goals that are right for them, this can be a really powerful way to keep gym members coming back time and time again.
We’re in an era where data is an invaluable resource, and with AI data processing software there’s so much that gyms can do with this data.
If you use gym retention software lie KeepMe you can monitor fitness data and use it to calculate the retention risks of your members. You can then automate member outreach to help different member segments stay active and engaged.
If you keep a record of which members use wearable tech you can monitor their retention scores and find out just how valuable smart wearables are for improving member retention.
If you want to see how KeepMe can keep your members coming back for more, book a free demo of our software today.
October 31, 2019 Beth Cadman
A healthy membership retention rate is absolutely vital for the success of any business venture in the fitness industry. Here at KeepMe, we’re committed to help you improve your customer retention rate. In this blog, we’re going to do a quick summary of the “Do’s” and “Don’ts” of improving your gym’s retention rates.
|✔ Friendly, approachable staff members ||❌ Unfriendly, cold staff members |
As Sir Richard Branson said, “the way you treat your employees is the way they will treat your customers”. Take one second to reflect on this, and ask yourself – how are you treating your employees?
As Sir Richard Branson said, “the way you treat your employees is the way they will treat your customers”. Take one second to reflect on this, and ask yourself – how are you treating your employees?
We know that the attitude that your employees have, has a strong impact on how they interact with your customers, and this in turn, has a big role to play in sustaining healthy customer retention rates. After all, 82% of people say that they’ve stopped doing business with a company because they received poor customer service! By focusing on creating a positive work environment for your employees, you will be creating a trickle-down effect that will improve the experience for your customers as well – making them more likely to stick around for the long-run.
|✔ Welcoming, inclusive gym environment ||❌ Impersonal, hostile, gym environment |
One of the biggest drivers of membership retention is customer engagement. Gallup Research shows that customers who are fully engaged represent a 23% premium in terms of share of wallet, profitability, revenue, and relationship growth over the average customer. One great way to keep members engaged is to create a sense of community.
Some easy steps to create a welcoming, inclusive gym environment are getting to know members by their name, and having meaningful conversations with them. Other ideas include celebrating members’ birthdays each month, running group classes, creating an online community, or even organising member-only parties like the London gym mogul, Gymbox! The possibilities, as they say, are endless.
|✔ Rewarding member loyalty ||❌ ‘Punishing’ member loyalty |
This may seem obvious, but how loyal your members are to your brand matters for membership retention. But if gyms want their members to remain loyal, they need to show that they value and appreciate members that do so. So, does your gym have a loyalty scheme? It should!
Loyalty programs encourage customers to remain engaged by giving them rewards for their loyal patronship – think coffeeshop stamp cards. In the absence of a loyalty scheme, long-term members may feel undervalued — even punished — for being loyal, since most gyms often tout introductory or newcomer promotions.
|✔ Targeted communications strategy ||❌ Generic communications strategy |
Customers don’t want to feel like just another number on your profit line. As Think with Google discovered, customers are demanding a more personalised form of service, and businesses that meet that demand are being rewarded handsomely for it – 90% of organizations that invest in personalized consumer experiences say that it significantly contributes to increasing business profitability!
Therefore, one of the keys to maintaining a healthy gym membership retention rate is delivering the marketing and communications services that will best resonate with segments of your membership base. With the use of sophisticated Artificial Intelligence technology, it is now easy for businesses in the health & fitness industry to meaningfully target and engage their customer base. Has someone been skipping the gym a lot lately? Send them an encouragement email. Someone new to the gym? Drop them a line asking if you can help them with anything. How about a loyal customer? Send them an incentive to refer their friends and family.
Although advice about member retention can sometimes feel vast and overwhelming, customer retention strategies ultimately boil down to these four categories. Isn’t that neat? Now, all you have to do is make sure you carry out all the do’s and none of the don’ts!
October 24, 2019 Beth Cadman
A single, unified retention strategy that can be rolled out across multiple outlets and teams could be the most powerful way to keep retention rates high.
