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

The Retention People have released the findings of a research study, conducted in conjunction with LeisureNet, into the main aims of health and fitness operators over the next 3 years.

5000 operators were invited to take part in the study across all sectors, with the majority of respondents of a senior level position within the public sector (see figures 1 and 2).

Fig. 1 - Type Of Operator

Fig. 2 - Position In Organisation

The findings showed that operators’ 3 main business goals for 2010 and next 3 years were:

• Increase participation of our customers in exercise – 16%
• Provide better product and service to our customers – 15%
• Increase profitability of the business – 13%

Fig 3. How would you describe the main goal of your business for the next 3 years?

The main focus of the business in order to achieve the above were found to be:

• The member experience – 28%
• Sales and marketing – 26%
• Staff training, management and development – 23%

Fig. 4 - Which area of your business do you plan to focus on in order to achieve your goal above in the short to medium term?

The study showed that many operators were unclear as to how to improve the member experience, with confusion over the various solutions currently on the market and no clear strategy for linking all of the activities that had been developed internally.

The services that operators were most likely to use a 3rd party for were:

• Measuring retention effectively
• Training in customer service for staff/management
• Interaction Software

The Retention People were seen as the market leader in being able to provide these services.

After receiving the results of the research study, The Retention People has made a number of investments in product diversification and resources, resulting in the creation of three divisions within TRP:

1. Software with Business Coaching
2. Training and Staff Development
3. Strategic Consultancy and Data Analysis

“TRP was the original innovator in solutions to improve the member experience” says Alister Rollins, Founder and MD of The Retention People, “I am pleased the research supported our market lead however we are not complacent about being the leader in this field. We invest heavily in retention research which drives further innovation. We hope 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.

“This industry should be growing at a rapid rate, but because of a continued high churn rate we are not. We have proven that several processes can be implemented to slow down the churn in health club members and we hope that all operators, large or small, can now start to see how a focus on the member experience increases retention and to realise the financial benefits that follow.”

OPERATOR NAME: Mid Sussex District Council/Freedom Leisure
SECTOR: Public Sector
MEMBERSHIP SIZE: >3000

Retention…3 Great Reasons to Care!

After a year of partnership working between Mid Sussex District Council and The Retention People (TRP) we can verify three fantastic reasons to focus on improving retention.

1. Happy Staff!

Traditionally, it has been very hard to precisely value the contribution of our fitness teams. Some operators have even shown that they feel they can simply get by without them.

Working with TRP identifies and measures the value that fitness teams add. This enables regular feedback to instructors showing how many people they have helped – and even more importantly – how much they have helped them.

Imagine you are reviewing conversations you had with over 500 members in one month. In the month before you spoke with them, the average member in this group was only attending your centre 2.7 times per month – significantly less than once per week. However, after you spoke with them, the average attendance increased to 5 visits per month.

These numbers are not made up! Figure 1 shows this is just one of the many fantastic results we could feedback to the team at Mid Sussex.

Figure 1 Average visit frequency pre and post interaction – based on 500+ interactions in September 2009

“Results like this made my team feel recognised and appreciated and so inspired them to look after even more members”, comments Chris Patch, Fitness Manager with Mid Sussex.

2. Happy Members!

The easiest way to assess member satisfaction is to observe their participation levels. Figure 2 shows clearly that the more we talk with our members – the longer they vote with their feet and remain as participating members.

This translates to at least 12 months more participation per member who receives at least 4 interactions. Members who do not receive an interaction are 3.4 times more likely to cancel compared to members who receive at least 4 interactions during the life of their membership. Happy members means increased participation and footfall.

Figure 2 The effect of interactions on member retention

3. Happy Managers

It is only a small step to realise that at least 12 months more membership participation equates to at least 12 months more membership income. If all members who joined during the year of this study followed the green line (4+ interactions) Mid Sussex would earn £281,449 more in that year when compared to all those members following the blue line (no interactions).

The Future of TRP at Mid Sussex

As the first year of this partnership ended, the contract for the management of the leisure centres at Mid Sussex was taken on by Freedom Leisure. As a result of the fantastic results to date, TRP remains a key part of service delivery at Mid Sussex and has since been installed in three other centres managed by Freedom Leisure.

Debbie Reed, Customer Service and Retention Manager for Freedom Leisure comments that “it is fantastic to think that by focusing the team on our high risk members we can increase job satisfaction, increase participation and increase our bottom line by nearly £300,000 in year 1”.

