Will Phillips, founder of REX Roundtables for Executives, manages 15 Club Roundtables for owners in the United States, Canada, Australia and New Zealand. He has consulted CEOs in 34 industries and nine countries in the last 30 years. You can reach him at Will@REXonline.org.
In the health club industry, a high retention is a must. Unfortunately, there’s a lot of misinformation out there about retention. Here are five important tips for improving your retention and separating the soft data from the cold hard facts:
1. Select your members wisely. Select the right people, and retention goes up. Select the wrong ones, and retention goes down. Several clubs report that their lowest rates of member retention come from memberships sold by their best salespeople. The best salespeople have the skill to sell to those people who are not really committed, and many owners intuitively sense that January joiners are not long-timers. Focus your sales efforts on new members who are likely to stick around.
2. Question why early users stay longer. Soft data shows that those who use the club more often in the first eight weeks of their membership stay longer. Therefore, many clubs believe that if they increase early usage with a strong orientation program, the member will stay longer. However, no hard research supports this method. All the work that several clubs and some chains have done in improving new member orientation has had only miniscule impact on retention. Instead of a club affecting retention, it’s more likely that a committed exerciser uses the club more in the first eight weeks and stays longer because of their own drive, not because of your attempts to get them in the facility.
This fallacious thinking points out the softness of most of our research in this industry: Correlation is not causation. Remember the research that showed that taller kids in middle school wore longer pants? Very true, but it does not mean that if you want your child to grow, you should buy him longer pants.
3. Guarantee results. “Getting results” is a phrase often found in sales presentations, yet I only know of two clubs in the world that take it seriously and guarantee all of a member’s money back if he or she does not achieve results. The data is not yet in, but retention might improve if you took yourself seriously and guaranteed results.
4. Invest in relationships. It is well documented that loyalty is based on emotion. We see this mostly in personal training and group exercise. Personal trainers who earn near or above six figures have all mastered the ability to engage and connect with their clients on an emotional level. Unfortunately, we have little hard data on the relationship between personal training and retention.
It’s a different story for group ex. The data on group ex shows that fitness-only members stay for an average of 27 months while members who attend group ex stay for 48 months -- an amazing increase in retention. I believe this is due to two factors: 1) group ex instructors’ outgoing personalities help them connect with members, and 2) the design of good group ex connects members to members. When regular group ex members do not show for class, they probably each have three members who will call them to see where they are. Moving your group ex participation of daily visitors from 25 percent to 70 percent doubles your net profit. To drive retention, invest in a professional group ex program and recruit group ex members. The hard data shows that it works.
5. Use contracts. Several clubs and some chains have compared the impact of contracts for one to two years versus month-to-month memberships. The result? The vast majority of members live up to the contracts they sign.
Some interesting and solid multi-year research has shown that when a prospect is offered a month-to-month contract or an annual contract (with no economic incentives to take one or the other), 90 percent choose the 12-month contract. Also, the retention of those who choose a 12-month contract is significantly higher (double digits) than those who choose a month-to-month contract or those who choose an annual contract with an economic incentive. This opens a powerful possibility that the prospect -- who is at the highest level of commitment when sitting across from a salesperson -- will choose a long-term contract and emotionally make a deeper commitment when it is not influenced by money.
When it comes to retention, build your numbers based on the hard data. Select members well, engage members with each other and with staff, build a professional group ex program, use contracts without financial incentives and consider taking your promise of results seriously.However, remember that to have good retention, you must have the basics. If your facility is outdated and you don’t invest in promotion, or if your location is poor and your parking is limited, good retention may not matter.