Delivering an exceptional customer experience is a tried and tested idea that has been proven to work. However, in this digital age, where customers are inundated with choice and competition is fierce, they have more power than ever before. Harbouring customer loyalty and keeping retention rates high should be top of the agenda for any business, as dismissing a brand or switching from one to another has never been easier.
A study by Harvard Business School reported that increasing customer retention by even 5% could increase profits by 25–95%. However, a recent CMO survey found that nearly half of CMOs don’t expect to improve their retention rates in 2019.
To give your customers exceptional experiences, you must first know your members experience, and then you must curate a retention strategy that is malleable and flexible. The better a gym can do this, the more tailored, unique, and personal their approach will be, and therefore, the customer will feel respected, listened to, and valued, thus increasing their likelihood of committing to their membership and the brand as a whole.
While some operators think that because of this, creating different strategies for different studios is the best approach. However, it is arguable that this could lead to inconsistency and confusion and actually result in the delivery of lousy customer service which could affect the reputation of the brand. Even a single poor customer experience at a studio has the potential adverse affect for the overall brand, even if their customer satisfaction rate is high. If a person has a negative experience in a particular location and chooses to write about it online, the whole brand could take a hit because the internet doesn’t have physical boundaries, and operators need to be ever mindful of that.
Therefore, creating an overarching retention strategy could be the most beneficial. Doing so means that gym members can expect the same level of customer care wherever they go. This means that if a member were to move away, they would be more likely to stay loyal to your gym and continue their membership in their new location. Similarly, for those members whose membership allows them to work out in any number of your outlets across the country, they will be presented with what is familiar and given the same service and attention that they have come to enjoy when they visit their regular gym, thus boosting their loyalty to the brand overall.
Of course, different studios do require separate incentives, and these will be determined by researching the customer base and adjusting offers and programs established by the results of such investigation. A discount for high-intensity workout classes, for example, may not work as well in a studio where the majority of members are aged 60+ as in one where they are in their twenties. However, the overarching strategy for rewarding loyalty through incentives should be the same.
However, aligning all teams and outlets under one strategy does make sense if a business hopes to keep delivering the same level of exceptional customer experience and care. Devising a singular retention strategy that can be rolled out to all studios means that there is greater fluidity and congruity, and all employees across all departments are working towards clear goals and a single vision and they have the tools and strategies to enable them to achieve these goals and realise this vision.
A study from Accenture revealed that 89% of customers get frustrated because they need to repeat their issues to multiple representatives. If gym operators have a retention strategy that is the same across all outlets, it is far more likely that there will be a protocol in place for how to deal with particular problems and complaints and therefore customers won’t have to continue to seek different advice and answers from various team members. Everyone will have the same answer, and it should be one that solves the customer’s problem, satisfies their need for answers and leaves them feeling as though they have had a genuinely positive customer experience.
One of the main reasons customers leave a business is because they feel ignored. Some 68% of customers stop doing business with a company due to the feeling that the company was indifferent toward them. By making sure that a solid retention strategy is in place across all outlets can ensure that customers feel as though they are being heard, wherever they are.
Another significant benefit from creating one retention strategy is that all the research and findings can be analysed together, and all resources can go into creating one compelling and effective strategy rather than some clubs doing a bit in one area, and others doing something different. Using a single platform such as Keepme to gather all information, and store all data means that the creation of a more unified and powerful retention strategy will be so much easier.
A solid retention strategy to retain and cultivate customers across the board is imperative. By creating a streamlined, integrated plan that still retains the flexibility to be moulded and tailored to individual needs and desires gyms will be at their most effective, and keep customers committed to their membership and loyal to your brand.
August 22, 2019 Beth Cadman
Paying attention to your member onboarding process can have a significant impact on member retention.
The member onboarding process plays a crucial role in maximising retention and can help ensure that new members turn into loyal customers who continue to use the gym facilities and engage with the gym in a positive way.