OPERATOR NAME: Westpark Fitness
SECTOR: Private Operator
MEMBERSHIP SIZE: >3500

Proof not Promises

As one of Ireland’s premier clubs for over 18 years, Westpark Fitness felt it was critical to work with a supplier of retention solutions with a proven record of success. The Retention People’s (TRP’s) ‘Proof Not Promises’ ethos underpins the company’s approach to providing operators with solutions that not only retain more members, but also allow them to refine their business practices to improve performance on an ongoing basis.

Identifying the Problem

With competition increasing from other clubs opening in the area, Westpark were keen to ensure that they addressed retention and service as effectively as possible. Kevin Doyle, Club Manager, had implemented a number of initiatives to promote interaction with members, including sending text messages and regular gym challenges. Whilst proactive, the impact of these activities on retention was not measurable and it was not clear whether resource was being targeted in the right place.

The Recommended Solution

Westpark Fitness purchased TRP Identify, TRP Interact and TRP Coach to overcome the issues described above. The software enabled the club to identify members ‘at risk of leaving’ and then deploy fitness staff to interact face-to-face with them. Recording each interaction provided management with an instant overview of the fitness team’s activity where they knew their efforts would count. Monthly reports sent out by Westpark’s TRP Coach proved the positive impact, showing clear improvements in member visit frequency following the interactions. TRP Mobile provided further assistance to the team, allowing instructors to record a greater volume of interactions on hand held devices on the gym floor.

Return on Investment

To assess the impact of the solution on retention over the first 12 months of use, TRP asked retention expert Dr Melvyn Hillsdon to analyse Westpark’s database and produce an audited retention report. Figure 1 clearly demonstrates the positive influence of timely face-to-face interactions.

Figure 1 Retention rate by interactions

The blue line shows that members who do not receive a proactive interaction throughout the course of their membership cancel rapidly; by month 5 half have already left the club and only 29% are still paying by month 12. In marked contrast, the red line shows that if members are interacted with when identified as high risk by the TRP solution, 80% are still paying at month 5 and 56% at month 12.

Figure 2 demonstrates the financial impact of this improved retention by factoring in the €44.00 per month average membership dues. Dr Hillsdon concluded that if all members joining after installation received at least 1 interaction, the estimated income over 12 months would be €313,602 higher compared to the same number of members receiving no interaction.

Figure 2 Income estimates based on retention rates for the members who joined during the study paying €44.00 per month

Customer Comments

Westpark Fitness’ board and management were clearly delighted with this level of ROI and took the easy decision to renew the TRP contract. Kevin Doyle comments “I have always been a firm believer in the theory that if you cannot measure it you cannot manage it. TRP’s clear and accurate reports coupled with the support and advice from our TRP Coach has made the TRP system a valuable tool in our fight to improve retention. We all know it costs more to find a new member than keep an existing one, this system backs this theory up and has made a substantial difference to our bottom line.”

OPERATOR NAME: Doncaster Dome
SECTOR: Leisure Trust
MEMBERSHIP SIZE: >3000

Low Cost Membership and Quality Service. Impossible? Not with a strong retention strategy.

When budget clubs entered the UK marketplace, the industry appeared to have two options. Either compete on price by cutting your staff – and inevitably your service – or justify a higher price with higher service. Kraig Kelly, Operations Manager at The Doncaster Dome saw a third possibility. Through 2009 he would cut his prices to below that of his competition yet still offer superior service.

How?

Kraig had already worked with The Retention People for a year so knew that managing the way his staff interacted with members made him thousands of pounds. He also knew his market would respond positively to a lower price.

By working in partnership with TRP and gaining a greater understanding of retention, he also knew he needed a multi faceted approach if he was to succeed.

Kraig says, ‘cutting the price of our membership for the 2600 members we had at the time was a huge gamble – my neck was on the line! I only had the confidence to do this as I knew I would retain more members as a result of our retention strategy.’

Reduce the Price

Kraig reduced his price from an average £30 per month to a simple monthly fee of £22.50 with a 12 month contract or £27.50 without.

Introduce Membership Contracts

TRP’s analysis added to Kraig’s understanding of underlying retention at The Dome so he was able to determine the exact price point at which to launch a 12 month contract.

