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How to Forecast Gym Membership Retention

By Tracey Heinz

According to a study by the Harvard Business Review, acquiring new customers is five times more costly than retaining current customers. A separate study by Bain & Company predicts that a five percent increase in customer retention can lead to a 25 percent increase in profit. Member retention is key to the success of your gym business.

Understanding how your retention rate is going to look in the future is exceptionally important. In fact, you should be dedicating a significant portion of your time to understanding, measuring and improving your membership retention rate. Here’s how:

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Speak to members to help forecast gym membership retention

Let’s start with the easiest, but possibly most productive approach for forecasting gym membership retention. You may think you’re an expert on what your members want, but the only true expert on this topic is your members themselves.

We’re not suggesting you interrupt your members while they’re training - that’d be a great way to decrease membership retention. But, if you do get the chance to chat to your members, this time is as good as any to glean some essential insights. Try to find out:

  • How they’re finding the service and the facilities
  • The areas which they’d like to see improvements
  • If there’s anything they’d change if they were running the gym
  • Whether they plan to renew their membership when the time comes

That last question might seem a touch simplistic, but it’s an important one. Yes, some members won’t want to tell you to your face they’re planning on not renewing, but some will and they’ll tell you why.

The information you gather here will be highly qualitative and in no way representative of your membership base as a whole. So you should also look into conducting some internal research too.

Gym management software is a great tool for doing this.

Set up an email campaign directing people to a simple survey where they can take five minutes out of their day to give feedback. But remember, you’ll need to offer an incentive for your members to complete the survey. Common incentives include:

  • Cash prizes, gift cards or vouchers
  • Free classes
  • Free equipment
  • Free or upgraded benefits
  • Free membership (for a month, six months, or a year, depending on your budget)
  • Holidays or trips away

In order to claim their prize, your members will need to enter an email address and/or name. This is useful for another reason too. It enables you to track the responses to each member. So if you can collate all the responses, and use the data gathered in your gym management software, you’ll be able to pull out some trends.

For example, you might notice that members who’ve been with you longer are more likely to renew. While newer members may still be searching for the right gym in which to hit their goals. Men may be less satisfied than women. Over-45s may be more satisfied than under-25s. Use the data you have to explore renewal intention trends among your membership base to create a clear picture of what you’re doing well and where you need to improve.

Monitor seasonal industry trends

This is another fairly simple approach to forecasting gym membership retention rates. Any gym industry professional knows that gym membership sign ups peak in January.

This data from Google Trends demonstrates quite clearly how interest in ‘gyms’ peaks each January, as non-members look to commit to positive changes for the year ahead.

Monitor seasonal industry trends.png

But there is another side to this coin. More than one in ten gym memberships are taken out in January. Given that gym memberships are typically for 12 months, a significant number of cancellations will also happen in January.

Other industry-wide sign-up and retention trends include:

  • People signing up in Spring to get in shape for their summer holiday
  • Businesses offering membership discounts to their staff, which drive peaks in sign ups. This often happens at the start of the financial year as businesses organise employee benefit budgets.
  • Budget and pay-as-you-go gyms opening up in record numbers, making the financial risk of gym membership lower, increasing demand.

Track internal and local trends

As well as industry-wide trends, you will have your own trends to measure. This is another instance where gym management software can be extremely useful.

Internal trends at a particular gym may include:

  • Increased demand due to renovation or new equipment
  • Increased demand as new trainers or staff members bring existing clients with them
  • Decreased demand due to environmental factors. For example, roadworks close to your gym can put people off joining as well as make existing members think twice about renewing
  • Operations of businesses nearby. If a business has been recruiting heavily, you may notice an increase in demand. This can also lead to an increase in cancellations, as your gym gets busier
  • Similarly, businesses relocating away from your local area may cause a drop in demand and retention

Keep track of membership behaviour and activity

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Your gym management software will again be of use for this task. It’s important to track your membership activity all year round, however, when forecasting retention rates, it’s useful to take a look over the past 12-month period to identify trends.

They’ll generally fall into two categories:

Unavoidable causes of gym membership non-retention

  • Member moves away from the local area
  • Member is sick or seriously injured
  • Member loses job and can’t afford gym membership
  • Member becomes a full-time carer for a sick relative

Avoidable causes of gym membership non-retention

  • Member is tempted by an offer from another gym
  • Member isn’t seeing the desired results
  • Member is bored
  • Member is demoralised or doesn't feel welcome
  • Member feels that he or she is paying too much
  • Member has grievances with how your gym is being run

When a member doesn’t renew their membership at your gym, it’s reasonable to ask them why. They’re entitled to decline your question, but many members will give you some valuable feedback.

You shouldn’t waste valuable time and resource trying to retain members who are not renewing for unavoidable reasons. You should focus on addressing the issue of avoidable non-retention.

Ideally, you’ll be gathering this sort of intelligence during the membership life cycle, from feedback and evaluation exercises (if not, why not?).

Additionally, there are a few signs that your members may not renew their membership that you can detect without talking to them. If you detect these early enough, you may be able to intervene and retain their custom. They include:

  • They’ve stopped attending - often this happens as members seek to run-down their membership - catch this in good time and you may be able to tempt them to stay
  • Attending less frequently - this may be the final sign before a member quits
  • Attending sporadically - lack of routine can be a precursor to a decline in attendance
  • Attending for shorter periods - a sign that your member may be demoralised or struggling to hit their goals.
  • A change in attendance or usage patterns - for example, your member may have quit some classes or isn’t using all the facilities they used to use
  • Member isn’t reading or opening communications from you - you’ll be able to see this using your gym management software

Forecasting gym membership retention enables you to plan your budgets, dedicate marketing resource accordingly, and, most importantly of all, anticipate any membership lapses before they happen.

The trick is to monitor activity and take stock of what is going on in the world around you. That could be a new gym opening that tempts away your members, or a new trainer joining your team who helps members hit their goals, stopping those who may have lapsed from doing so.

Always keep an eye on these trends and have policies and systems for tackling them.

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Tags: Gyms & Clubs

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