Increase Your Health Club’s Retention Rate Through Member Data Mining

Club owners are scrambling for help in the down economy, but the key to improved revenue and retention may already be at their fingertips. By collecting and analyzing their membership data, operators can unearth a gold mine of information that can help them grow their businesses.

"If you have the data, you know what to do with the data and you can execute a marketing plan, then you can increase your membership," says Stephen P. Roma, owner and chief executive officer of WOW! Work Out World, Brick, NJ. Roma says that he considers his membership roster as his company's most valuable asset.

Fitness facilities — from small recreation centers to large club chains — often gather reams of data on their members, yet the information often sits untouched on their servers, according to two software vendors. One of them estimates that less than 5 percent of club owners use membership software programs to their fullest potential. The president of another software company says most club owners use 20 percent of their software's functionalities 80 percent of the time. However, another software vendor says that many fitness facility owners did not appreciate the value of the data that they were collecting on their members five years ago, but more club owners today are analyzing information to make better business decisions.

By digging into the data that's available to them, analyzing it and compiling reports, club owners can better understand their members, and as a result, improve their bottom line and boost retention and recruiting efforts, vendors say.

Improving Operations

Data can help in large and small ways. Kelly Bonewald, program coordinator for New Braunfit in New Braunfels, TX, received a request from a member to open on Sundays. Using her membership software program, Bonewald analyzed usage patterns on a daily, weekly and monthly basis before deciding that the facility's low attendance and activity levels on Saturdays did not warrant opening on Sundays.

At WOW, which has 10 locations, Roma captures the following information for each of his 50,000 members: basic demographic data, club usage, retention term, purchases, date the member last used a personal training session and their monthly dues. By knowing this information, Roma can balance his staffing load, he says.

The data from membership management software programs also can help create targeted and effective multimedia advertising and promotion campaigns. Rather than sending a mass e-mail to all members in a club, a fitness facility owner can define a targeted list, such as Pilates class participants, and then send an e-mail only to those members.

Roma uses his membership management software for more targeted marketing, which generally yields a greater response, he says. His club, which markets to current members, non-members and past members each month, crafts specific marketing messages and launches targeted campaigns based on membership data.

"We have always believed that the marketing information we can obtain from our club management software is vital to our marketing plans," Roma says. "Because we know so much about our members, we can design and execute a campaign that is tailored to their exercise habits."

By using this approach, operators also can reduce costs related to direct mail, such as creative, printing, postage and shipping, and also disseminate the message more quickly. Unlike traditional campaigns, which can take weeks or months to coordinate, execute and track, e-mail messages can be sent out in one day.

Member Retention

Membership management software also can help with retention, which is important as the economy forces clubs to get more dollars from existing members, who are becoming more difficult to retain. John Miller, president of Courthouse Athletic Clubs, which has five facilities in Salem, OR, discovered that by mining data, he can create strategic plans for keeping his members.

"A lot of clubs are losing memberships as their members tighten their belts, and that affects all of us in the fitness industry," he says. "In this kind of economy, you must be good at what you do and figure out how to get better. A big part of that is understanding your business, which is all about information."

Since non-use is often tied to cancellation, many software packages allow managers to generate a list of members who haven't worked out in two to four weeks. A club owner can then send a targeted e-mail to these members and encourage them to come back to work out.

Jeff Skeen, president and CEO of Titan Fitness Holdings, has noticed a direct correlation between club usage and attrition rates. Skeen's company owns 14 Gold's Gym clubs in North Carolina and Minnesota and converted all of them to the same Web-based membership management system.

The data within the software helps the managers to identify causes for attrition, Skeen says.

"If one of your club's attrition rates goes from 2.5 to 3.2 percent per month, you may think that members don't want to come because they don't like the product," he says. "If you look at their check-in usage, and it is strong, however, then you can look somewhere else."

In some cases, club owners can even leverage their membership database in order to draw former members back to the facility. Operators who continue to store past members' data in their software program can easily send promotions to former clients.

Using this data, one club operator received a 20 percent response rate on a postcard mailed to all the members who had cancelled over the years. Normally on a postcard promotion, club owners get less than a 2 percent response rate, one vendor says.

