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Research Survey Results: Do you have the same goals as other operators?

The Retention People are pleased to release the findings of a research study, conducted in conjunction with LeisureNet into the main aims and focus of operators for the next 3 years. The survey was sent to 5000 operators.

Click here to see the results.

TRP expands into 3 divisions and launches new websites

After receiving the results of the above study, we have made a number of investments and changes in our business resulting in the creation of 3 divisions of TRP – Software, Training and Consultancy. We hope that the clear categorisation of our services and the diversification of our product range into lower cost solutions will enable more operators to benefit from our knowledge and experience in this field, whatever their current position in developing a member experience strategy.

Click to see our new websites:
Main Corporate Website – details of our Training and Consultancy, including Free Education and Research
TRP Interact – Software to manage Interactions with Members – from Email to face to face contact
TRP GroupX – Software to manage Group Exercise delivery and facilitate Reporting
TRP Fitness – Software to manage Fitness Programming and Goal Setting

In this article we look at what are predicted to be the top retention trends in the coming year. If you need help or advice on how to start implementing these trends or would like to talk to operators who are already doing some or all of the strategies below please contact us.

1. Measuring retention accurately and benchmarking

As the economic climate took its inevitable toll on membership cancellations last year, many operators began to focus more feverishly on retention. This starts with measuring it properly. Purely looking at cancellation numbers and percentages will offer little comfort when trying to establish strategies to prevent them. In 2010 measuring the ‘membership life’, or more specifically, the ‘median length of stay’ of your member base will become much more popular. This measure will help operators to determine how they compare with their competition and, more importantly, what action to take to improve performance.

2. Targeting ‘high yield’ customers

Operators who measure retention using ‘length of stay’ are ahead of the game as they are able to analyse key member characteristics in their data, to identify which types of members stay the longest. This year there will be an increasing trend towards understanding the ‘lifetime value’ of the member base, that is, which members stay longest and pay more over the course of their membership life. These are the ‘high yield’ customers. Knowing which members produce the highest yield will influence marketing and sales trends, leading to operators gaining a much higher return on marketing investment for every member who joins.

3. Inductions

For the last few years many operators have been implementing some form of induction process, but the big trend in 2010 is towards clearly understanding if the process is working and how / what to do to improve it. A member’s experience in the early weeks of membership is key in determining whether they are retained in the long term. As sales pressure has increased over the past year, sharp operators have begun to turn their focus to not just creating a ‘member journey’ but measuring it and managing it effectively.

4. High Risk Customers

In the last year many of the major operators have conducted studies and analysis into ‘high risk’ customers, i.e. those customers most likely to cancel at a given point in time. This trend and increased investment is set to continue in 2010. It’s demonstrative of the simple acknowledgement that when it comes to retention, prevention is far better than cure. Just as operators want to understand our ‘high yield’ members so they can attract more of them, many of the major players are identifying existing members who are at risk of leaving so that we have time to intervene before they make the decision to leave.

5. The changing role of the ‘Fitness Instructor’

Although research has shown for some time that interacting with your members on the gym floor will encourage them to stay longer, many operators are now going one step further in ensuring that any interventions are ‘quality controlled’. This recognition that staff are at the heart of membership retention has seen new methods of staff management being developed, including new tools and processes to asses the impact that staff have on member motivation and ultimately membership life. Incentive schemes are also beginning to be introduced, rewarding staff for their skills and contribution towards improving visit frequency of members and hence retention.

The world’s largest health club operator, Fitness First, has launched a new customer service process in its UK clubs to assist with member retention and offer added support, with plans to roll it out worldwide.

‘Star Guest is a unique process, developed by The Retention People, which prompts staff if a member’s attendance starts to decline and provides simple information on the member’s history and their reasons for joining. This prompts staff to further engage with the member to better understand and help to reinvigorate their enthusiasm for exercise.

Global member experience director Rob Gregory said: “Fitness First knows that it’s motivation that gets you to the gym to start with, but habit that keeps you attending regularly. We understand how difficult this can be which is why ‘Star Guest’ prompts staff members to intervene and provide renewed support and motivation to members and give them the kick start they need.

“Interacting and supporting our members is paramount to the Fitness First ethos and ensures a good experience for members in each of our clubs.”

The system’s great user interface, simple interaction process and unique reporting capabilities proved a winning formula for the group which has over 540 clubs worldwide. It boasts powerful reporting functions, enabling all management to see which staff members are being most effective and what impact they are having on increasing member attendance.

“For the first time we can monitor how staff are adding value to the member experience,” added Mr Gregory.

The process was the brain child of 27 year old entrepreneur Alister Rollins of The Retention People which provides the system to Fitness First and following a two year trial of the software, the system has now been implemented across all 161 clubs in the UK.