The first four weeks are the most crucial in the membership lifecycle, and in this time frame, the more frequently a new member visits the gym, the better impression they have of the facilities and the more positive a customer experience they receive, the more likely they are to remain gym members.
A smart, thoughtful, cleverly designed onboarding process is crucial to ensure member loyalty, just as a poor, badly planned onboarding process can lead customers to terminate their membership.
Onboarding is also known as ‘organizational socialization.’ In short, it is the process by which a person acquires information, knowledge, and skills as well as learning appropriate behaviours to become an ‘effective organisational member.’ When applied to the gym member onboarding process, this is the way that a new member becomes familiar with the gym’s facilities, equipment, and processes via different interactions and experiences. Done well, and this process will positively change a member’s behaviour and attitude towards working out, as well as developing a positive relationship with staff, the gym, and the brand.
An excellent first impression will last. From the moment a new member walks through the door and is greeted by reception staff to how much they enjoy the facilities, the quality of their workout, the options for exercise available, and how they are treated by staff all form an opinion of the gym. If overall the member finds the experience positive and enjoyable, the benefits of continuing as a member will far outweigh the expense and effort, and therefore that new member will turn into a loyal customer – providing the balance remains tipped this way.
In a survey taken by the American Society for Quality Control, results showed that the number one reason why companies lose customers is down to an attitude of indifference on the part of an employee. This demonstrates the importance of building customer relationships, of getting to know your members, of showing that you have a genuine interest in their health and wellbeing and that you and your teams want to make their customer experience the very best it can be from start to finish.
Your gym’s USP might be state of the art equipment or offering the cheapest and most flexible deals, but without providing an excellent level of customer service, this may not matter.
By considering every aspect of the customer experience, particularly during the onboarding process, clubs can hope to provide a seamless journey that allows them to make the most of the gym and enjoy their visits time and time again. They will have certain expectations, and particular needs, and the more these are being met or surpassed effortlessly, the more likely a gym is to retain that member going forward.
Function – does the gym meet the customer’s needs? This encompasses everything from changing room and locker facilities to the provision of refreshments and training classes and equipment.
Accessibility – how easy is it for members to do what they want to do at the club? Be that finding their way around, getting information, or having flexibility within their membership?
Emotional connection – do customers feel valued and respected? Do they think staff care about them as individuals?
If a gym can better understand a member’s expectations of the club, as well as their interests, the goals and so on, that they can provide an onboarding journey that meets and surpasses them. It is through research and listening to customers that gyms can discover what is important to their customers and identify opportunities to provide them with satisfactory solutions and improve their service to align with customer’s needs and desires.
Talk to members about their fitness goals and help them to devise a plan that will help them achieve these goals. Create both short term and long term plans, so after they have finished their initiation, they still feel as though the gym is guiding and supporting them.
Train staff to greet each member personally, and take time to engage with them to develop strong connections and a social atmosphere.
Encourage a high frequency of visits. Attendance and retention are linked, and the more frequently a member visits the gym, the more likely they are to perceive value from their membership investment.
Manage expectations. The more information you can give members during the onboarding process, the better. If a member knows what to expect from the gym, they are less likely to feel disappointed when something they might have taken as a given is not a possibility. If a class always gets booked up in advance, for example, let them know this so they can decide whether that is important to them, rather than not letting them know and then risking disappointment or frustration after they have joined.
Provide incentives. Providing members with time-bound incentives can encourage them to continue attending the gym and will create a sense of urgency to do so. Anything from free PT sessions to vouchers in the cafe can help provide instant value and create a good first impression.
Track their engagement. Make sure that you have the tools in place to track member behaviour from the moment they join. Being able to use data collected and ascertain how engaged your members are will help you to identify when they are becoming at-risk and allow for intervention before the member is lost.
Follow up regularly. Don’t let a member feel as though they are no longer important to you. Make sure staff members follow up after the first 30, 60, and 90 days. Send induction emails and congratulatory emails when they have completed their first class, let them know of any discount, offers, or new classes – keep communicating and keep them engaged.
