Health Club Member Retention
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.
Fitness Marketing Group
has helped its clients successfully increase retention for years. We will teach you the low and no cost methods to keeping you members satisfied and paying you longer.