Everyone's job description should include membership retention because consumers now have more choices when it comes to clubs. The challenge is how do you get your fair share of the marketplace, and when you do, how do you maintain your share and grow your business every year?
Most clubs in today's competitive environment are struggling to increase or, at the very least, maintain their membership retention rate. If you want to increase retention and reduce cancellations, then you need to recognize where the problem starts and then change your members' behavior.
Many club operators are aware that integration within the first three weeks of new membership is vital to long-term retention. A few years ago, an International Health, Racquet and Sportsclub Association (IHRSA) study found that 30 percent of new members quit using the club after only three weeks. Through our research in dozens of clubs, we realized that you can almost track and predict the cancellation rate of your members based on their club usage in the first 45 days of membership. More than 80 percent of the members who cancelled before their contract expired or at the end of their contract had low usage in their first 45 days of membership. Specifically, the lowest usage, and in many cases no usage, occurred between the 15th and 45th day of their membership. In the first two weeks they belonged to the club, they showed a reasonable amount of usage. This may be due to the new members' enthusiasm about fulfilling their dreams of improving their health or the fact the club set up appointments for them with personal trainers. Thus, many clubs may think they are doing a good job on early integration and retention, but in reality the first three weeks are only the halfway point toward better retention.
The retention process really begins as soon as members join your club. They are not just a new sale. Usually, they are also undergoing behavior modification. To create an exercise habit, new members need a minimum of 21 days of positively reinforced behavior. Your sales team is a crucial part of your successful retention of these new members. They need to be taught that the sale really begins after the customer has joined the club. The sales team should sell the new member on the idea of coming to the club on a regular basis (at least once a week or more), getting some results (usually feeling more energy in the beginning; weight loss and muscle tone take more time and discipline), and most importantly, telling their friends how great they feel since they began exercising, which will in turn increase retention and referrals. Most referrals need to be earned through service excellence, not through prizes and trips. Members who exercise with someone they feel comfortable with are more likely to stay with their program and with the club.
The new member needs positive reinforcement not only when they walk into your club but also when they are not at your club. They need to feel they are getting more than just expected service (they expect you to be nice and to say hello every time they come in). We are also in the entertainment and hospitality business, which means we must give all of our members (not just the regular exercisers) noticeably superior service. This happens in the club and through our sales teams and our retention staff. Remember, it costs a lot less to keep customers than to replace them. More than 30 percent to 50 percent of your new members are referrals from happy members. Where do you spend 30 percent to 50 percent of your time and money?
In most markets, competition has increased five-fold. More choices exist today for consumers, and our customers are more demanding. They want more value, better communication from us, a better attitude, assurance that we will deliver what we promise and exceptional service.
Every time a member calls or comes into your club, you have an opportunity and a choice. What choices are you making to get and keep customers? What is the reality of your service? Is it lousy, satisfactory or memorable? How do you and how can you create not just satisfied but loyal members?
Ed Tock is a partner in Sales Makers, a marketing and sales training consulting firm that specializes in on site seminars and performance and profitability programs by delivering staff training, proven systems and marketing programs. They have worked with more than 983 clubs worldwide including 192 pre sales since 1981. Ed has spoken at more than 60 Club Industry shows and IHRSA conventions. Sales Makers is a winner of IHRSA Associate member of the Year. Ed can be reached at 800-428-3334 or at [email protected].