Most industries measure customer loyalty by whether customers are highly likely to repurchase. Lexus has loyal customers, but Lexus car owners are not loyal because they made an initial purchase and drove their cars every day. They are loyal because, given the choice to repurchase the Lexus or another vehicle, they would choose a Lexus. The assumption is that loyal customers will repurchase a business's product or service.
How does that hold up in the fitness industry? Fitness facility members are not repurchasing when they pay their monthly dues. Because most monthly dues are paid by electronic funds transfer, the payment is simply a continuation of an initial purchase. That means that building loyalty in the fitness business is not just about increasing the number of months that the member pays his or her monthly dues.
Consider this: 100 percent of your members are going to stop paying their dues at some point. So the question then becomes whether your cancelled members would repurchase a membership to your club after experiencing your cancellation process or whether they would choose to never come back.
Members may be “raving fans” while they are active. They may love your staff, your services, the condition of your equipment and your facility's cleanliness. In fact, everything about their experience at your club might make them highly likely to refer a friend or colleague to you. But when the time comes for them to cancel, what will they think?
If you have low attrition, say around 25 percent, your customer churn in a four-year period will equal your current membership base. If that base is 4,000 members, then every year you release 1,000 potential returning customers or 1,000 angry detractors into your own pond — even if they were raving fans when they were active.
To successfully re-attract cancelled customers, you need to think in terms of high-value attrition and low-value attrition. Two gyms with identical attrition rates and identical customer satisfaction scores could give birth to very different attrition values. Let's assume these two gyms are in the same market competing for the same customers. Say Gym A has a cancellation process designed to maintain a raving fan even after that member leaves, and Gym B has a cancellation process designed to extract value from the member upon exit. Gym A may be “stocking their pond” for the future while Gym B may be selling its future to Gym A for the small profit former members provided on exit.
Complaints reveal areas of operations that are under our control and are reducing members' likelihood to continue their memberships. Most complaints can be categorized into a few areas: poor equipment condition and selection, lack of cleanliness, poor staff attitude, and poor or broken processes, policies and programs. When members experience these situations, their likelihood to continue their membership decreases.
It is important to note that poor staff attitude often is the fault of a broken process or policy. If the only response your frontline has for a member complaint is, “That's our policy,” the member might report “poor attitude,” when the real issue is the lack of a process for handling complaints well.
Strategies to address constant improvements to these areas will improve the member experience and increase the likelihood that members will continue their memberships. However, this doesn't ensure that members will have a high likelihood to repurchase should they need to cancel. To better empathize with members who wish to discontinue their memberships, review your own frustrating attempts to cancel cell phone service or some Internet services. These processes may have left you grumbling about the company and saying that you would never do business with them again.
If you had a cancellation process designed to delight exiting members and ensure that they would be highly likely to repurchase from you, what would it look like?
Our industry needs to broaden its thinking about our customers like other industries do. We need to make it a high priority to increase former customers' likelihood to repurchase. In other words, we might define customers as those who currently pay us and those who are on temporary hiatus.
Blair McHaney is CEO of Confluence Fitness Partners Inc., which does business as Gold's Gym of the Wenatchee Valley in Wenatchee, WA. He also is president of the Gold's Gym Franchisee Association.