March 15, 2019 Category: Retention
“The Keepme product captured my full attention from the minute I first heard about the concept. The service delivers on every aspect of members communication, engagement, and retention that I have worked towards over the last fifteen years.”
Nasta comes to Keepme with 15 years of experience in the retention management field. Most recently, Nasta worked as Director of E-Commerce & Marketing for UK gym chain, Xercise4Less, where he helped to drive the gym’s ambitious expansion programme around the region. Previous positions have seen him as COO of Retention Management LLC, and Sales Director for Matrix Fitness.
Nasta combines his expertise in consulting with many other relevant skills, such as public speaking at core fitness industry events (The 2018 IHRSA European Congress & The Scottish Leisure Network Group), implementing effective loyalty/ rewards schemes and improving communications & engagement with health club members. Nasta’s knowledge and commitment to retain members within an industry that faces challenges to achieve a consistent retention strategy, is inspiring. His passion, experience and work ethic will be an asset for Keepme, and we are thrilled to have him on board.
March 7, 2019 Category: Retention
Artificial intelligence (AI) has, in recent years, continued to develop and infiltrate many aspects of the fitness industry and will continue to do so for the foreseeable future. Be it through sales and marketing, customer service, or data collection, the influence of AI is extending its reach and affecting how gym owners and other fitness industry operatives create more meaningful retention strategies to keep existing members renewing their gym membership contracts time and time again.
The Encyclopedia Britannica definition of AI is “the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings.”
However, in reality, the term AI is much more fluid then this and, over time has been adapted and modified to better match the goals that a particular system is designed to achieve.
But how does the fitness industry make use of this technology? And is it necessarily a good thing?
People who join the gym are interested in their health and fitness and self-improvement. For a gym to be invested in AI and to be willing to utilise this new technology to improve their systems, to gather data, to inform them on customer satisfaction, and to tailor their service to better suit the needs of the individual is likely to appeal to gym goers across the board.
The implementation of AI in the fitness industry can not only serve to attract new members with its shiny, hi-tech promises but also convince longer serving members to continue to use the gym as they see it reacting to their ever-evolving needs.
According to Gartner Inc., only 2% of businesses in 2017 used virtual customer assistant (VCA) or chatbot technology for customer service and support, but by 2020, this figure is expected to increase to 25%.
AI can also be used to gather intelligence on messaging interactions, phone conversations, gym attendance records, and other communication between a club and its members. This information enables marketing teams to identify when customers might be at-risk and to act by creating personalised incentives to draw customers back in and keep member retention rates high.
Gyms are also beginning to see how the application of AI could be used to offer virtual personal training programmes to members, lowering the cost for them of hiring an actual personal trainer while giving them a similar option for customised workouts and even individual motivational strategies delivered in a virtual form.
By using a mobile app, gym owners can gather data on how individuals workout – which machines they use and how long for as well as other useful information such as their heart rate. This data can be used to devise bespoke training programmes as well as other nutrition and fitness advice tailored to the individual.
As AI continues to improve members can expect even more specific advice, for example when coupled with motion sensing technology, suggestions on how to improve movement to make the most from a workout are possible. This kind of personalised experience is likely to help members remain motivated and engaged in their workouts and renew their gym membership when the time comes.
Wearable technology and connected fitness machines will allow trainers to get real-time information on gym members activities both inside and outside the gym. This data again can be used to help identify less engaged gym members and to flag up at-risk members thus informing retention strategies to help keep those members motivated.
The development and refinement of AI opens up a whole wealth of possibilities in the fitness industry increasing productivity, gathering and analysing unprecedented amounts of data and taking over routine tasks which could free up gym owners and their employees to spend more time improving customer experience.
However, there are some drawbacks. For a start implementing AI doesn’t come cheap, and for low-budget gyms purchasing the necessary equipment and systems to apply any meaningful AI into their club may, for now, be out of reach.
It is also important to note that humans crave human contact, communication, and company and the importance of face-to-face interaction with customers cannot be underestimated. As Mina Chang writes for Forbes: “you do business with people, not entities. The beauty of communication is found in the nuance that’s only felt in face-to-face conversations.”
This sentiment rings true for gym members who rate having no gym buddy, lack of guidance and feeling out of place as their top three reasons for wanting to quit, problems that are hard to rectify without human contact.
AI certainly has its place in the fitness industry, and it is up to health club operators to strategise how they can implement the technology available to them to best effect.
If they can successfully implement AI systems to automate the more routine conversations or demands that take up employees valuable time, while simultaneously gathering data to improve facilities and offer personalised experiences they could have the best of both worlds. Intelligent, productive systems that inform sales and retention strategies in addition to a team with more time to be out there communicating, motivating and engaging with customers and providing that irreplaceable ‘human touch.’