Staying connected with former members is vital for a health club, especially as new member sales slow, says Michael Fox, general manager of Energy Interactive Fitness in St. James, NY. By logging the reasons for cancellations into the software, he can easily generate a cancellation report.

"If you don't know who your members are, where they're coming from, what they're like and why they're leaving, then you're limiting your ability as a club to grow and serve your members," Fox says.

By storing information electronically rather than in a paper-based system, facility owners can stay more organized and improve retention rates. Some club owners scan all their member-related documents, such as contracts and health release forms, so they can easily access and retrieve records in their software system.

Shifting from a file cabinet to a software system helped Backstreet Fitness, a 2,000-square-foot, 24-hour fitness club in Lucedale, MS, keep its business on the right track and easily find members' records, says Chrissy Havens, manager.

"The software is one of the most important things that we've spent our money on," she says.

Tracking Purchases

Although it's important for clubs to track when and how often their members check in, club owners must also keep tabs on what members are buying once they're in the club.

With this data, club managers can keep the most popular items on the shelves and not invest in the products that the members aren't buying, Skeen says.

Since many club members don't walk around with their credit cards while they're working out, club owners are making it easier than ever for members to buy products and services, and owners are tracking these purchases with their software programs. Over the years, the technology for connecting members to their billing accounts has improved to the point where at some clubs, members can buy an item simply by scanning their fingerprint, which is tied to their credit card.

By analyzing members' buying patterns, owners are better able to anticipate future and recurring purchases, which is especially important for services such as personal training. In the past, Energy Fitness lost revenue when trying to track personal training appointments through paper cards and a self-created schedule. Now that the club can track this data electronically, Fox and the other trainers are able to better manage the personal training end of their business.

Service and Support

Club software packages can help club operators manage their retention, marketing, billing and activity levels, but with so many options available on the market, owners must decide whether to go with a comprehensive software program or a stand-alone membership management application.

Regardless of which option they go with, many club owners are looking for software training and support for their front desk staff and members. Although the front desk employees normally check in members and ring up purchases using the software, club managers also use the software to run reports on a daily, weekly or monthly basis.

After a club owner purchases a software program, some vendors offer live one-on-one training, on-site demonstrations and Web-based training courses. Vendor support played a critical role in Havens' decision about which software package to select for Backstreet Fitness.

"I'm not a computer savvy person, and I set it up and went right into it," she says, adding that the vendor's technical support team was easy to work with.

By building a complete database, analyzing the data to uncover trends and leveraging that information, health club owners can uncover a gold mine of information that could help them grow their business and improve retention and revenue during tough economic times.

Skeen, for one, is sold on the technology used in his clubs' membership management system.

"I've been in the business for 18 years, and I haven't experienced anything like this," Skeen says. "I tell my peers that if they have a good management system in place during a down economy, they'll be much stronger when they come out of it."

Connecting with Members Online

Membership management software is helping club owners stay organized and grow their businesses. At the same time, some vendors offer functionalities that allow club members to log on to specialized areas of club Web sites.

These Web sites are often tied closely with clubs' member management software programs. That way, clubs can still keep track of members' usage of services, while allowing them to book an appointment with a trainer or update their membership information online.

Michael Fox of Energy Fitness says he plans to allow his 700 members to view their membership information, book training packages and access video clips on his Web site this year.

"I think it would be a benefit to our members to have that option," he says.

How to Select the Right Membership Management System

Do your research

To find the vendors of membership software programs, visit Club Industry's Fitness Business Pro's Directory and Buyers Guide and click on the software category.

Look for comprehensive reporting

Although any software package can help a club owner collect basic information about a member, try to look for software that allows deeper analysis and thorough reporting.

Consider ease of use

If a software package is impossible to use, you'll find that most of your employees will not use it to its full potential. Instead, try to look for a software package that offers all the necessary features while still being user-friendly.

Get support

Don't just look for technical training sessions or online resources. Instead, try to find a vendor that will share marketing strategies to help you meet your goals and help you devise custom solutions to meet your needs.

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