Improve the Induction Process

Kraig, like many operators, knew the first few weeks of membership were vital so purchased TRP Induct. Delivered on behalf of TRP by Dr Paul Bedford, this combination of training, process support and software dramatically improves retention.

Deliver Fantastic Service – by Managing Interactions with Members

The team at The Dome already had a year of experience managing staff interactions with members through TRP’s retention solutions. The challenge now was to set and deliver even higher targets for both the quantity and quality of interactions.

Refurbish the gym

Following a successful 2008 – and funded in part by improvements in member retention since working with TRP – the 8000 square feet (750 m2) of the Fitness Village was completely overhauled and turned into a stunning, contemporary health club.

Results

Kraig provides the best summary of the results, ‘The project has been fantastic. We have seen membership increase by over 600 to a total over 3200; our DD line is higher than it has ever been and we are retaining members for longer than we have ever done before.’

As the first year of the project came to an end, analysis by TRP was able to demonstrate the effect of the various strategies:

• The overall retention rate improved for members joining in 2009 compared to those joining in 2008.
• Members who were interacted with at least 4 times during their membership remained at the club 18 months longer than those with no interactions (see figure 1).
• Interacting with members was more important than both contract length and visit frequency in determining length of membership!

Figure 1 The effect of interactions on member retention

Conclusion

By combining proven retention strategies from TRP with The Dome team’s skill and experience, The Dome have successfully shown an alternative route to success – low prices combined with fantastic service.

Click here to view this article as a Powerpoint

It is commonly accepted that membership retention is the largest problem facing most businesses in our industry. However, this problem is not new, so why are clubs still struggling to make an impact on their retention performance? The secret lies in a change of strategy. Operators who continue to focus their energy and investment on sales and marketing as the primary method to grow their businesses are missing an opportunity. It is proven that successful retention of members not only increases profitability, but will reduce the necessity to perpetually sell to a shrinking market.

So if it is that easy, why aren’t all clubs, and the industry as a whole, taking hold of the problem and delivering better retention results? The underlying reason is that most clubs use the wrong measures and can therefore never clearly assess whether their retention efforts have any kind of impact. In this article we look at how to measure retention in a way that allows operators to make clear, actionable decisions which will improve retention and increase income.

The attrition percentage – why it has no value in measuring retention

A method which has been used for years by the vast majority of clubs is to measure attrition by expressing the number of membership cancellations in any given month as a percentage of the starting membership that month, as illustrated in Figure 1 below:

Fig. 1

A similar measure is used to calculate ‘annual attrition’ as illustrated in Figure 2 below. In this case the annual percentage is calculated by totalling the number of membership cancellations throughout the year and dividing the figure by the average monthly starting membership.

Fig. 2

Drawing conclusions about retention performance using these methods has two fundamental flaws:
• 1. The attrition percentage is heavily influenced by the number of membership sales. In Fig. 1, between June and July the attrition % fell (from 5.0% to 4.9%), yet the number of cancellations increased (from 126 to 129)! It is clear in this example that the reduction in attrition was caused by a large amount of new joiners in June and not by any improvement in the retention of existing members.
• 2. The attrition percentage does not take into account HOW LONG A MEMBER HAS BEEN RETAINED. Using our example from the table in Figure 1, if we analyse the cancellations further on any given date, it is possible to see huge variances in the membership duration of each member that cancels. This is illustrated below in Figure 3, which looks at the cancellations from 1st April 2009.

Fig. 3

As you can see the membership life varies considerably. If every member left after 1.18 months the club would be in a very different financial situation compared to a scenario where every member stayed 56.57 months! It is therefore essential that clubs get beyond the cancellation figure to understand more about their members and how to encourage them to stay longer. What is the reason the member was retained for 50 months? What kind of demographic profile did that member have, how old were they and what kind of service did they receive?

Measuring Retention Correctly

In order to understand how to improve retention operators need to measure:
1. THE RETENTION RATE defined as:
The proportion of members who stay for a predefined period of time e.g. 3, 6, 12 months etc.
2. LIFETIME VALUE defined as:
The average length of time members stay and therefore how much they pay in membership fees.