Ask for feedback. Remember, as part of your onboarding process you can ask new members what they liked, and where there is room for improvement. Take feedback seriously and act on it to demonstrate to customers that they are at the heart of everything you do.
“We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.”
An onboarding process should be designed to educate, engage and entice new members so that they not only understand where to go and what to do at the gym but also start to build positive relationships with your team and fellow members, and provide them with excellent reasons to keep coming back time and time again.
To learn more about our powerful AI-driven retention tool, book a demo today.
August 1, 2019 Beth Cadman
Staying in touch with gym members has a significant impact on retention, and excellent communication can strengthen customer relationships, compliment marketing efforts, and boost your brand.
Every successful business is driven to grow, expand, and become more profitable, and gyms are no exception. However, retaining members is one of the biggest challenges they must face and an obstacle which can cause significant problems when trying to achieve such an aim.
One of the most important lessons any business can learn is: “Look after your existing customers, and the business will look after itself.” It doesn’t take a genius to work out that by keeping your current members happy, you have, and will continue to have a solid customer base from which to grow. In fact, just a 5% increase in retention can increase a businesses profit by 95%.
Because of this, when each new member comes on board, this should set in motion a long-term plan to ensure that their needs and expectations and observed and met to secure their continued custom. Many factors that affect customer satisfaction and can change a customer from satisfied and motivated to upset and at risk of ending their membership. Communication is one of the most important.
Your customers are your business’s most valuable assets and should be treated accordingly. By staying in touch with your customers, you are making sure that they know it, and if a customer feels valued, they are more likely to remain loyal to the business.
By communicating regularly with your customers, you are:
More often than not, it is down to poor communication. If you do not make an effort to connect with customers, it is easy for them to forget about you. For gyms, this plays out slightly differently, but the principle is the same. If a person joins the gym and over time begins to attend workout sessions and classes less and less, without communication from the gym, it is easy for them to continue to lose motivation, until they eventually forget about it altogether.
This can be true of both face to face and other types of communication. A member who receives a warm welcome from a receptionist who knows them by name is more likely to feel valued and as though their experience is personalised than one who does not. Similarly, a member who receives an email or social media notification with motivational content or discounts and offers for new classes may be inspired to start working out more regularly again.
Staying in touch with customers can also help to encourage members who are impressed with the service you offer to like posts, to engage with you and form a connection and to share content and information that could lead to new referrals. Word of mouth marketing is extremely powerful, with a massive 90% of consumers believing brand recommendations from friends, and the better the engagement you have with members, the higher your retention rates will be.
This means that operators could be missing a trick if they aren’t putting out regular forms of content via different communication platforms to not only strengthen their connection with existing customers but reach out to new ones too.
Building relationships with customers on an individual level is essential. If customers feel a connection to the brand, if they feel a sense of community, of belonging, as though they are treated like dear friends, they’ll turn into customers for life. Customers are bombarded with choices, and your gym members are likely to have their heads turned by other gyms marketing efforts. By staying in touch with your members and continuing to build a relationship with them, even if a rival offer is tempting, they’ll be more likely to remain loyal to you.
Advances in technology mean there is no excuse for gym owners not to have a strategy in place that identifies how each member likes to be communicated with, what kinds of things they want to hear about, and ensure that they are fed such communications regularly.
The better you stay in touch and communicate with your customers, the more you will get to know them, and in doing so will be able to anticipate their needs, desires, challenges, and problems and address all of these accordingly. Regular communication gives you data to work with. If you aren’t sure how a customer feels about your service, ask them. You can measure whether emails are opened, whether responses are made, whether members subscribe to email lists, whether they like or share your social media posts, whether they take advantage of offers, refer friends, complete surveys, answer questions. All this data can feed your retention strategy and help to build a better customer experience on a uniquely personal level.
Keeping in touch with members also helps you to identify those who are at-risk, and can even help you win back members who have set in motion cancelling their contract.