Mr Rollins commented: “We are delighted to be working with Fitness First and assist in one of the most fundamental aspects of running its clubs. Its commitment to member retention and experience is outstanding and ‘Star Guest’ can only help with producing visible results for the group.

“We are continuing to work closely with Fitness First to develop the solution to meet specific requirements worldwide including different languages to implement the system in all of Fitness First’s global markets.”

Notes to editors

Fitness First is the largest privately owned health club group in the world with over 540 Fitness First clubs worldwide reaching over 1.4 million members in 19 countries. In the UK alone there are 164 Fitness First clubs with over 425,000 members.

Fitness First is a member of the Fitness Industry Association (F.I.A), the industry trade body which represents both private and public organisations that are involved in the fitness industry, visit www.fia.org.uk.

Fitness First was awarded Club Operator of the Year in the Fitness Industry Association’s 2009 FLAME Awards.

The Retention People (TRP) are the worlds largest researchers of health club member loyalty and the leading supplier of Leisure Industry customer retention solutions with offices in UK, US and Australia.

TRP Induct is The Retention People’s recommended induction process and the only one independently proven to increase retention. The package of training and consultancy focuses on member behavioural change and is delivered by Dr Paul Bedford, one of the industry’s foremost experts in retention. The Dome are the first site to implement TRP Induct in conjunction with TRP Process, The Retention People’s new software module which can be adapted to track and manage any process from induction processes to GP referrals.

The combination has already made an impact at the Dome. Kraig Kelly, Operations Manager comments,

How do you get 300% interest on your investment in 9 months?

By investing in Retention.

An independent study by Dr Melvyn Hillsdon concluded a Health Club owner is £24,000 better off in just 9 months because of The Retention People, representing a 300% return on investment.

Mike Hills [left], TRP Account Manager, hands Simon Cranston, VVV Managing Director a cheque representing the £24,000 Return on Investment

VVV Health and Leisure has been working with The Retention People’s software, training and ongoing services for 9 months.

says VVV’s Managing Director, Simon Cranston. “I don’t see how any club can… [read more click here]

Introducing TRP Targets

TRP Targets is the latest product release by The Retention People and provides operators with powerful information on staff performance at individual, team and site level. The system allows targets to be set for staff to ensure the quantity of interactions with ‘high risk’ members are at the necessary level required to improve retention.

Whether you are a manager of a single site or a multi-site chain, TRP Targets will enable key performance indicators to be monitored in real-time from any location. With results displayed in a ‘dashboard’ view, you can make quick decisions about motivating and incentivising staff to improve performance, and identify staff training and resource planning requirements for the future.

Dr Melvyn Hillsdon – Author of FIA’s Winning The Retention Battle series of reports. Melvyn is at the forefront of research in this field, he is a highly respected academic and sought after advisor in public health.

Q1. Are female members more likely to cancel earlier than male members?
There is no evidence to date that retention rates vary according to gender.

Q2. I want to monitor my staff based on retention of their members. Is it fair to simply do this by assigning them members (randomly) to look after and measure how many cancel each month?
Assuming that they all work a variety of shifts then it is possible to do this fairly. However, quite often staff work fixed shift patterns meaning that some may work more lates / earlies etc. This may introduce some bias and make it less equitable.

The number quitting is probably the wrong measure as it is not entirely under the control of the fitness staff. It would be better to monitor the things that they can control and that are related to the risk of quitting. In other words, they should be monitored according to the proportion of their members that they speak to per visit. We know that the frequency with which they talk to members reduces the risk of quitting, yet a high proportion of members don’t get spoken to when they are working out. It is possible to set this as a fitness team task rather than individual staff. You will need a systematic way of recording this activity and a means of reporting fitness staff-member interactions as a % of visits.

Q3. The business model of a health clubs seems to be broken! We know, to retain members they need support and service from my staff, but in order to compete on price I have to keep my running costs low in order to be profitabe. Inevitability that means less staff resulting in not enough staff time to support all members, poor retention and zero or negative growth in net membership. What is your view on a solution to this?
In part, you answer your own question. Zero or negative growth in membership cannot be profitable in the long run. If the membership yield is high per member, then fewer members are required to make the same amount of money.

In any club there is usually capacity within the existing staffing levels to increase staff-member interactions. However, if resources are low then your efforts should targeted at those most at risk from quitting, namely those making irregular visits to the club (less than once per week) and those in the first 12 weeks of membership.

Socialising new members into the club as soon as possible seems to be strongly related to their risk of quitting up to one year later. You should try to ensure that as many new members as possible make at least 4 visits to the club in the first month and are interacted with by staff on each visit.

Dr Melvyn Hillsdon – Author of FIA’s Winning The Retention Battle series of reports. Melvyn is at the forefront of research in this field, he is a highly respected academic and sought after advisor in public health.

