October 3, 2019 Beth Cadman

Contract vs. Pay As You Go: Members Who Commit To Staying

Contract vs Pay As You Go

Should gym operators focus on persuading members to sign up for longer contract lengths, or is pay as you go better for retention? A careful combination might be the best way.

Understanding what effect membership plans have on gym membership retention rates can provide a useful insight to enable operators to market one or the other more strongly, and should be considered when devising a smart retention strategy

There are, of course, benefits to both members and the club to offer different membership types. Most gyms can charge more if they offer a ‘drop-in’ or pay as you go service. However, convincing members to sign up for a 12-month contract means that the business has greater financial security and can forecast and make budgeting and growth plans more easily. 

So how does each membership type effect retention rates?

Let’s investigate.

The 12-month contract

Those who commit to a 12-month contract, be that by paying a monthly fee or paying the entire sum upfront, naturally have a higher retention rate than those who only pay from month to month or simply pay each time they visit. This, of course, is understandable as if a person feels tied into a service that they have committed to pay for for a particular length of time, they are more likely to use it to get their monies worth.

Persuading members to sign up for a 12-month contract can give operators more stability and financial security, and because this is the standard for many gyms, there is less likely to be much resistance if dealing with an engaged and motivated member.

However, it is important to acknowledge that offering flexibility and freedom in a members contract can also work well. Members who don’t feel ‘trapped’ and who see going to the gym as a choice that they are fully in control of, rather than an activity that they have been coerced into are perhaps more likely to remain motivated and inspired to continue. Exercise quickly becomes unenjoyable if a person feels as though they are being forced into it against their will. 

Similarly, if a person can no longer afford to pay the monthly fee, and has the flexibility to pause their membership for a while, they may be more likely to return to the gym when their income increases again. Those who have committed to a 12-month contract they can’t get out of, who then fall upon hard times, may end up feeling extremely resentful towards the gym when they have to continue to pay even though they are struggling to afford it. This could lead to a negative association, and even if they then become more affluent and can afford to rejoin, may refuse to do so because of the negative experience they underwent the first time. 

Members Gym

Membership types – the figures

According to a study, numbers indicate that members who commit to 12-month membership agreements have a higher rate of retention than members who join month-to-month without any commitment. The research shows that those who pay month-to-month decrease significantly beginning at three months.

What is interesting to point out, however, is that the same study also revealed that of the 1.47 million memberships sold, 80% of these are month-to-month plans, and only 20% are 12-month agreements. This indicates that month to month contracts remains a more popular choice for people and that they do crave options, get-out clauses, and flexibility in their memberships. However, being given that choice, then makes it much easier to leave – and they are reminded of that possibility every month when given the option to renew. 

The maths makes this even more plain to see. In short, those who have a month by month contract have 12 chances to leave every year, while those who sign up for a 12-month contract only have one chance. As a gym operator, it’s easy to see which odds are more attractive when trying to boost member retention rates. 

In terms of revenue, however, it might not make a great deal of difference. Since the more attractive option to entice new members appears to be the month by month payment option, selling a greater number of these membership types could offset losses made when members do quit. What it does mean, however, it that gyms have to fight each month to find new members, where those who are signed up to a 12-month contract remain secure, for the time being. 

Better sales techniques = better retention rates

The truth of the matter is that the more you can sell to a member, the better the chances are of them remaining committed to the gym. Joining fees, longer contract lengths, added extras, higher price points – these are all challenging to sell. However, if a salesperson is able to get a potential member to make that commitment, once they have signed on the dotted line, they will be more motivated to ensure that they obtain value from that commitment. 

So should operators push for 12-month contracts?

It is important, as always, for gym operators to gather data, research member behaviour, and offer tailored marketing plans, personalised memberships, and flexible options if they wish to optimise retention rates. For example, focusing on customer service, on excellent orientation and onboarding procedures can help to ensure a member remains more committed. Encouraging members to attend the gym more frequently and create a routine can also help to boost retention. In fact, doing so means a member is likely to stay an additional six months longer than one who visits the gym on a more ad hoc basis.  

Certainly, operators have begun to change their business models, and brands such as The Gym Group and PayasUGym use these flexible contract types as one of their main benefits to entice members away from bigger gyms who want to tie them into a longer contract length.

Research from energy firm JD Power in the utility sector revealed that billing and payment factors could account for 20 percent or more of total customer satisfaction scores. Making sure that the payment process is smooth and error-free is, therefore, imperative. By paying attention to how much time the team spends correcting payment errors, gym owners can get a clearer idea of whether payment experience is positive or poor. 

It also might be worth considering and revising systems for chasing those customers who fail to pay. Debt collection should be handled sensitively and if not done so could trigger a backlash from upset members, which could then damage the reputation of the gym. 