Through smart communication, you can find out why customers want to leave, identify warning signs that make customers at-risk of leaving and make relevant offers to help dissuade them from doing so. Offers such as putting their membership on hold if they go travelling or can’t afford it, or taking any complaints or points of dissatisfaction on board and explaining precisely when these issues will be resolved could help to turn an at-risk member into one who feels appreciated and satisfied and loyal to your brand.
Gyms should not bargain on customer loyalty, instead, they need to focus on building and nurturing relationships through personalised, targeted communication. By creating a communication strategy that is triggered as soon as a member joins the gym, owners can not only begin to capture data about that customer from the outset but also start to forge a robust and lasting connection with them that will leave the customer feeling satisfied, valued and appreciated. Staying in touch with customers leads to a mutually beneficial relationship where gyms can benefit from a cohort of loyal members and a foundation of revenue that is predictable and secure from which they can continue to grow.
Looking for a smart, AI-powered tool to help you better communicate with your customers and keep retention rates high? Keepme can help. Book a demo to see how today.
June 6, 2019 Danni Poulton
A lot of hard work, research, and strategic thought goes into developing ways to improve gym retention. But knowing the theory of how to retain members is one thing, and actually implementing that knowledge effectively is quite another. Let’s take a look at how to do that.
By looking at how hard gym retention can be, we can start to find more creative and actionable ways to improve gym retention. So let’s start at the beginning…
We’ve probably all got experiences of the difficulties involved in going to the gym… many of us will be all too familiar with the struggle to stay motivated, or even find the time in our busy lives to hit the treadmill. And when budgets are tight, extra “luxury” spending like gym memberships are often the first to go.
Here are some of the main reasons people quit the gym:
Time constraints; finding that magic hour before work (fighting the snooze button) or after work can be tricky, especially for busy people
Cost; research has shown that income is the biggest predictor of weekly levels of physical activity, suggesting membership costs can be a major source of attrition.
Delayed results; we are surrounded by media telling us that we can sculpt rock solid abs in no time at all, and there are lots of unrealistic expectations of how quickly people can see results. It’s also possible to put in lots of effort in an untrained way and quickly get frustrated that nothing appears to be happening. This can easily put member off.
The commute; if people don’t have local gym memberships they can easily be demotivated by having to commute to the gym, especially if this involves battling rush hour traffic.
The atmosphere; the gym atmosphere can be make or break for gym members. Overcrowding can cause a lot of people to quit, poor or dirty facilities or a competitive or unfriendly atmosphere can easily lead to people dropping out.
Isolation; lots of people go to the gym on their own or can’t find a regular gym buddy to go with. It has been shown that people are much more likely to quit the gym when they exercise on their own. In fact one study found that 95% people who joined weight loss programmes with friends completed the course.
Given the difficulties in retaining gym members it’s all too easy to fall back on customer acquisition as an alternative to solving your retention problems. People often join the gym powered by a rush of enthusiasm that “this time they’ll make it” and get that new more shapely body, or lose that weight, gain more energy and so on.
It’s much easier to generate initial enthusiasm for joining the gym than it is to keep that enthusiasm going week after week, month after month and (hopefully) year after year.
Take New Year for instance: people ride high on a rush of motivation fuelled by Christmas excess and a sudden collective interest in self improvement. But studies have shown that 70% of people who join the gym in January quit by May.
It can be tempting to think that most people quit the gym and so it’s a losing battle to focus on retention. However, it’s widely known in business that it’s actually 5 times more expensive to acquire a new customer than to retain an old one.
Despite this, more companies focus on customer acquisition than customer retention. Why is there such a big gulf between our knowledge of the benefits of retention and our actual business practices?
Let’s take a look at an analogy: let’s say you own a shop that sells widgets. So you pay for a sign that says “20% off all boots”. Sure enough, people start to come into your shop to check out your wares. They fall into three groups of people:
Group 1: customers who leave instantly without buying anything.
Group 2: customers who will buy one or two things and then you won’t see them again.
Group 3: customers who will come back time and again.