October 28, 2018 Category: Retention
Membership retention should be top priority for any business aiming for long-term success. It costs five times as much to attract a new customer than to keep an existing one, and increasing customer retention rates by 5% increases profits by 25% to 95%.
One of the factors that affects membership retention rates is pricing strategy. In this article, I’ll discuss the current pricing strategies popular in the health and fitness industry, and suggest three strategies to improve membership retention rates.
Pricing speaks volumes in this industry. When a gym or health centre sets its prices, it is also involuntarily committing to a model of business that prioritises either attraction or retention.
Statistically, it is well-established that 44% of companies focus on customer acquisition as compared to 16% that focus on retention. Taking the United Kingdom as a case study, virtually every commercial gym giant offers free trials of at least 1 day in length. For example, Virgin Active, Anytime Fitness, Fitness First, and Nuffield Health all offer free trial schemes of varying lengths. Other household names like easyGym and PureGym also promote offers which reduce joining fees for new customers. In addition, many gyms promote lower membership rates for new members. These establishments are all following a pricing model that intends to bring in new customers with eye-catching offers.
However, this pricing strategy also sorely misses the mark. The optimal strategy for a firm in the health and fitness industry is to focus its resources on retaining existing members rather than attracting new ones. But current behavior communicates to both existing and prospective members that the business cares more about its new members than its existing ones. After all, the old members aren’t the ones getting discounts and membership benefits.
Jill Avery, a senior lecturer at Harvard Business School, adds that this sort of pricing strategy also is likely to attract the ‘wrong kind’ of customer – “deal seekers who then leave quickly when they find a better deal with another company”.
‘Okay’, you might say. ‘The status quo hasn’t quite got it right. But what would an optimal strategy for membership retention look like?’ In the next section, I suggest a few general principles to guide a retention-focused pricing strategy.
Have you ever received a stamp card from a coffee shop? If you have, it probably sounded something like this: ‘buy 9 coffees, and get the 10th free’. If you’re lucky, you may even have experienced the sweet satisfaction of turning in a completed stamp card at your favourite coffee joint, and subsequently claiming a free drink.
That feeling of excitement is why so many coffee shops have this sort of loyalty scheme. When you feel rewarded for your action (in this case, consistently getting your coffee from one particular shop), you are more likely to associate enjoyable experiences with that same shop. You are motivated, through such an action-and-reward mechanism, to stay engaged with the shop you are patronizing.
And it’s not just coffee shops that play the ‘loyalty card’. International clothing brand H&M has H&M Club, a loyalty program that gives regular shoppers reward points for their purchases. These points can then go on to redeem “offers, services, events and much more”. Sainsbury’s, the second largest chain of supermarkets in the United Kingdom, also runs a similar program with their Nectar Points scheme. In fact, everyone seems to agree that rewarding loyalty matters. Except, strangely enough, the health and fitness industry, in which loyalty programs are not the norm.
If you’re a health and fitness operation, making loyal customers feel valued will not only improve their experience of your brand, but will also solidify their commitment to your business. Some techniques to make long-time customers feel valued include allowing for members to pay incrementally lower monthly rates depending on how many years they’ve stayed with you, or for long-term members to get perks that new members don’t, like a free towel service and refreshments.
This will not only improve membership retention rates but could even have the happy consequence of attracting new members through word-of-mouth recommendations from your ever-growing loyal and satisfied consumer base.
In a recent article, Harvard Business School professor John Gourville discussed the psychology of pricing. He discussed the case study of an “average health club” who is faced with the challenge of ensuring that they both attract and retain their member base (sound familiar?). Gourville suggests that the owner of a health and fitness business should actually make members pay monthly, rather than yearly, in order to improve membership retention rates.
This seems odd at first. Surely, making new members commit to a year of payments upfront is better, since it eliminates the ability for them to ‘drop-out’ every month. However, the psychological element behind payment means that a monthly payment cycle incentivises people to exercise more regularly than a yearly payment cycle. This, in turn, means that members of your health and fitness facility members are more likely to reap the physical benefits that they signed up with you in order to achieve, and will motivate them to continue on with their membership beyond the first year.
Thus, knowing when to charge is just as important in pricing strategy as knowing how much to charge.
Finally, one final important element that is necessary in pricing for retention is a sensitivity to your target demographic. Every business has unique needs and a unique demographic. You know your business better than anyone and are better placed than anyone else to figure out what sort of pricing strategy will work best for your members. Do your members value flexibility or costs-savings? Do they use all your services, or would they prefer paying for one at a time? Find out, and then work towards your demographic.
After all, at the heart of all of my suggestions is one simple principle: if your consumers feel valued, they’ll stick with you for the long-run.
October 25, 2018 Category: Retention
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!