Why your gym is losing members, and what you can do about it
Member retention is one of the biggest drivers of gym profitability. Here is why members leave, and how better facility tracking keeps them coming back.
Why your gym is losing members, and what you can do about it
Gyms operate based on a relatively simple business model. Customers purchase durational memberships (often monthly or yearly), and gyms provide access to facilities that allow their members to live a healthier lifestyle.
The transactional simplicity, however, overlooks the most difficult aspect of successfully managing a training facility. The difficulty lies in getting new members, and more importantly, getting such customers to stay.
Why member retention is so important
Member retention is often cited as one of the most critical drivers of profitability. In fact, increasing member retention rates by merely 5% can boost profits by anywhere between 25 – 95%.1 Focusing on retention allows managers to maximize a customers' LTV (lifetime value), the total gross profit expected to be generated from the relationship with the business. This profit then allows for essential breath in the club's financials, which can be re-invested into other sectors of operations. For instance, most businesses aim for an ideal LTV to CAC (Customer Acquisition Cost) ratio of 3:1, meaning that the value of a customer should be approximately three times as much as the cost to bring them in.2 Applying this ratio, maximizing LTV implies that more funds can also be spent on marketing to bring in new customers.
Besides the direct profitability tied to member retention, losing members has numerous negative implications for a gym's business. Firstly, high levels of attrition implies that customers are dissatisfied; not only does this pose an immediate risk of losing members, it also likely implies that other customers will start to abandon the business for similar reasons if they are not addressed. It is naive to expect unrealistically high levels of membership renewals, as each individual customer has their own personal circumstances. However, ignoring member attrition and the issues potentially tied to it can drive a health club into a nearly unrecoverable downward spiral, suggesting the need for great urgency and attention from managers.
Furthermore, losing a large number of unhappy customers can taint a gym's reputation. Especially in urban areas with a dense population and strong competitors, bad word-of-mouth may go a long way. Though it may seem superficial, even a couple negative reviews on social media or one personal connection criticizing the gym can discourage new members from signing up. Because most gym memberships face relatively elastic demand, keeping customers loyal may be directly correlated to acquiring more of the same.
Improving member retention
Getting valuable customers to stay does face some limitations. It is ultimately inevitable that people will face personal issues that have nothing to do with the business' operations that cause them to cancel their memberships. For instance, the annual failed new years resolutions, people moving locations, or those who are unable to make time in their schedule. Regardless, an average of approximately 34% of gym memberships are cancelled yearly, which cannot just be attributed to failing fitness goals. More common trends in customer depletion is rooted in dissatisfaction. There are a couple key factors that gyms must consistently uphold to maximize their chances in keeping their members.
One important aspect is timing. The first 90 days of a new customer's membership is often seen as the most important time period in creating an impression on the gym.3 Throughout these first three months, members can get a grasp of what facilities are most useful to them, settle into routines based on machine availability, and schedule the times they want to train. A common mistake that gyms make is to focus on getting the customer through the door, but abandon their experience once they have paid for the initial plan. This practically guarantees that member retention will be poor, as customers slowly recognize that they aren't getting the value they paid for.
Gyms must also focus on maintaining their facilities' operational capacity. The two most common complaints among members were overcrowding and equipment unavailability, which essentially boil down to the same issue.4 Members are unhappy when they have to wait long periods to use machines or even worse, are unable to use them at all. In either case, the responsibility thereby lies on gyms to ensure full functionality in their equipment and promptly address breakdowns.
The bigger the fitness club's size, the more daunting member retention can seem. In a standard large-sized commercial gym (20,000+ sq. ft), manually tracking equipment, floor usage, and member traffic requires a heavy load of consistent checkups. This results in a meticulous time-consuming process that also requires significant expertise that most gyms do not staff.
Using OnSight to Improve Member Retention
OnSight offers a unique, simple solution to maintenance and facility tracking for gym owners. Our service combines sensors and utilization analytics, built specifically to help gym owners with floor maintenance, member retention, and extending asset life.
The easily integrable, one-time install sensors allow gym staff to view maintenance schedules, machine usage, and a floor heatmap that offer live analytics at a single glance. No longer do you need to guess when machines will break down, or how many members are using them during peak hours.
The usage data is valuable for gym managers in a multitude of ways. They can help in informing future purchasing and selling decisions, ensuring only the highest usage machines are placed in the facility. Consistent monitoring of machine usage also helps extend asset life, maintaining operational capabilities for more extended periods. Such data also assists in rearranging floor plans to reduce overcrowding and wait lines. In short, OnSight offers a remote, cloud-based solution that assists key decision-making supported by real data, improving membership experience and retention rates.
Check out how OnSight can save costs in real time or book a free demo today to get started on improving your gym for the long-term!