Attrition: Your Business’s Biggest Expense
Go the extra mile in making members feel they are a valued part of your business.
If you think your biggest expense is payroll, which is what I often hear when I ask fitness facility owners and managers, you’re wrong. In my experience, attrition—the number of members lost compared to the number of members overall—is the real financial sinkhole. When I ask people what their attrition rate is, they tell me they’re losing an average of 30%–45% of their members each year. This means, in theory, that in a 3-year period their entire membership is turning over. If you calculate the dollar value per member based on the average tenure, you get the value of attrition—and, in most cases, you see how expensive it is.
Retention is a hot topic. Most fitness facilities would give anything to learn the secret to better member retention. Some attrition is uncontrollable: clients experiencing financial issues related to job loss, moving outside the area or leaving for medical reasons. Most attrition, however, is controllable. You simply need to ensure that patrons are using your services and programs and getting good results. When members want to quit, you’re gifted an opportunity to reengage them and help reset their paths. The most recent installment in this series on creating successful outcomes for your fitness facility explored hiring a dedicated employee to focus on member satisfaction, engagement and goal setting. Today’s installment considers additional ways to retain your valuable members, so you can support their success over the long term.
Getting a customer to use your services sounds simple, right? Let’s say that members who use a business 100 times or more per year are “core users.” From my experience, most fitness businesses are unable to count more than 65% of their customer base as core users. Why? Because of a lack of these critical elements: integration, customization and ongoing engagement.
People buy a service or program because they think it will take them from where they are to where they want to be. Every person is different. Therefore, to determine how you can help members stay active, you must find out what they need, what they like, what results they want and how to achieve those results. You must recommend or customize a program for them, and you need to motivate them along the way. If they give up, you need to reengage them, regroup and change course.
One way to do this is to monitor attendance. The moment that members stop being core users without an explanation, contact them and involve them in a process of reassessment and goal setting. Call members who haven’t used the facility in 30 days—don’t ever let them get to 60 days!
Habits don’t form overnight. You’re in charge of helping members create an exercise habit. You are the expert. When members join, inform them that the first 2–3 months of their membership may be not only the hardest, but also the most critical to their long-term success. Sit down with them, grab a calendar and map out each visit for the first 30 days. Be an active exercise habit leader. Stress to members how important these appointments, similar to doctor’s visits, are to their wellness and overall success.
Results are closely tied to usage, and they are equally important. Do not presume that members know they’re succeeding. Record their desired results at the outset, and monitor their results over time. If you can’t prove to your customers that they are succeeding, they may quit. Show them their work, even if the results aren’t what they want. Encourage, motivate and offer practical steps forward.
Positive retention results will come from integrating members and keeping them motivated and active. However, sometimes you can’t convince someone to stay. When this happens, conduct a proper exit interview. If this is done correctly, you may be able to salvage a relationship. And if members don’t change their minds now, this interaction may help them decide to return in the future.
Ask the following questions in your exit interview:
- “Why are you canceling?”
- “I see here that when you started you were coming ___ times per week? What happened that put you off track?”
- “What types of benefits were you looking for when you first enrolled?”
To reclaim trust, after this line of questioning proceed with the lifeline proposition described below.
Lifeline or CPR Program
The “Client Program Resuscitation” (CPR) is a “lifeline program” that involves being accountable. Acknowledge your responsibility for members’ dissatisfaction, and create action plans to reignite their interest. If you discover during exit interviews that members are canceling because they’re pressed for time or they simply haven’t made use of the membership, a lifeline program might include the following proposal: “Mr. Jones, first of all, please allow me to apologize for our inability to ensure your success as an exerciser. I know that exercise is important to you, and we would like the opportunity to assist in your success. Instead of a cancellation, would you consider a reduction in dues or some free membership time in conjunction with a new action plan?”
Retaining existing members takes time and money. However, in my work in the fitness industry, I’ve seen that the average cost of obtaining a new member is roughly $300. In calculating your attrition cost, you may find that member retention efforts are worth the investment.
Information in this article is based on feedback and statistics from the clients of New Paradigm Partner, a fitness industry management and consulting firm.
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Maria Parrella-Turco is a senior partner of New Paradigm Partners, a health club industry consulting firm. She is also COO of fitRewards, the fitness industry's first reward and loyalty program. She has assisted hundreds of fitness facilities in idea conception, business plan development, finance, facility development, management and staff training, and she is also a turnaround specialist.