Look Beyond Your Net Promoter Score to Drive Member Loyalty

Since the inception of the Net Promoter Score (NPS) study conducted by the International Health, Racquet and Sportsclub Association (IHRSA) in 2012, the industry has been inundated with information proclaiming NPS as the ultimate measure of member loyalty.

A club’s NPS is determined by asking members and clients to rate how likely they are to recommend your facility to a friend or colleague on a 0-to-10 point scale, then subtracting the percentage of people who responded negatively from the percentage that responded enthusiastically.

Recently, IHRSA reported a preliminary NPS benchmark for the health and fitness club industry. According to the survey, the industry achieved a score of 44.

Unless you’ve been holed up in a cave, you, like most others in our industry, have been told that knowing and growing this single number is the magic solution to improve member loyalty, member retention and continuous profitability. What our industry has not been exposed to, but should be, is the work of others that show that NPS, while a valuable and easily understood metric for customer loyalty, is not necessarily the only metric, and in many cases not the best metric for helping management drive member loyalty.

Club operators should consider the following questions to make a more informed decision about how they measure member loyalty and consequently the actions they can take to enhance member loyalty, tenure and spending:

Is NPS a good benchmark to compare member loyalty across clubs?

According to some member loyalty experts, comparing NPSs across industries may not provide valid comparisons. The same can be said for comparing the NPSs of two businesses whose value propositions are different. The NPS is a reflection or outcome of a business’ ability to over-deliver on its value proposition, or the expectations of its clients. For example, the value proposition of a budget club and the expectations of its members are completely different than the value proposition of a luxury club and the expectations of its members. An experience that drives happiness in a budget club might be a detractor for a luxury club. The old saying, “Don’t compare apples to oranges” rings true when it comes to benchmarking NPS across different clubs.

Can NPS drive loyalty, retention, tenure and increased spending?

The validity of NPS is highly dependent on the market, market segment and even the particular customers of a business. In other words, leaving your future to one number may not be the best decision to make. Instead, you should look at several measures to ensure you are covering your bases.

Our work with operators of some premium and luxury clubs, as well as with other hospitality businesses, shows that the score related to the question, “How likely are to you remain a member?” has greater predictive value than the question, “How likely are you to recommend the club to others?”

We look at four outcome measures for member loyalty: 1) how delighted you are with your overall experience with the club; 2) how likely you are to recommend the club to others; 3) whether or not you love the club; and 4) how likely you are to remain a member. By assessing these four outcome measures, we are able to provide a more comprehensive idea of how well the club is driving loyalty.

Can NPS tell you what is working or what needs to change?

NPS is an outcome measure, not a process measure. It provides you with a measurable outcome that can be tracked over time, but what it can’t do is tell you what is working, what is not working or what needs to change. If you really want to drive loyalty, retention, tenure and profitability, then you want to uncover the drivers and influencers that impact these outcomes. To do that, you have to measure what’s important to the customer, what’s not so important to the customer and how well you are performing tasks in both categories.

By understanding where you and your members stand, you can put steps in place to create positive and lasting change.

Stephen Tharrett and Mark Williamson are the co-founders of ClubIntel, a brand insights firm. Together they have more than 50 years of experience in the club and hospitality business. They can be reached at [email protected] and [email protected].