Q1. As long as my member base is still growing why do I need to look at retention?
If retention is 100% (no one leaves) then achieving growth is simple as every sale adds the total number of members. However, achieving sales in a climate of high attrition puts significant pressure on sales teams just to stop the membership base from falling. Of course a higher attrition rate requires greater sales, which requires more sales people and therefore higher overheads. This high churn model is not as cost effective as a low churn model. It is also possible to calculate the average membership yield per member. Growth with high attrition is also likely to mean that the membership income per member is lower than it might be, reducing overall profit. Finally it is important to note that a health club’s market is limited to a geographic area normally within 15 minutes drive time. On average only 11% of the population within the drive time will become a member of a health club. Clubs with a high churn model will soon find they have ‘run out’ of potential new members especially if they have competition.

Q2. How do I proportion my retention efforts across different usage types i.e. gym users, racket sport users, social users, swimmers etc?
If membership retention rates were reported by usage types then it would be quite easy to classify usage types according to their risk of quitting. In other words if social users quit at a rate twice that of gym users then you might decide to expend twice the effort on retention in social users. Without accurate retention rates by usage types it becomes more of a guessing game.

Q3. How do I put a case forward for using marketing budget for retention initiatives?
It is very concerning that despite the severity of membership churn in this industry, almost no operator has a budget specifically for retention. In the answer to Q1 you will see why having a retention budget is equally if not more important than having a marketing budget. My suggestion for putting forward a case for a retention budget would be to use the arguments presented in Q1 and go for a minimum of a 50: 50 spilt between retention spend and marketing spend. It is also worth noting that the marketing spend could be used wisely to help retention.

Since 2001, the numerous reports we have completed on membership retention show that certain membership types (older, family, corporate) have higher retention rates than others. Consequently, a marketing strategy that leads to a greater proportion of members from older age groups who have other family members in the club etc would increase membership retention without any change in operations.

Dr Melvyn Hillsdon – Author of FIA’s Winning The Retention Battle series of reports. Melvyn is at the forefront of research in this field, he is a highly respected academic and sought after advisor in public health.

Q1. I have recently held my first members evening. It included guest speakers from all aspects of health and fitness, e.g Dentist (teeth whitening), Personal Health and Stress management consultant, Physiotherepist, Diet Consultant. The evening was a massive success with lots of compliments made during and way after the event. Now I do understand in some respects why this would help with retention but I would like you to explain fully the reasons. By understanding these I will be able to hold our next members event with even further success.
Health/fitness club members might be expected to be more health conscious than non health/fitness club members and consequently enjoy hearing about a range of health related issues. Whether or not attendance at such events leads to an increase in retention is unknown. In those that do attend satisfaction is usually high but it does not necessarily follow that this translates into longer memberships. It remains possible that the people most likely to attend such events are those who have a propensity to stay longer anyway, and the people most likely to quit prematurely don’t attend. It is certainly a question that deserves examination.

Q2. Is there a simple method of calculating retention correctly which the whole industry can adopt and doesn’t involve paying an external consultant?
The straightforward answer is no. Because people join and leave on a daily basis, accurately measuring a rate of quitting is complicated and does require specialist statistical software. However, retention is not subject to weekly change and probably only needs to be measured once or twice a year in the same way that end of year accounts are dealt with. More importantly, the determinants of retention such as visit frequency, staff interactions, customer service, fitness appointments, should be measured more frequently, say monthly. This form of ‘auditing’ will be a better short term reflection of whether the business is achieving high performance in the factors that determine retention. Then, when retention is reported it can be linked to these process measures. Having a means of systematically monitoring club performance on the determinants of retention is the equivalent of the customer intelligence that Tesco’s gets from its club card.

Q3. We are a smallish club with a very friendly and personal atmosphere /service. However our retention is not good (we lose almost all our members over a two year period – firstly is this normal?). Secondly why do you think this is? I have thought it could be to do with our sales process. We use a external marketing company to do impact sales for us every two years. They bring in a lot of new customers but they only sell two year contracts. I feel that our existing members get disgruntled about the offers, and how busy the gym gets, and almost all the new members stop coming after the first three months anyway and then complain they are locked in for two years. Do you think this could be part or all of the problem?
From the limited data available it is common for around 15%-25% of members to retain their membership for at least 2 years. Unmet expectations certainly lead to disappointment and reduced visit frequency, itself likely to increase the probability of quitting. If it is the case that the impact sales teams raise expectations about the ‘product’ that can’t be met then inevitably quit rates will increase. If those members are then tied in to a membership for 2 years then it is unsurprising that when they get the first opportunity to quit most do. It would certainly seem worthwhile to discuss with the sales team what exactly it is they are selling and see how that matches with what you can deliver. It would also be worth considering a more systematic survey of members who were sold 2 year contracts, that are still in the first 6 months of membership, to see how they feel. It may reveal things that you can alter that would reduce the risk of quitting.