Providing flexibility is also crucial. While collecting monies via direct debit is the preferred option, it could be well worth gyms offering different payment offers to suit various cohorts of customers, such as allowing members to pay on any day in a given month. Being sensitive to different members budgets can also help operators come up with a range of membership plans to cater to everyone. Offering different types of payment plans and lower-cost memberships can encourage members to commit for longer, and can also foster customer loyalty from a broader range of members. The rise in popularity of fitness passports which offers those who sign up access to a wide variety of gyms and other health and fitness facilities in their local area is also a consideration that gym owners should consider buying into.

Pushing for a 12-month contract can have a positive psychological effect too. If a member signs up for this length of time, they start their gym-going feeling committed to attending longer term. Statistics show that if a gym-goers attend more sessions when they first join, they are more likely to continue to use the gym going forwards.

There are pros and cons for both contract, pay monthly and pay as you go options, and it is important for a gym to be able to calculate how to achieve the best balance for optimum revenue and retention. While the evidence seems to suggest that longer, fixed-term contracts tend to improve rendition rates, month to month contracts to appear easier to sell.  Gyms must be careful not to push too hard for one at the expense of the other, and as always it is by engaging with members, listening to their needs and investing time and resources into understanding their behaviour that gyms will provide unique, satisfying fitness experiences and retention rates will remain high.

September 26, 2019 Beth Cadman

Why Building Relationships With Members Matters

Why Building Relationships With Members Matters

Encouraging fitness staff to build positive customer relationships with gym members can have a significant impact on member retention.

All smart business owners agree that building relationships is crucial when it comes to attracting and retaining new customers. For gym owners, this has never been more pertinent, and with competition fiercer than ever, they cannot afford to lose customers to competitors because of poor customer experience.

If a member feels emotionally connected to the gym, if they feel as though they are part of a community, and going to the gym is a positive and social experience, they are much less likely to cancel their membership or be swayed by a competitor’s more attractive offer. 

Member retention – communication is key

Building robust and lasting relationships between members and fitness staff and demonstrates that nothing quite beats the human touch to increase emotional engagement and brand loyalty. 

It is up to the employees of the gym who interact with members on a daily basis to ensure that their experience is a positive one, that they are satisfied with the service they receive, that they are provided with opportunities to socialise and make friends and that they are hitting their fitness goals, and making new ones when they do.

While data can be captured when members join a gym or through routine surveys or even via social listening, the information that those members of staff who walk the floor and who are communicating with customers can provide is enormously valuable and shouldn’t be overlooked when trying to devise a smart member retention strategy. 

In fact, a TRP study found that the most effective salespeople are the fitness staff themselves, revealing that fitness-staff members can generate 600% more income per member than salespeople alone. The study also determined that frequent interaction between staff and gym members has a direct impact on how often members frequent the gym and how likely they are to renew their memberships when they come to an end. 

If fitness staff are briefed on how to approach members, what the right questions are to ask to generate meaningful and valuable feedback, and are able to engage in positive and motivational dialogue with members consistently, they will make them feel valued, heard and motivated. This positive messaging, delivered face to face can have a massive impact on how a member views their gym sessions, their overall experience of dealing with the company, and can even inspire them to share their positive experience thus strengthening trust and creating a better impression of the brand which will, in turn, increase brand loyalty and impress new potential members simultaneously. 

Excellent customer relationships mean increased customer loyalty

Developing a meaningful client base is imperative if gym owners hope to see retention rates improve. Recent studies have placed emphasis on the vital relationship between customer satisfaction and retention and how important retention is for a business’s continued success. It is the role of those who interact with members to seek to understand their concerns, to answer their questions and to build an emotional connection that fosters commitment and loyalty through the development of long term relationships. Cultivating these personal relationships takes time and effort, and it is by providing a unique, tailored experience for each member that meaningful relationships can flourish. It is an ongoing process too, for those that are taken for granted or ignored for too long will quickly deteriorate leaving the neglected member vulnerable and at risk of terminating their membership or being tempted by a hovering competitor

A Walker study revealed that customer experience would likely overtake price and product as the critical brand differentiator as early as next year. Experience can, of course, be related to the products and services offered, but it is also the experience of being at the gym, of how staff members make customers feel from the moment they arrive to the moment that they leave that could have the most significant impact. 

If your gym focuses on building these customer relationships, getting to know your members, and providing a level of customer service that goes beyond the expected, this acts as a point of differentiation between you and your competitors. Therefore, relationship building should be an integral part of any smart retention strategy, and by being dedicated to exceeding expectations and providing unique experiences through strengthening bonds between member, gym and brand, owners can hope to see a rise in loyal, satisfied, spending customers and a subsequent increase in retention rates.