It’s no surprise that the members of group 1 and 2 outweigh the members of group 3. But that doesn’t mean there’s less value in nurturing group 3. For a start, group 1 may be the largest group but they’ll bring in no revenue at all. Group 2, might not even bring in enough to cover the cost of advertising to them over a sustained period of time. The cost of getting them through the door is much higher than for the loyal customers who already know and trust what you have to offer.
Retaining members, essentially means marketing to people who are already familiar with your fitness offerings and are more likely to buy what you’re selling than a random person off the street. Not only is it cheaper to retain existing gym members than recruit new ones, but improving fitness retention can actually bring in much more money for your gym.
Across most industries, boosting retention leads to a significant lift in profits. In financial services, a 5% increase in retention can increase profits by 25%. That’s because repeat customers tend to buy more products in their lifetime than one-off customers. That means that over time the operating costs of serving them decrease. And you also get a kickback when those customers refer you to their friends and family.
One study found that 60% of customers will recommend brands they are loyal to to friends and family. That’s a lot of unpaid marketing that you’ll get from focussing on improving retention and increasing your Net Promoter Scores. That’s why gyms are increasingly turning to customer retention tools to automate and streamline this lucrative process.
Repeat customers are also less likely to be tempted away by your competition because they have become familiar with your offerings and feel committed to your brand.
The benefits of gym member retention aren’t just financial, there are also significant marketing benefits as well.
A major aspect of effective advertising is knowing exactly what kind of audience you are serving. I.e, who is your ideal customer? But with member retention strategies, you already know who your customers are because they are already coming to your gym. This removes a lot of the guesswork from your marketing efforts. Research has shown that the success rate of marketing to existing customers is around 60-70% compared to just 5-20% success rates marketing to a new customer.
Some business are even focussing exclusively on retention. Here’s a quote from the founder of eCommerce seller Zappos:
“The number one driver of our growth at Zappos has been repeat customers and word of mouth. Our philosophy has been to take most of the money we would have spent on paid advertising and invest it into customer service and the customer experience instead, letting our customers do the marketing for us through word of mouth.”
If you want to see how improving gym retention can supercharge your revenue and improve your marketing ROI, book a Keepme demo today – it will be worth your while.
May 30, 2019 Beth Cadman
Referrals are not only a great way to boost sales figures but can actually help keep member retention rates high too, and therefore should be part of every gym owner’s retention strategy.
Any smart gym owner knows that no matter how much time, effort and budget they put into their marketing and retention strategies, without loyal members who are so impressed with their service that they are willing to shout about it and encourage their nearest and dearest to join, their retention rates may remain unstable.
Every new gym member is another person who needs nurturing, encouragement and attention to ensure they remain with the gym. This takes work, time and money, and while a gym owners primary focus may well be on finding new members and retaining them once they join, it is also essential to understand how retention links to referrals and why boosting referrals should be an integral part of the retention strategy overall.
According to the Nielsen Global Trust In Advertising Survey, 92% of people trust recommendations from friends. This means gyms are missing a trick if they aren’t gently encouraging members to get their friends to sign up too.
Word of mouth marketing is hugely influential and cannot be underestimated. A person may be mistrustful of a salesperson who evidently has their own agenda, i.e. to close the deal and make the sale. A friend, however, or even a stranger who bothers to write a review or say something positive on social media is more likely to be doing so because they genuinely believe in the quality of the products and services offered. Therefore, people are more likely to trust the opinions they receive this way and be persuaded by what they say. In fact, word of mouth marketing is the primary factor behind 20 to 50 percent of all purchasing decisions. Having a robust strategy to utilise this, and ensure that your current members are not only spreading positive messages about the gym but actively working for you by encouraging new members to join, can have a significant and hugely positive impact on member retention rates.
So why are referred members more likely to remain members?
One of the important factors to consider when devising a member retention strategy is how to keep gym members motivated. One key component that keeps people coming back to the gym is if they feel it is a welcoming space where they can interact with other members, socialise and have fun. According to a 2014 IHRSA Member Retention Report, almost 60 percent of members credit social motivation as one of the main reasons they continue to use the club.
