Member Retention: A Multi-Country Study on Why Members Leave
Member Retention: A Multi-Country Study on Why Members Leave
Retention rates for health clubs are historically difficult to keep high, but there are steps you can take to improve rates at your club.
For effective change, it is important to make decisions based on data. Here are the findings of a study exploring the effects of age and country on club retention, as well as suggested actions that you can take in your facility.
The following is a summarization of an education session from the 2014 IHRSA Convention, produced with full permission from IHRSA. The full-length video is available for purchase at ihrsastore.com.
About the Speaker
Doctor Paul Bedford, also known as the “retention guru,” has twenty years of experience in the fitness industry. His hands-on experience has produced valuable data for fitness club owners who are looking to engage and retain as many members as they can.
Melissa Rodriguez is the Senior Research Manager at IHRSA.
Before you can improve your club's retention rates, it is important to understand the different terms used to discuss this metric. Retention and attrition are not mutually exclusive. Attrition is a measure of the total number of people who quit within a certain period, and is usually a secondary measure when assessing retention rates.
The retention rate (length of membership) of members in a fitness facility refers to the length of membership or lifetime value (median length of stay) and last visit (join date to last visit date).
Survival analysis is concerned with the length of time between the start and end of something. It is a well-established method used primarily by medical professionals, which measures "time to event." In health clubs, the time refers to the length of membership (usually in months) and the event refers to whether the member cancels or not.
At 12 months, about 70 percent of members retain. This could be due to the restrictive nature of 12-month contracts not allowing them to leave earlier. Research shows that 90 percent of everyone who joins fitness facilities stays for at least two months. A useful strategy to change declining retention rates is to sell memberships to the right people.
Lifetime value refers to the average length of a membership or the lifespan of a membership.
The White Report 2009-2012
The report contains quantitative research conducted in the United Kingdom including 342,759 members over four years and five sectors.
The UK fitness industry loses about 3.9 million users every year. The report found that almost half of the total memberships quit after the first twelve months. The average length of a club membership across the study was 12 months. The worst performing clubs were retaining members for less than six months. The best performing clubs were retaining most of their members for 23 months.
Retention by Age
Research shows that older members stay longer than younger ones. Younger members are easier to sell to but are more transient in terms of their memberships.
Risk of Quitting by Age
People aged between 25-34 years are 19 percent less likely to quit than people aged between 16-24 years. People aged 55 plus are 40 percent less likely to cancel. A lot of marketing and training programs are targeted to the younger consumer base which leads to a lower number of older people being brought into fitness facilities. This in turn leads to lower retention rates because the younger consumer base tends to leave earlier than the older consumer base.
Retention by Amount Paid
Research shows that the more members paid for their memberships, the longer they remained with the club. The study revealed that longer, more fixed contracts tend to improve retention rates and are therefore more valuable, whereas month-to-month contracts are not as valuable, but can be easier to sell.
Research shows that people in Belgium who take out longer contracts stay longer, and pay for services longer, independent of age and gender. Month-to-month members tend to cancel quicker.
Norway has no low-cost or budget market. Clubs in Norway only sell 12-month contracts. The study showed that almost a quarter of memberships canceled before the end of the contract. Clubs in Norway tend to retain 37 percent of their members until 24 months. The market in Norway is older and memberships are more expensive. With longer term contracts, the older members do end up staying for a greater period of time.
In Russia, the study tracked when members stopped paying and when they stopped visiting. It was found that sometimes that when they stop visiting can be a predictor for when they will stop paying.
In North America, the study found a direct correlation between the last visit of a member and their last payment. In the North American and Canadian fitness market, 67 percent of new members remain in a fitness club for the first 12 months, and 12 percent remain until the end of the first 36 months. This variation in the market when compared to the UK may be due to the fact that fitness and health has been established as a lifestyle habit for a portion of the US and Canadian market, and has not been so established in the UK.
Increasing Retention Rates
You can implement savings bundles or promotions to entice customers to choose longer contracts over month-by-month, resulting in more valuable customers, higher rates of retention, and increased revenue.
Since older members tend to stay at facilities longer, consider restructuring memberships for younger customers based on a few months paid up front.
Intervention planning is a great tool for increasing retention rates. A member is 20 percent more likely to revisit a fitness club after receiving one interaction from that club, 50 percent more likely to visit again after two or three interactions, and 80 percent more likely to visit again after four or more interactions.
Onboarding is essential for improving retention. A member of your staff should ideally provide new customers with a comprehensive tour of your facility, as well as any other information that may be required. They should aim to understand the goals and interests of new members. Getting to know each member’s key goals is essential for member retention. Following these guidelines should help you improve retention rates for your club and earn you more revenue.