Doing Well By Doing Good
Membership retention is the one weightiest factor in running your business, after winning initial sign-ups. I’ve been reminded of this because, according to the author of the book Blue Zones, Dan Buettner, almost all of your members will drop out within three years of first signing up. This is your recidivism rate. Improving and extending these numbers will reduce the turnover rate at your gym.
The Importance Of Membership Retention
Your revenue is going to benefit from marginally extending the averages on your memberships. Revenue comes from your subscriptions and if you are doing the sort of memberships that are popular these days that means that the majority of your income arrives in equal lumps from each member, each month. So if the average membership length is twelve months and you extend that by one month to thirteen then you have increased your per-member lifetime revenue by 8⅓%.
The cost of adding memberships are more front-loaded, as the cost of finding new members and getting them on board, with a minimal cost on a monthly basis. Basically this means that your fixed costs are a bigger part of your budget than your variable costs. The basic point here is that when members stick around longer your revenue goes up and at the same time it takes less to keep your gym at full occupancy.
Blue Zone Spoiler Alert
The concept of Blue Zones asks the question of what helps people live the longest and most productive lives. In the book the author asks what is the cause of longevity and answers that it is habits. Researchers discovered that people who live in certain specific regions of the world have exceptionally long life spans. They also found that the common factors included cultures that support moderate exercise and simple fresh diets and a sense of purpose in life.
The key feature turns out to be the culture and community to which people belong that ensures that the habits are followed. So, I don’t think that it’s too big a leap to say that, as gym trainers and employees and owners, we are doing good work by creating a supporting environment and encouraging people to be fit.
Tools For Cleanliness Community And Hope
There are a few things that you can do to help improve your recidivism rate and reduce your membership turnover:
- Live your values
- Be aware of best practices in your marketplace
- Be approachable and responsive
I do believe that it all comes back to the values that make a successful fitness related enterprise. The habits that support longevity reminds me an awful lot of the values that are at the core of any fitness related business. By living those values more closely I think that you can improve your membership retention rates. Be prepared for the “grass is greener” argument by being knowledgeable about the alternative offerings in your marketplace.
Finally, be approachable and responsive toward both your staff and to your members. If you have good communication channels you will be able to respond to challenges and get more chances to fix problems when people are comfortable bringing them to you.
The Insight Membership Retention Tool
The member retention tool in the Gym Insight management software is a part of our system so that you can know when members are at risk of quitting or it is nearing renewal time. Keeping the members that you have is so much easier than trying to find new ones. It’s also good for people when you keep them involved and active. It may help your business numbers but if you can do a good thing like adding 8⅓% to the length and productivity of peoples’ lives then you are helping everyone, are you not?
Membership Longevity Contributes To Actual Longevity
The result is that you have more members over which to spread your costs, i.e., lower overheads per member and more total revenue per member. The social benefits are even greater; by aspiring to the highest level you will create a feedback loop that keeps your gym full and creates health in the community.
When you use Gym Insight to monitor potential cancellations and respond to turnover, you have a control panel that helps you help others and keep your business doing well by doing good for everyone.
Buettner, Dan. The Blue Zones: Lessons for Living Longer From the People Who’ve Lived the Longest. Washington, D.C.: National Geographic Society, 2008.
—. The World We Build – Dan Buettner Zeitgeist Americas 2012. ZeitgeistMinds. http://youtu.be/m8Oq0nVQI1s?t=8m10s .
Contributors, Wikipedia. Hawthorne Effect. June 4, 2014. http://en.wikipedia.org/w/index.php?title=Hawthorne_effect&oldid=611593650 (accessed July 7, 2014).
Fagan, Lawrence. The Insight Retention Tool. http://gyminsight.com/members.html#retention .
—. The Value of Clean Working. January 9, 2014. https://blog.gyminsight.com/2014/01/the-value-of-clean-working/ (accessed June 19, 2014).
Singer, Natasha. “Your Recycled Resolutions Are a Boon for Business.” New York Times (The New York Times Company), December 2011.