August 22, 2019 Beth Cadman

How A Smart Member Onboarding Experience Helps Better Retention

How a Smart Member Onboarding Experience Helps Better Retention

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. 

So why does good onboarding help with member retention?

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. 

How can gyms improve the onboarding experience for their customers? 

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.

Onboarding

Points to consider include:

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.

Simple onboarding tips to improve retention

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. 

As Amazon CEO, Jeff Bezos succinctly puts it:

“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.

July 4, 2019 Faith Christine Lai

Understanding CRM Systems to Improve Customer Retention

Understanding CRM Systems

What is a CRM system?

According to Bain & Company, Customer Relationship Management (CRM) is a process that companies use to understand their customer demographics and respond efficiently to changes in their customers’ preferences.

A CRM system, in turn, is a tool that enables a company’s’ CRM process. A CRM system compiles crucial customer data across different points of contact between the company and customers. Such data usually focuses on the unique features of the relationship that a customer has with a company. For example, how many times a customer has been contacted, how much business they’ve done with the company, and what sort of conversations have taken place between a customer and the company.

Why use a CRM system?

Customers are at the heart of every successful business. Increasingly, it has also been shown that careful attention to one’s customers is an important factor that determines whether or not a company makes it or breaks it. It is widely predicted that, by the year 2020, customer experience will overtake price and product as the key brand differentiator when making consumer choices. At the same time, customers are also growing increasingly discerning. More than ever before, customers are expecting higher standards from the customer service they receive, with many, as PwC found, even willing to pay more to ensure better service.

Thus, businesses must address the evolving demands of their consumers in order to supply effective customer service. As Harry Gordon Selfridge (the retail magnate behind department store chain Selfridges) once said: “People will sit up and take notice of you if you will sit up and take notice of what makes them sit up and take notice.”

And what do customers consider better service? PwC found that nearly 80% of consumers point to speed, convenience, knowledgeable help, and friendly service as the most important elements of a positive customer experience. Think With Google insights also indicate that consumers also expect more personalised service, and a “frictionless” transactional experience.

Customer Service

Thus, CRM systems can be a great asset in ensuring that these customer service features are provided to customers to improve both customer satisfaction and membership retention. In the next part of this article, we’ll explore how CRM systems do so.  

How does a CRM system improve customer service?

As briefly mentioned, CRM systems keep a log of the relationship between a customer and the business. It consolidates customer information and documents into a single database, so business users can more easily access and manage such user data. This increases the efficiency of customer service interactions (for both customer and staff), the effectiveness of your customer service strategy, and reduces avoidable human error.

  1. Efficient:

Accenture found that 89% of customers get frustrated because they need to repeat their issues to multiple representatives. Since CRM systems keep a detailed log of the relationship between a customer and the business, any changes in the staff members handling a customer’s case can be done with ease, since the representative can refer to the CRM system without the customer having to go through the pain of repeating themselves. In addition, since customer data is not ‘tied’ to any particular member of staff, staff can join and leave the business without customer data (and customer-business relationships!) being affected by such changes.

2. Effective:

While efficiency certainly plays into how effective customer service is, only having a quick response is not enough. Imagine having an urgent or important concern that you want resolved from a business that you patronise. Now imagine that concern not being resolved, not because you didn’t get a response quick enough, but because the customer service representative you are speaking to is not informed enough about the issue at hand. That’s got to be frustrating, right? Indeed, 84% of consumers are frustrated when the agent does not have information.

However, with a robust CRM system, members of staff can, at any time, easily access a clear picture of any customer’s interaction with the brand. When staff are able to get accurate information about the customer they are dealing with, they are better positioned to make the best customer service decision possible.

3. Error reducing:

Finally, having a CRM system reduces human error. Without a standardised CRM system, data about your customers is at the mercy of the way that your staff takes notes on their interactions with clients. Sure, some of your staff may be extremely organised, meticulously making digital copies of everything they note down accessible to the whole team. However, more realistically, you may find notes about your clients lost on post-it notes, scribbled down on napkins, or not taken down at all in the first place! A CRM system protects you from such ‘nightmare’ scenarios.   

How can a CRM system improve customer retention?

67% of consumers cite bad customer service experiences as reason for churn. In our other articles, we have also explored in greater depth how customer service and customer satisfaction impacts membership retention rates.

In addition, CRM systems are another way for you to get an accurate snapshot of your customer demographic and the segments that it’s comprised of. This is an important aspect of risk scoring and targeted marketing, another important part of improving membership retention.

In summary, a good CRM system can elevate the standard of customer service that you can offer your clients, increase customer satisfaction, and boost your customer retention rates. What’s not to love?  

