Whether you’re a new fitness club owner or an experienced one looking for ways to reduce membership churn, overhaul their retention strategy, or you’re driving marketing and sales for a fast growing fitness brand, knowing how to keep your members for the long term is one of the most critical strategies you can have. But with so many members coming and going, what’s the most effective way to do this?
There isn’t a single answer that can make or break your retention strategy. More often than not, you’re going to have to implement several different elements to make your retention strategy go as far as it can. And this is going to be the same if you’re a fitness club owner or a marketing director of a large fitness brand. Keeping members engaged and satisfied is key for long-term business success.
Operating a profitable fitness club comes down to building an emotional connection with your customers and ensuring they have everything that they need. And this doesn’t start and finish once they sign up for their membership. Instead, it starts while generating leads, continues through the sales process, and remains ongoing throughout their journey.
The good news is that there are many different things that you can do to increase your member retention and reduce membership churn. Let’s take a closer look at everything you need to know, from what membership churn is and why it matters, to calculating churn rate and tips to help identify and reduce your overall customer churn.
Your members will end up staying longer, be more satisfied, and trust in the services you offer, which will all lead to a successful and profitable business in the long run.
What Is Membership Churn?
Membership churn is the specific percentage of members that leave or are lost during a period of time. Studies have shown that each year, many gyms can lose up to 50% of their overall membership.
That’s a pretty astonishing figure, but it’s in large part due to many businesses not fully understanding how it works or how to address a high churn rate.
You can calculate membership churn by taking a specific amount of time, usually a month or a quarter, and determining how many members were lost compared to the beginning of the period. From here, you can gain insights into some of your strategies that are or aren’t working and make the necessary adjustments moving forward.
Why Does Membership Churn Matter?
A fitness club simply would not be able to see long-term success without having a solid membership base. The majority of revenue will often come from membership dues, so losing more members than you gain each month or year isn’t good for business. It’s one thing to get members through your doors, but how are you going to keep them there?
For example, let’s say that your fitness club currently has 1,000 members. While you’re increasing your membership by roughly 100 members each month, you’re also losing around 120 members per month. This means that your monthly growth is at around -2%. If this pace continued consistently, it would take just over four years to have no members at all.
By being able to recognize the customers who are canceling memberships, you can take the proper steps to try and figure out why they’re leaving in the first place. From here, you can do any number of things to add extra value or address the concerns that they might have.
This can often be as simple as collecting valuable data from them as to why they’re leaving in the first place before they actually cancel. You can have them fill out a form or a survey that asks targeted questions, such as why they’re looking to cancel and if you could do anything to keep them. You can even go as far as offering an incentive to encourage them to stay.
So what are some of the reasons that members choose to leave most fitness clubs? Here are some of the most common:
- They can’t afford the membership fee
- They aren’t motivated enough to continue to come to the gym
- They aren’t seeing the type of progress with their fitness goals that they expected
- They don’t have enough time
- They aren’t motivated
- They don’t receive the right type of training they’re looking for at the gym
Having better membership retention will also lead to an improved rate of growth. It’s no surprise that the more members you have, the more revenue you can generate. This means having more budget for different areas of your fitness club to further contribute to growth. Ultimately, when you fix a bucket that’s leaking, you can keep more water inside.
One of the biggest reasons that understanding membership churn is important is that it costs much more to gain new members than it does to keep existing loyal members. So knowing where your business stands will allow you to make necessary adjustments to keep members for the long term.
How to Calculate Membership Churn
Monitoring and tracking your membership metrics are important to do regularly so you can have a better sense of what might be working and what’s not. And one of the biggest indicators of how healthy your business can be is the membership churn rate. Essentially, the churn rate is the member turnover over a period of time.
All you need to do to calculate membership churn is choose a specific period of time, such as a month, a quarter, or a year. You would then divide the number of lost customers by the total number of customers you had at the start of the period. Finally, you multiply that number by 100 to get the percentage of membership churn.
