RETENTION: Necessary But No Longer Enough


Even though I may have delivered one of the first member retention seminars back in the 1980s and I've recently read more articles and seen more advertisements for systems related to member retention, I'd like to set the record straight: retention is not the be-all or end-all answer to the woes plaguing health clubs today.

In their book, The Origin of Brands (Harper Collins Publishers, 2004), Al and Laura Ries state that “A company that devotes all of its efforts to ‘satisfying its customers’ is a company headed for trouble.” They contend that a company should create marketing opportunities for introducing new categories (i.e., new revenue sources), and they further assert that “Almost any company in any industry could be stronger and financially healthier by selling…or discontinuing some of its operations.”

This way of thinking certainly flies in the face of the current rationale in many sectors of the health club industry, but I believe it's sound business advice. While I see some evidence for facilities doing the best they can to take care of members, I don't think that most clubs benefit greatly from all-out membership retention efforts or from the adoption of sophisticated retention systems. This opinion is borne out by the fact that, despite our best intentions to hold onto members, we have not significantly affected a 40 percent attrition ratio that has basically stood for nearly 15 years.

We should have learned two critical lessons in the past decade:

  1. People are fickle; most people don't like to exercise; and the majority of people are not highly self-motivated — no matter how we try to change them.

  2. It's extremely challenging to turn non-users into users. Thus, it's challenging once they're out of the loop to get them back on track. It necessitates behavioral change of the highest order, and I don't see many behaviorists at the helm of health clubs.

Let's take a trip back in time to study the core of the retention phenomenon. In the 1970s and 1980s, early adopters flocked into health clubs and signed up. As the industry grew into the 1990s, it became clear that we were no longer attracting only early adopters (we called them “gym rats”) but that we had already shifted into the early majority stage of product development — that point on the bell curve where you begin to approach the top of the curve (we called this the introduction of the deconditioned market into our membership).

We have been riding that crest for about a dozen years, and, in my opinion, we have gone over the top of the curve and are now sliding down the other side as we've entered the late majority phase of customer attraction. The market segments that remain to be tapped, though timing is challenging to ascertain, are the dregs of the late majority group and then the laggards.

Statistically, though others will say differently, we have sold more than half of the member-eligible markets, and we have done a poor job of keeping them in the game. As the industry has grown in numbers and types of facilities, we now realize that we don't have nearly the remaining prospect market that we thought we had. So, we suddenly pay big-time heed to retention — possibly too much, too late. (I believe this factor has given rise to the Curves phenomenon and to the introduction of the low-price quality clubs — but that is subject matter for a future column.)

It seems that our industry suffers from what I'll call elementary confusion. The media and consultants now say we have to take care of our members and/or get them back into our clubs. That's like saying we ought to put a sprinkler system in the barn while the barn is better than half-burned-down and the stock is all out.

Seth Godin says it eloquently and simply in his little gem, Purple Cow, a must-read book for anyone intent on learning modern marketing. He says, “It [used to be] up to the marketers to decide who would pay attention and when. Today, it's the consumers who choose.” He advises that “You must develop products, services and techniques that the market will actually seek out.”

It's high time that we pay less attention to retention and focus more on the new customer's experience while we build viable alternative products, such as short-term program offerings, to better appeal to a more savvy marketplace. I believe the day of re-marketing what we already marketed and delivered poorly is in the past.

Author's Note: A personal thank you to all of this column's readers who sent condolences to Phyllis and me following the death of our daughter, Susan. Your thoughts were much appreciated.

Michael Scott Scudder is a 30-year veteran of the fitness industry. He is a personal business trainer operating Fitness Focus, a consulting company that offers private workshops on pertinent fitness business matters. Questions and comments are welcomed by Michael at 505-690-5974 or [email protected].

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