People who refer their friends and relatives to the gym already have an established relationship; they’ll come together, workout together, spot one another, try new classes, and keep one another motivated, this makes them more likely to stay loyal members and, as a by-product, keep retention rates high.
Social influence can also have a profound and exciting effect on member retention rates. Meaning that if members say positive things about the gym and convince others to join, the new member will also feel positive towards the gym, having had their opinion and beliefs already shaped by their social interactions with their friends. As this study on Social Influence and the Collective Dynamics of Opinion Formation states: ‘In many social and biological systems, individuals rely on the observation of others to adapt their behaviors, revise their judgments, or make decisions.’
Customers who are referred come with an already embedded sense of positivity towards your business and brand. While this expectation must be met, the initial positive perception helps get more members onboard (therefore making your sales teams jobs a lot easier) but also carries with them as they begin to use the gym. If you can continue to meet their needs and expectations, they will likely remain and turn into a loyal customer themselves.
It is also important to note that encouraging referrals can have a positive impact on the referrer as well as the referred. By asking your members to refer you are strengthening your relationship, you are doing business together. You are also asking them and in turn reminding them to think of all the things they love about the services you offer. This can help members feel more invested in (and loyal to) a gym.
Referrals are likely to breed more referrals, particularly if you are incentivising your customers to do so. This ‘snowballing effect’ means that if your members have a positive experience they’ll tell others, and if they have a positive experience, they’ll do the same.
At the heart of it all; however, it is crucial for gym owners to remember that these newly referred customers still require the nurturing, the attention and excellent customer service that your current ones do. If you put all your energy into referrals and hugely incentivise your members to help you but do not then match expectations, retention rates will continue to fall and the time and money you put into creating a referral campaign could result in a poor ROI. Incentivising customers for referrals is fine, but encouraging them to do so organically and naturally is better, and you can do this by providing an excellent service. Then appeal to their ego, let them know that their opinion counts and acknowledge that they clearly have influence and are doing you a favour. Flattery will get you everywhere after all.
A study in the Harvard Business Review showed that bank customers who opened an account from a customer referral were 18 percent more likely to stay with the bank than new customers who weren’t referred. This is because people who refer are kind of like matchmakers. They go out and find people who they think would be a good fit for your gym, who would like what you’re offering. They aren’t just grabbing anyone off the street, and they are finding motivated, interested, engaged people – people who are more likely to remain members and keep your retention rates high — because of this focusing on referrals can be crucial and should be included in every gym owner’s retention strategy.
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April 25, 2019 Faith Christine Lai
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 11, 2019 Faith Christine Lai
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.
February 28, 2019 Faith Christine Lai
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 4, 2019 Faith Christine Lai
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 Faith Christine Lai
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.
October 30, 2018 Faith Christine Lai
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 Faith Christine Lai
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.
October 25, 2018 Faith Christine Lai
So, you’ve got the fitness company of your dreams. You’ve pushed through hours of conceptualising your brand and business model, creating the best facilities, hiring the best employees. You’ve even been successful at getting customers in the door. All the hard work is over now, right?
Wrong. The key to real, sustained success in the fitness industry is not member attraction, but member retention. This article will explore why this is the case, why it’s not necessarily easy to achieve a healthy membership retention rate, and why you should make improving membership retention a top priority, starting right now.
You probably don’t need to look at your bank book to know that a strong membership base is really important for any health and fitness business. However, if you do, you’re likely to see that membership fees account for around 80% of overall revenue, as Helen Watts discovered was the case for a significant proportion of businesses studied in her paper “A Psychological Approach to Predicting Membership Retention in the Fitness Industry” (2012). This means that member fees are a vital component of revenue (and consequently, profit) generation for fitness businesses. And yet, according to the Fitness Industry Association’s figures in 2002, the average retention rate for a fitness club is 60.6%. This means that each year, a club loses approximately 40% of its members! It is unsurprising, therefore, that the IHRSA has referred to membership retention as the “Achilles Heel” of the fitness industry.