Here are five steps to follow to calculate the membership churn rate:
- Figure out the appropriate time period, either monthly, quarterly or annually
- Find out the number of customers your gym had at the beginning of the time period
- Find out the number of customers your gym lost by the end of the time period
- Divide the total number of customers that were lost by the number of customers you had at the beginning of the time period
- Multiply the final number you get by 100 to receive the percentage rate
Here is how the calculations would look as part of a formula:
Membership Churn Rate = (Number of Lost Customers / Number of Customers at Start of Time Period) x 100
Let’s take a look at a quick example.
For instance, maybe your fitness club had 400 total members at the start of the last quarter. Throughout that time period, you also lost 40 members. Some of them canceled on their own, some canceled because of poor customer service, and others never renewed their memberships.
To calculate, you would divide the 40 churned customers by the 400 total members you had at the beginning of the time period, which would equal 0.10. Then, multiplying this number by 100 would give you your percentage. This would be 0.10 x 100, which would equal a total churn rate of 10%.
What Is a Good Churn Rate for Your Gym?
When it comes to establishing a good churn rate for your business, there isn’t going to be one number or percentage that is perfect to shoot for. For example, gyms and fitness centers that have very high membership numbers might see a higher churn rate, but still be able to stay profitable. A small gym, on the other hand, can have a smaller churn rate, but still have difficulty staying profitable.
The key is to reduce your membership churn rate to its lowest possible percentage. There are always going to be members that leave regardless of what you do, so having a churn rate of 0% probably isn’t feasible or worth striving for.
But a churn rate that’s 15% or less annually can be a good goal to try and reach. Not only does this ensure you have enough members to continue to stay profitable, but it also allows you to make changes where necessary to add extra value to the existing members you already have.
6 Tips to Help Reduce Customer Churn
You want to do everything you possibly can to keep your members coming back to your fitness club for months and years to come. But where do you start? How do you know what might work and what might not? What are the best and most efficient ways to understand what extra value to offer your members?
Don’t worry, here are six tips that you can use to not only identify possible reasons for customer churn but ways to reduce it. You’ll have a healthier membership base in more ways than one and be able to continue to keep your business profitable.
1. Improve and Streamline Communication
Communication is key, and how are you going to know what your members love and what they don’t if you aren’t engaging with them regularly? Simply getting them through the door and then not continuing communication can be a recipe for disaster.
This can often be as simple as striking up a conversation with a member and having a conversation about what they might like most about the gym, and perhaps what they don’t like. But not all members are eager to share this information in a one-on-one setting, so you can take it further by leaving comment boxes, for example.
That said, it can be important to try and have communication segmented and personalized. Content marketing is a great way to update all your members with new information about the gym or upcoming classes. Other automated tools like text messaging, email, and newsletters are also a great way to keep members informed.
2. Create a Sense of Community and a Welcoming Environment
It can be easy for members, especially new members, to get overwhelmed when first starting their fitness journey. They might be starting for the first time or are self-conscious about working out by themselves. Creating a sense of community and a welcoming environment is critical to reducing membership churn.
You can have specific types of fitness classes, such as for beginners or for experts, and encourage members to get to know each other through fitness-based games. It’s a healthy way to make members feel more comfortable and give a little extra motivation to continue working towards their goals. It’s no surprise that members who have a friend to go to the gym with are 40% less likely to cancel their membership compared to those that go it alone.
Creating a type of loyalty program can also be an effective way to establish a level of community. You can get creative with this, as well. It could be a points system, for example, where members are rewarded for coming in and reaching their goals. Think of it in a similar way to what airlines or hotel chains do for members that continue to be loyal customers.
3. Leverage the Power of Social Media
Almost everyone is on their phone at some point throughout the day, and most of these people are doing some sort of scrolling through social media. Take advantage of this by becoming active on social media. It’s a great way to not only promote your gym to a wide audience but also highlight what sets your gym apart from the competition.
And the possibilities of what you’re able to do are endless. Here are a handful of ideas for how to leverage the power of social media and reduce your membership churn rate.