Book a 30mins demo, to discover more about how you can take back control of member retention with our powerful retention tool.

December 29, 2018 Faith Christine Lai

Boost Member Retention By Motivating Your Gym Employees

Boost Member Retention By Motivating Your Gym Employees

As Kotler stated in his 1994 article, “The key to customer retention is customer satisfaction.” The core of any effective membership retention strategy is creating a positive experience of your brand for your customer. Such a positive experience often entails two main components.

The first component involves providing excellent customer service. It was found that 73% of consumers would consider purchasing from a brand again if they had a superior customer service. The second component is creating a sense of community. Humans are social creatures, who desire a sense of belonging. At gyms, members who’ve made a friend at the gym in the last three months are 40% less likely to cancel than those who haven’t.

Some common ways that gyms attempt to improve customer service and create a sense of community in a gym include group classes, the gamification of member experiences, and strategic communication. However, there is one commonly overlooked aspect of gym management that, if well-managed, can drastically improve both customer service and customer’s sense of belonging in a gym – its employees. In this article, I’ll explore the important role that gym employees play in customer satisfaction and customer retention strategy.

The relationship between employees and member retention

The experience that gym staff have of the company that they work for, from higher management to the brand itself, has a strong impact on the membership retention rate of that company. Besides your customers, the best advocates for your business are your employees themselves.

It was discovered that leads from employee advocacy are 7 times more likely to close, and customers referred by an employee advocate have a 37% higher retention rate. In addition, brand messages get re-shared 24 times more frequently when shared by an employee as opposed to the brand. This phenomenon is bound to be further magnified as the Internet grows in popularity as a source for recommendations, and more websites like Glassdoor (a website where employees and former employees can anonymously review companies and their management) emerge.

This means that how your employees feel about your brand has an influential impact on how your customers feel about it. Studies have found that studies have found that companies with high employee engagement scores had twice the customer loyalty than companies with average employee engagement levels. It should be no surprise, therefore, that according to a Hay Group study, engaged employees can cause companies to grow revenues twice as much as companies with lower engagement levels.

However, one cannot assume that their employees are reflecting their brand in a positive light. A startling close to 50% of employees in North America are actively discouraging those they communicate with from purchasing from or working for their employer.

Thus, in order to achieve healthy membership retention rates, employees of the company must first be engaged and motivated. Here are some ways that you might go about doing that.

Start a conversation

The most straightforward way to find out what would motivate and encourage your employees is, simply, to just ask them. Never underestimate the power of creating an open channel of communication between employees and managers, particularly in organisations such as gyms, where gym owners and upper management rarely interact with gym staff on a day-to-day basis.

Find out what your employees enjoy most about their jobs, and what they enjoy least. If there are complaints that come up again and again, consider making some organisational changes. This process doesn’t have to be impractical or time-consuming. It could take the form of something as simple as feedback forms for employees to anonymously submit their thoughts about the company. If your employees feel heard, they’re more likely to feel valued by the organisation, which will, in turn, make them feel more connected to the company, and motivated to work hard.

Put down the carrots and sticks

It may seem tempting to ‘incentivise’ greater employee productivity through measures such as forcing employees to work for commission or to ‘incentivise’ better employee-customer engagement by mandating that employees engage with a certain number of customers every work day.

However, such strategies are fundamentally misguided, and will harm, rather than help, employee motivation. Dr. Paul Marciano, a Ph.D. from Yale University, found that the typical reward-and-punishment model is extremely ineffective at motivating employees. Instead, a whole variety of other factors including supportive feedback, respect, and empowerment are much more effective.

So, instead of constructing rigid organisational structures intending to compel employees to be more motivated and provide better customer service, how about investing in them instead? For example, employees of the health and fitness industry like personal trainers and group fitness instructors often have to invest large amounts of money into getting the necessary fitness qualifications to teach and improve in their career. A gym who wishes to invest in their employees could consider starting a ‘talent development fund’ to subsidise some of these training costs. This not only will make staff immediately feel valued, acknowledged, and supported, but will also improve the quality of service that they (and consequently, your gym) can provide to customers.  

Create the right connections

Once you’ve succeeded in winning over your employees, don’t forget to connect them with your clients. 70% of customer perception of a brand is determined by experiences with people. For example, encourage your employees to interact with your clients on social media once they’ve left the gym, or create fun social events in the gym space that are open to both clients and employees. This will not only link up your strongest brand advocates (employees) with your customers, but will also foster a sense of community for both customers and employees alike.  

Conclusion

In this article, we’ve explored the importance of the role that employees play in ensuring high levels of customer satisfaction and customer retention. So, the next time you’re looking for brand ambassadors, don’t forget – they’re right under your nose!