Health Club Member Retention

Health Club Member Retention Retaining_Members 2

Keeping your current members happy is seven times more important than spending time and money attracting new members. That’s right. It costs 7 times more to attract a new member than it does to keep an existing member happy.
In the quest for new members, too many health club owners overlook the importance of keeping existing members involved and satisfied. This group is your cash cow! They have already proven that they are willing to spend money on your services. Keep them involved, keep them spending money, and keep them happy. It is seven times more expensive to attract a new member than it is to simply hang onto an existing member. Plus, happy members refer new members to your club…at no cost to you!

Don’t be of the mindset that once you have a person under contract, you don’t have to pay attention to them anymore. Paying attention to your existing members is essential to the growth and longevity of your fitness business. The key is to turn your existing members into raving fans of your health club.

Retention is arguably the most important factor to long term success in your health club. However, before we can discuss how to improve it, we have to identify exactly what it is and how to measure it. Contrary to popular belief, retention in our industry is not measured by the amount of new members vs. the amount of lost members, it is measured by how long a member pays you before he or she eventually cancels their memberships.

Take a look around your facility; chances are that the people who you see are not the same faces from five or even two years ago. Health clubs are constantly turning over their membership base and that is why getting your members to stay and pay you longer is critical. A simple thank you card or birthday card can make all the difference. Say hello, say goodbye, take time to learn their name, become friends with your members, keep the gym clean, manage by walking around, and making your fitness center a fun place to be will all go a long way in retaining members.

Take the time to appreciate your members and show them you care. Increasing your average retention rate by only one month can add tens of thousands of dollars to your bottom line and it costs almost nothing to do it.
Stop focusing on how many memberships you need to sell and start focusing on how many existing members you need to keep

New memberships will build your fitness business, but keeping your members longer will make your fitness business last. The more emphasis you can place on keeping members happy, the more stable your health club will become. It will make you less vulnerable to economic changes and new or existing competition.

Unfortunately our industry is struggling to come to terms with the fact the retention is the most important contributing factor to a successful health club. The majority of health clubs in the United States maintain only around 20-30% of their members from one year to the next.

However, retention is not about how many people join verses how many people leave. It’s about how long people stay before they cancel. At a typical health club, members are good for approximately 8 monthly payments, regardless of the length of term membership they have. Increasing the average length of stay of each member at your club is what will lead to long term profit. Here’s an example:
500 members x $30/ month = $15,000 EFT
x Average length of stay = 8 months
$120,000 per year EFT

If we assume that eventually 80% of these 500 members will cancel for one reason or another, these members will effectively be worth only $24,000 after 8 months. You will have to replace 400 memberships every 8 months to maintain profit. That is an average new member volume of 50 memberships per month just to maintain revenue. To increase revenue you’ll need more than that.

However if you increase retention with some very simple systems, we can augment these numbers very easily. Let’s say you implement retention systems that get your members to stay, on average, two additional months:
500 members x $30/month = $15,000 EFT
x Average length of stay = 10 months
$ 150,000 per year EFT

Now we can still assume that 80% of these memberships will eventually cancel. However, we have decreased the stress on new membership sign ups and added profit to our bottom line. With the exact same 500 members you have extracted $30,000 more in revenue. Furthermore, since the average length of stay has increased you have to sign up fewer new memberships to maintain revenue. Instead of 400 new members every 8 months you need 400 new members every 10 months. A net reduction in new membership needs of 10 memberships per month.

This also allows you to build your revenue faster because you have a larger margin of error between new member requirements and breakeven. But if you REALLY focus on retention, and increase the number of months members are staying by four or six months, you can really begin seeing the power of retention.

Retaining_Members

Tips to help retain gym members

Many health club owners think that simply getting members is the most important money than can spend when it comes to marketing.

But did you know that you can make up to 500% more money by simply focusing on retaining the members you already have and trying to upsell them on the various products or services you carry?

If not, you’re in for a huge income boost when you focus on retaining and upselling members instead of only trying to obtain new members.

So here are my top 5 tips you can use to retain more members immediately:

1. Treat Them Like Gold – If your in-laws decided to become part of your health club, do you think you’d make sure your employees treated them absolutely perfectly? I bet you would, but if so, why aren’t you doing this for EVERY member you have? Hold a very high standard for the way your staff treats your members and it will do wonders for your business.

2. Be Exclusive – If you offer something that your competitors don’t, your members will be more likely to stick with you. If you were given the choice between 2 products, but one product had some kind of interesting gadget that you loved, wouldn’t you pick the one with the extra gadget?

3. Keep Them Excited – You should be constantly thinking of new products and services to come out with. Not only will you have more to offer your current members, but by telling them a few months in advance what is coming (but “teasing” them and not telling them exactly what it is) – it will keep them there longer because of the anticipation!

4. Frequent Flyer Miles – How do airlines and/or credit cards keep you going back to their business over and over again instead of switching to other companies? They give you incentives for using their services. Think of a few different offers or discounts your members will receive after sticking with you for a certain number of months, and many will stick with you just to get the bonus!

5. Re-Capturing Members – If for some reason you do lose a member (for whatever reason), send them a series of postcards, about a week or so apart, asking them to come back. And, of course, give them an incentive for coming back. Tell them that if they call you and let you know why the left, you’d be willing to offer them a special offer – only for them – if they come back. And of course, promise to fix whatever problem made them leave.

Retaining your members and upselling them is incredibly profitable and much more profitable than simply trying to continually find new members. By doing these 5 steps I just laid out for you, your business can easily double its revenues in the next 12 months – so get busy!

By Brian Cannone

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