“But who cares?” You might question. “Even if people leave, new members will just come in and replace them.” However, the statistics indicate that this may not necessarily be true. The 2018 State of the UK Fitness Industry Report shows that the rate of growth of the fitness industry is slowing – during the 12 months to March 2018, the number of fitness facilities increased by 4.6 percent, as compared to increases of more than 5 percent in the previously recorded period (March 2016 to March 2017). IBISWorld, an international market research company, has made a similar warning, recently predicting that Australia’s gym market may reach saturation in the next five years. This means that there is no guarantee that there will always be new members to make up for the revenue (and love) lost if your current members leave.
Additionally, apart from ensuring the longevity of your business, there are also inherent benefits to higher membership retention rates. Firstly, focusing business strategy on retaining existing members rather than attracting new members is likely to result in some real costs savings, since, as the Harvard Business Review notes, the acquisition of new customers entails unique costs. For example, the costs associated with advertising, new member discounts, and the practice of giving ‘free trials’. These costs are not incurred with the retention of existing customers. Thus, a shift in business focus towards retention will bring about costs savings, and accordingly, higher profits.
Secondly, improving your membership retention rate can also improve your rate of growth. With a more consistent consumer base, meaningful relationships between these regular members (and even between staff and members) are more likely to develop. This sense of belonging can drastically improve the member experience. As Phillip Mills once said, “people join to get results and motivation, but they stay because they make friends”. When people enjoy and have confidence in your business, they are more likely to recommend your business to others, bringing new customers to your door! Retained customers, therefore, could also be a valuable form of word-of-mouth advertising for your business.
In the first part of this article, I showed that membership retention is really, really important for any successful health and fitness business, and that it is often a problem for businesses within the fitness industry. Why might this be the case? I suggest three reasons.
Firstly, fitness culture is changing. The concept of holistic fitness is becoming more popular, people are demanding greater variety in their fitness regimes, and companies such as ClassPass and GuavaPass are stepping up to meet that demand. This means that the idea of long-term commitment to just one type of fitness facility or workout is becoming increasingly unattractive to consumers. In the Internet age, there are also an increasing number of resources available for free online that allow people to work out from the comfort of their homes, without spending any money!
Secondly, staying fit isn’t easy. At almost every point of one’s fitness journey, there is the temptation to quit. At the beginning, fitness is difficult because one hasn’t yet developed the habit of regularly turning up to the gym and working out. Even when that has been overcome, the motivation to keep exercising diminishes as one becomes more experienced, and session-to-session progress slows down. In addition, people often undergo life changes that make it difficult to keep up with their fitness routine – people go away to college, start demanding new jobs, or have babies. There are many exogenous factors that can make someone leave a fitness gym or facility, membership retention strategies aside.
Thirdly, and most importantly, health and fitness businesses simply aren’t doing enough to ensure that their members stay in the long-run. If businesses don’t actively prioritise membership retention, they won’t account for it in their business and resource allocation strategy. Many businesses even actively divert energy and resources into attracting new members rather than retaining existing ones. As has already been discussed, this is a big mistake, and is likely to be a significant source of the retention problem in the industry.
If you’re reading this article, you’re probably interested in improving your health & fitness business’ retention rate. Although every situation is unique, one thing to be mindful of is the existence of ‘first-mover advantage’. First-mover advantage is the advantage gained by the initial significant occupant of a market segment. Although this phenomenon usually refers to the gaining of technological leadership or resources, it is also applicable when a business emphasises membership retention amidst an industry that does not. As illustrated earlier on in the article, low membership retention is a striking problem throughout the health and fitness industry as a whole, and businesses haven’t caught on yet. But you have.
So, start thinking about your membership retention today. Look closely at your demographics, the people behind your profit line. Think about how to make them feel happier, more included, and more engaged. Think about developing relationships with them for the long-run, not just for the now, and start considering the resources you may need to do so. Start today, get that first-mover advantage, start retaining your members, and watch your business grow!