- Share videos of new equipment to get members excited about coming into the gym
- Show behind the scenes videos of personal trainers and some of the techniques they use
- Hold online contests with prizes and giveaways
- Post fitness classes or workout activities that members can do from home
- Hold live events where members, and non-members, can see what it’s like to come into your gym
Social media is one of the most powerful ways for you to get your gym to stand out from the rest. You can even take it further than simply posting about classes or equipment that you have by sharing other tips and tricks, such as publishing a blog about diet and nutrition.
Basically, the more value that you can offer your members, the better.
4. Offer Rewards and Giveaways
Everyone loves free things, and rewards and giveaways are a great way to help reduce membership churn. Plus, it can be a great way to motivate members to reach certain goals if they know there is something there waiting for them when they get there.
Many members will have fitness goals that they want to reach, so offering up something extra will keep them motivated to keep coming back and reach their ultimate goal.
You can partner with other local businesses to offer new products or services, or offer things like a monthly discount on membership fees or gift cards to a local spa or massage therapist, for example.
There isn’t a limit to what rewards or giveaways you can have since you have the freedom and flexibility to get as creative as you want. But the idea is to entice your members to keep coming back to your gym.
Source: Club Solution Magazine
5. Use the Power of Marketing Automation
Another great way to reduce membership churn is by using the power of marketing automation. There are several online tools that you can use to your advantage, but it’s an excellent way to stay engaged with your members and keep them up to date and interested in your fitness club.
Marketing automation can work effectively in many different ways, as well. For example, it could be by sending emails, text messages, or through another type of channel. And to take it even further you can have multiple strategies for both new members and existing members.
For new members, you can send them a series of personalized emails that welcomes them to the club, explains and highlights important information about the facilities, and encourages them to sign up for newsletters or follow you on social media.
For existing members, you can have a strategy that sends emails or text messages to members on their birthday, monthly or yearly anniversaries, and other things like special events and holidays. You can also offer suggestions for other fitness classes they might benefit from and remind them if their class packs are expiring. The purpose is to keep your members engaged and add an extra layer of personalization that further establishes your gym as a community.
One of the key things to remember with marketing automation is to ensure you’re making members feel comfortable. There’s no need to overload or annoy them with too many reminders. Make it as easy as possible for them to stay engaged and feel at ease with their workout schedules.
6. Provide Exceptional Customer Service
Never underestimate the power of providing a positive experience for your members. Just because you might have the equipment and facilities to get them through the door, making them feel welcome and comfortable on their fitness journey is just as important.
Everything about your gym should be centered around your members, from the facilities to your personal trainers and instructors to the support staff you have on hand. Making sure members can rely on you, ask questions when they need to and have their concerns addressed will contribute to them staying longer. Open channels of communication allows for honest feedback and the ability to listen to customer concerns.
Ask your members for feedback on your staff, the services you offer, and the equipment you provide. When you show them that you care and implement the suggestions they have, they will feel empowered and supported. This starts from the moment they walk through the door and pass the front desk.
The six strategies outlined above are a great place to start to build your retention framework. Use them as a solid starting point and continue to monitor, evaluate, and improve the processes as they move forward. You can even test out certain strategies and tactics to get a better sense as to what might be most effective.
You want to do everything you can to provide your members with as much value as possible to ensure they stay at your fitness club for the long haul, and it’s not something that just happens. Having a solid plan of action to reduce membership churn not only helps your business, but it creates a better environment for your members to keep coming back to.
Having better communication with your members and offering them exceptional customer service will provide a better chance at recognizing any pain points early so you can address them. You can also do a few other things to reduce the membership churn rate.
Be sure to leverage the power of social media if you aren’t already. You can highlight what sets your gym apart, share insights, and keep your members up to date on any important information. You can also offer different rewards and giveaways to add another level of motivation for your members to reach their ultimate fitness goals.
Whatever it is that you do, understanding the membership churn rate, how it works, why it’s important, and how to calculate it will all help you increase member retention. Your fitness club will stay profitable, but most of all you will be able to provide as much value as possible to your members. Having the right retention strategy will give you added peace of mind to grow your business.
If you’re looking to start implementing new strategies to reduce membership churn, Gleantap has everything your fitness and wellness business needs. Marketing automation has never been easier and you can leverage the right tools to make your customer experience more personalized and efficient.