Key Performance Indicators Influence Health Club Membership Retention

Since its inception, the health and fitness club industry has been about members—attracting them and then holding onto them. In the preface to “IHRSA’s Guide to Membership Retention,” published in 2007, John McCarthy, the then-executive director of the International Health, Racquet and Sportsclub Association, wrote that membership retention had become the industry’s Achilles’ heel, since the industry tends to focus more on sales than retention. During the past 20 years, the average annual retention rate for clubs has ranged from 60 percent to 75 percent, with many of the largest club groups experiencing retention levels as low as 50 percent to 60 percent.

Research from several fitness industry groups shows a correlation between membership retention and certain metrics or indexes. If you want to improve retention at your club, you should be monitoring or measuring several metrics.

The metrics that seem to have the closest statistical relationship to retention include:

  • Member usage. Research shows a closely related relationship between frequency of usage and membership retention. The more frequently that members use the club, the more likely they are to remain members. The less frequently that members use the club, the more likely they are to resign.
  • Early stage usage. Research shows that frequency of usage during the first 90 to 120 days of membership is closely correlated with retention, both during the first few months and after more than one year.
  • Member satisfaction. Data shows that the higher a club’s “net promoter score” (percentage of members who rate you as a five on a five-point scale, minus those who rate you a one, two or three) the better a club’s membership retention levels are.
  • Additional services revenue per member. The more money a member spends in a club, especially during the first 90 to 120 days of membership, the more likely they are to remain a member.

The following metrics are valuable since they can be easily measured, are easily communicated and are easy to grasp. They also can be influenced by the entire staff once they know your targets.

  • Percentage of membership using the club daily. Management should understand that a percentage of the total membership visits the club daily. The higher the percentage of daily visits, the more engaged the membership is. A good number to shoot for is above 25 percent.
  • Percentage of members using additional services. The higher this percentage is, the more engaged the membership is. Although the percentages partially depend on your club’s business model, achieving greater than 20 percent penetration will positively affect retention.
  • Average additional services spent per visit. This number, especially if measured daily, can help management and staff zoom in on new approaches to generating spending and improving retention.
  • Percentage of members who use the club less than four times per month and more than eight times per month. These two variables have the most reliable relationship to retention. If you can decrease the percentage of members who use the club less than four times per month and increase the percentage of members who use the club at least eight times per month, you will positively influence retention over the long haul.

The following are some informational metrics that you can act upon immediately once you know the numbers:

  • Current members who use the club less than four times per month. Contact these members and identify strategies and actions to get them more involved.
  • New members from the past month who have used the club less than four times. Implement strategies for helping them connect more effectively with the club.
  • New and existing members who have used the club at least eight times in the last month. Knowing who these members (your “business apostles”) are, allows you to recognize and reward them.
  • New members who have not spent money in the club in the last 90 days. If you learn the names of these members, you can focus on getting them engaged in club services.

Stephen Tharrett is president of Club Industry Consulting. He is the author of four books and is a former board member and president of IHRSA. Tharrett is involved in public speaking, having served as an international keynote speaker at conventions in Argentina, Australia, Brazil, China, England, Ireland, Japan, Russia, Singapore, Spain and Turkey, as well as domestic conventions such as Athletic Business, CMAA, IHRSA and SIBEC.

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