4 Questions Gym Operators Should Be Asking About Benchmarking

For Gym Operators

4 Questions Gym Operators Should Be Asking About Benchmarking

Benchmarking is the process of using data to measure a business' performance and can be a powerful tool for identifying areas in need of improvement.

Every company can benefit from data analysis, but in case you don't know much about benchmarking, here are the basics.

The following is a summarization of an education session from the 2015 IHRSA Convention, produced with full permission from IHRSA. The full-length video is available for purchase at ihrsastore.com.

About the Speakers

Anne Hawkins is the Executive Vice President at STR. STR is the leading provider of competitive benchmarking, information services and research to the hotel industry.

Alex Smith is the Vice President of Sector Analysis at STR.

4 Questions About Benchmarking and How It Can Help Your Business

What Is Benchmarking and How Can It Grow Your Business?

Benchmarking involves a particular standard or point of reference when measuring or judging a company’s current value. With benchmarking, an operator is more able to predict future success. 

To know how you are performing within your market, understand how your competition is doing. This comparison places your success in context. The information acquired from benchmarking will help you identify areas for improvement in your market and club, and gain a competitive edge.

What Do Benchmarking Companies Provide?

Benchmarking companies like STR provide businesses the ability to better understand and identify new market trends while better engaging employees. For example, STR tracks and provides benchmarking tools to approximately 160,000 hotel properties around the world. Their clients include some of the biggest names in the hotel industry around the globe.

STR is currently working with IHRSA to collect data within the health and wellness sector to provide dynamic, growing and innovative business models. The fitness industry attracts public interest attributable to the expanded focus on health and wellness. It's important to collect new information because the fitness industry data is limited, often stale, and produced infrequently. As a result, most data available in the industry involves small sample sizes and may not necessarily be relevant to you and your business.

Accurate and current data will enable you to benchmark performance within your market. Current data can compare KPIs and examine growth in your particular competitive set to improve your operations, and new programs can be evaluated to provide a competitive advantage.

Why is Data Important to Health Clubs?

Fitness businesses usually have a sense for how they’re performing relative to the market. However, often outside of stale data and conversations with friends, fitness clubs do not have a specific understanding of their individual performance. Accurate and current data coupled with specific and actionable information provides an informed basis for improvement. Actionable data is critical because it creates the knowledge foundation required for growth.

Data point value for aggregation from the club industry includes total revenue, total dues revenue, total members, number of canceled members, and total number of member visits. The aggregation of this information will help improve average revenue per member, average dues and non-dues revenue, total number of members, retention and number of visits of members. Data provides a holistic view of performance and is crucial to operations, initiatives, and market share.

How Do Companies Collect Data?

The primary methods of collecting data include simple spreadsheets, secure online portals and automated data feeds. The process is simple, and takes about five to ten minutes once a month. STR collects industry information, aggregates it and publishes it in monthly newsletters covering trends in the industry. All data and club information is kept confidential.

Working with a benchmarking data company allows you to view and manipulate new data on the fly, view which locations or regions are under-performing, see which areas are experiencing growth, and determine whether managers are on target. Knowledge is key to success, and accessing high-quality data lets you gauge problems your business may have and find avenues for growth and expansion. Benchmarking is an empowering step toward understanding your club's performance and implementing positive changes.