Retention...We know it's important but how do we measure it?

Most clubs will agree that it’s much easier to keep an existing member than it is to find a new one.  Most clubs will also agree that a good way to know whether you are keeping the members you have is by measuring retention. Surprisingly however, in my experience most clubs aren’t measuring retention.

It’s understandable. Most of us didn’t get into the fitness industry to work with maths and statistics. But retention is a valuable tool to use in understanding your business and ensuring long-term success. In this article, we’ll discuss how to measure your member retention and how to use the measurement regularly to make sure you’re on track with your business goals.

First lets agree on what retention actually means: retention of members at your fitness club refers to how many members remain members after their minimum contract period expires.

 How to calculate year on year retention:

How many members did you have in January (or choose your month) last year?

How many of those same members are still with you in January this year?

Take the second number, divide it by the first and voila! Your retention percentage.

Example

In January 2008 my club had 1800 members. In January 2009, 1343 of those same members are still members at my club.

So, I take how many members are still with me (1343) and divide that by how many members I had 12 months ago (1800) and the answer is my retention percentage:

1343 / 1800 = 74.6%

This sort of measurement will give you an indication of whether your member retention services and programmes are working. Track this each month and you’ll be able to start to see patterns over the seasons. What time of year do your most loyal members join? Are your new retention programmes effective?

Of course, waiting 12 months to find out what your member retention looks like is a bit risky. You would want to know how well you’re doing during those 12 months. Ensuring your members are attending will have a huge impact on whether your members decide to stay once their membership is up for renewal.

One way of measuring how well your member retention programmes are working is to track the attendance levels of your members from month to month. You can also do this when you change your membership retention programme to track how well the new programme works in comparison to the old one.

For example, let’s say that you design and implement a new member retention strategy with increased staff and member interaction that starts on February 1^st 2010. You might have outlined the number of contacts a new member has with a fitness instructor over their first few weeks, and then over the following months. For tracking, you might also have defined an active member as a member who attends 2 or more times each month.

 If you tracked each members attendance who started on that new retention programme each month vs. the members attendance who joined in the previous month on the ‘old’ retention programme, you would get an idea as to how well your new programme is working.

Example

January 2010 – 40 new members joined and started on our old member retention programme

February 2010 – 45 new members joined and started on our new member retention programme

Over the months, you would track the number of active members to get an indication of whether your new member retention programme is working:

From the example above, we can see that our new member retention programme has been a raging success. After 6 months at our gym on the old programme 65% of our January members are still attending the gym. After 6 months at our gym on the new programme 73% of our members are still attending the gym. We can assume from these outcomes that our new member retention programme, which is showing a higher number of active members at 6 months, will also result in higher retention of the same members at 12 months.

Retention and attendance can also be used in measuring the service delivered by fitness instructors and business planning for new member sales in the future.

For example, if we have two fitness instructors who are both assigned 20 members to look after in January 2009 we can track their success in retaining those members over the following 6 months.

If Bob and Jane are both using the same member retention programme, it’s clear from the comparison above that Jane is producing a better result.  Your job as a manager is to work to understand what Jane is doing to produce such good results, and what Bob is doing that is resulting in less than ideal results.

Jane is obviously good for your business, so perhaps it’s worth including a performance bonus for fitness instructors who help retain your members.

If you think that measuring retention would help your business and you’re not sure where to start, why not give us a call? We’re always interested in meeting fitness professionals and helping them get better at what they do.