Lately, I have been reading article after article, column after column, and seeing advertisements for system after system — each of them about the subject of member retention. It seems as though we can't get our fill of retention in this industry these days.
I'd like to set the record straight, at least from my point of view, that retention is not the be-all or end-all answer to the woes plaguing health clubs today. After all, I may have delivered the first retention seminar way back in the 1980s. So this is certainly not a new subject.
Al and Laura Ries in their brilliant book “The Origin of Brands” (Harper Collins Publishers, 2004) state that “…a company that devotes all its efforts to ‘satisfying its customers’ is a company headed for trouble.” They contend that a company should create marketing opportunities for introducing new categories and further assert that “…almost any company in any industry could be stronger and financially healthier by selling…or discontinuing some of its operations.”
This certainly flies in the face of the current rationale in many sectors of the health club industry, but I believe it is sound business advice. As I look back over the modern era of the health club business, while I see some evidence for facilities doing the best they can to take care of members, I do not believe that most clubs benefit greatly from all-out membership retention efforts or from the adoption of sophisticated retention systems. I think this opinion is borne out by the fact that, despite our best intentions to hold onto members, we have not significantly impacted a 40 percent attrition ratio that has basically stood for nearly 15 years.
We should have learned two critical lessons in the past decade:
People are fickle; most people don't like to exercise; and the majority of people are not highly self-motivated — no matter what we do to try to change that.
It is extremely challenging to turn non-users into users. Thus, it is hard once they are out of the loop to get them back into the loop. It necessitates behavioral change of the highest order, and I do not see many behaviorists at the helm of health clubs.
Let's take a little time trip to study the core of the retention phenomenon. In our initial stages, way back in the 1970s and 1980s, it was easy to see that we had a whole bunch of “early adopters” who flocked into health clubs as new members. As the industry grew into the 1990s, it became clear that we were no longer attracting only early adopters (we called them “gym rats”), but that we had already shifted into the “early majority” stage of product development — that point on the bell curve where you are beginning to approach the top of the curve (we called this the introduction of the “deconditioned market” into our membership).
We have been riding that crest for about a dozen years, and, in my opinion, we have gone over the top of the curve and are now sliding down the other side as we have entered the “late majority” phase of customer attraction. The market segments that remain to be tapped, though timing is challenging to ascertain, are the dregs of the late majority group and then the laggards.
Statistically, though others will say different, we have sold more than half of the member-eligible markets, and we have done a poor job of keeping them in the game. We now realize, as the industry grows in numbers and types of facilities, that we do not have nearly the remaining prospect market that we thought we had. So, we suddenly pay big-time heed to retention — possibly too much, too late. (I believe this factor has given rise to the “Curves phenomenon” and to the introduction of the LPQ clubs [low price quality] — but that is subject matter for a future column.)
It seems to me as though our industry suffers from what I'll call “elementary confusion.” The magazines and trades and many consultants now say we have to take care of those we have already sold and/or that we have to get them back. That's like saying we ought to put a sprinkler system in the barn while the barn is better than half-burned-down and the stock is all out.
Seth Godin says it eloquently and simply in his little gem “Purple Cow,” a must-read book for anyone intent on learning modern marketing. He says, “…it [used to be] up to the marketers to decide who would pay attention and when. Today, it's the consumers who choose.” He advises that “…you must develop products, services and techniques that the market will actually seek out.”
I think it is high time we paid less attention to retention and focused more on the new customer's experience at the same that we build viable alternative products (non-membership memberships and short-term program offerings as examples) to better appeal to a more savvy marketplace. I believe the day of re-marketing what we already marketed and delivered poorly is past.
Michael Scott Scudder is a 30-year veteran of the fitness industry. He is a personal business trainer operating Fitness Focus, a consulting company that offers private workshops on pertinent fitness business matters. Questions and comments are welcomed by Michael at 505-690-5974 or firstname.lastname@example.org.