How to Increase Gym Profitability by up to 95%

June 30, 2015

By: Richard Thomas

Did you know it costs nine times more to acquire a new member than to retain an existing one? Or that increasing member retention rates by just 5% can increase profits by 25-95%? In fact, leading research shows that a 2% increase in customer retention has the same effect as decreasing costs by 10% (Leading on the Edge of Chaos, Emmet Murphy and Mark Murphy).

What’s the moral of the story here? Gym profitability depends on member retention over anything else. Loyal members spend more, buy more often, care less about price, cost less to “court,” and become Promoters who tell all their friends about your gym. If you’re a busy fitness club owner, member retention is the key to upping your game. So where do you start?

First, understand what members care about most, and then do more of it. Not just when they first sign up, but as part of a lifelong relationship. In this series, I will share the top things loyal club members care about, followed by a 5-step plan for keeping members happy and turning your business into a profit machine. Ready? Here we go.

We started by asking 1 million fitness club members how they really felt about their gyms.

5 steps to profitabilityThe top five things mentioned by Promoters, the loyal members, were:

  1. Friendly staff / trainers / instructors
  2. Plenty of good-quality equipment
  3. Variety & schedule of classes / programs
  4. Clean facility
  5. Good customer service

Probably no surprises there, right? Above all, your members just want to feel comfortable; they expect your staff to be welcoming, and they want a clean, functional place to work out. But unfortunately, lots of clubs aren’t delivering on member’s basic expectations. Which brings us to Step 1.

Step 1: Conduct a Gap Analysis

Find out where you stand with your customers (really). Eighty percent of businesses believe they provide a superior experience but, sadly, only 8% of their customers would agree (Bain & Company). Don’t be that gym!

Analyze how well you are delivering in each of the areas listed above. If you are surveying your members, look closely at what they are telling you, and pay special attention to what Detractors say. Detractors are the folks that are dissatisfied with some aspect of your business. Those folks spread negativity around your brand, and can do some serious damage to your online reputation. In contrast to the Promoter comments above, the most common Detractor complaints are:

  • Too crowded/had to wait for equipment
  • Equipment was broken
  • Locker rooms/showers were dirty
  • Not enough variety in classes/inconvenient class times
  • Too expensive

If you know what bothers Detractors, you can close the service delivery gap and create more Promoters instead. This can radically change your growth strategy. You can focus less on getting more new members to sign up, and more on following through on basic expectations that drive member retention and – ultimately – increased profitability.

Step 2: Map out a member-centric strategy

This one seems like a no-brainer; yet so many gyms fail to keep the client top-of-mind. If the approach is only about making and saving money, the business can suffer.

  • ⅔ of clients do not feel valued by those who serve them
  • 68% of clients leave a personal trainer due to a negative experience (IHRSA)
  • Most disturbingly, happy clients tell just 4-5 others of a positive experience while a dissatisfied client will tell 9-12 about a bad experience

Getting back to the main takeaway of my series… In the race to profitability, client-minded gyms that place the focus on member retention and not just driving new memberships will win every time.

Your member-centric strategy begins with the results of the gap analysis. Look closely at what Detractors are saying. Red-flag comments that show you may be falling short of those things loyal members really want. Then rewrite each issue as a goal.

For example, if a customer feedback survey reveals this comment:

“I would love to learn how to work out, but I got no help!”

The goal would be written as:

“Improve attentiveness of gym floor staff and trainers.”

And there you have it – a prioritized, actionable list of the basic things expected by those who keep your lights on.

What issues would a gap analysis uncover in your gym? When was the last time you ran a customer feedback survey? What’s your current retention rate? Leave a comment; I’d love to hear from you.

Up next: the fun part. You are now ready to dig in to root causes of member churn and start fixing problems.

Continue to Step 3 – Coming in the August Issue of the ABC Insider

Explore Listen360

If you don’t already use a customer feedback system, why not? Tools like Listen360 are how today’s busy fitness executives keep members longer, land positive customer reviews, and create word-of-mouth referrals that tell the world why their clubs rock!

Listen360 is not just a survey tool. We are a cost-effective, cloud-based system for efficiently managing member feedback, improving business operations, and generating a steady stream of positive reviews. Our platform is built on the premise that it should be easy to know exactly how all your members feel about doing business with you, and just as simple to build a great online reputation that drives new business.

We are pleased to offer ABC Financials customers a free 30-day trial of our software so you can try it for yourself. Try Listen360 FREE for 30 days, or leave me a comment.