RETENTION RATE

The horizontal axis on the graph in Figure 4 below shows the time lapsed since joining, taking ’0′ as the start of a membership. The vertical axis shows the proportion of members who retain their membership. Figure 4 shows that the 12 month retention rate is 50.4%. That is 50.4% of members retain their membership for at least 12 months. The corresponding figures for 24, 36 and 48 month retention rates are 27.7%, 17.1% and 10.7%. The area under the curve represents the total income from membership dues and therefore the shape of the curve is very important. Any flattening of the curve represents greater income.

Fig. 4

LIFETIME VALUE

The lifetime value of a member is the average duration of membership represented by the ‘median’ duration – that is the duration of membership that separates the total membership in half. Half the members stay longer than this time and half stay less (for mathematical reasons it is wrong to use the mean value as the average). This can also be read from the retention curve (Figure 5). A horizontal line is taken from the 50% point on the vertical axis and read across to the corresponding point on the retention curve. Taking a vertical line down to the horizontal axis will give the median length of stay and therefore the average lifetime value. In this example the Lifetime Value is 7.8 months. That is, 50% of members pay 7.8 months of membership dues or more, and 50% of members pay less than 7.8 months.

Fig. 5

Operators can plot all sorts of variables using these measures e.g. age, gender, membership type, service received etc. and by doing so, can start to understand why some members stay longer than others. This helps them take actionable decisions that will improve retention.

Using ‘Age’ as an example, we can plot the graph below:

Fig. 6

Assuming £40 per month.

By looking at the Lifetime Value measure in Figure 6 we can clearly see that recruiting 45+ year old members yields on average £344 more income per member than recruiting 18-24 year olds. What decisions can we make from this analysis that can be used to increase retention?

• Invest in marketing to older age groups through campaigns, imagery etc.
• Offer a discount to older members e.g. you can spend £300+ more attracting an older member and still be better off than selling to a 18-24 year old.
• Adjust membership sales targets and commissions accordingly, i.e. offer a higher commission to a sales person if they sell to an older and reduce commissions for younger members

These are examples, but they all stem from having the correct membership retention measures in place.

CONCLUSION

Hopefully we have helped to illustrate that the first and most important task in developing a membership retention strategy is to fully understand the size of the problem, and whether the problem is more prevalent in some members than in others. This will lead to possible solutions in sales and marketing, and more importantly, help to develop your customer experience using systems, policies and procedures that will achieve the desired retention outcomes.

Some of the practical steps you can take to do this are reviewed in later TRP articles.

Join us on LinkedIn to discuss this and other findings and developments in the retention field.

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Join us on LinkedIn to discuss this and other findings and developments in the retention field.

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.

Surprising find from latest research – can talking to your members really make your equipment more reliable and facility cleaner?

Introduction

This intriguing question was raised as a by product to a piece of research conducted by one of TRP’s largest customers. The study looked at comparing customer service questionnaires conducted in clubs using the TRP solution against clubs falling into three further groups; historic scores on the questionnaire in TRP clubs, (i.e. before TRP was launched), a control group (a group of clubs with similar member demographic breakdown) and the entire estate.

The questionnaire involved phoning members who have visited each club within the last month in order to assess their level of satisfaction with the service. The questions covered a variety of service related topics, ranging from staff interactions, to cleanliness and equipment satisfaction.

Results

The results were impressive with TRP clubs scoring consistently 15 – 20% higher than both the control group and the entire estate over a six month period, see figure 1.0. TRP’s entire model is based on improving retention figures by improving customer service so this may not be surprising, especially to TRP customers. However it was the increase in scores of the ‘non-staff based service’ measures that were the most interesting. Average scores relating to cleanliness of the facility were 25% higher after the launch of TRP and satisfaction with the equipment were 15% higher.

So what is happening here? How can a solution which helps you manage who your staff are talking to and how often, suddenly make your facility cleaner and your equipment more reliable? The answer is simple – communication. Proactive communication with members means staff can pick up on issues faster; it also creates a friendly atmosphere and culture in your clubs, meaning that members are more likely to approach you if they have a problem instead of being quietly dissatisfied and eventually stop using the service. The proactive contact also makes members see a ‘person’ behind the problem meaning they will be more lenient towards issues.

Conclusion

So if you want to improve your members’ perception of your club, don’t invest in new cleaning staff and new equipment, invest in staff interaction training and most importantly a system to proactively encourage staff to talk to members. You need to measure this activity as well as the effect. This study shows staff and member communication is the key and “If you can’t measure it you can’t mange it”.