Q1. If you were to pick just three KPIs for clubs to focus on around member retention, what would they be and how often would you be tracking their progress daily, weekly, monthly, etc.
The first thing I would look at measuring is the retention time and I'd be doing this perhaps every four months, maybe twice a year. Certainly at the beginning of a project, we will always use survival analysis to measure the gap between when people join and when they leave and when people join and when they stopped paying. So we use survival analysis to do that.
That gives us a curve that allows us to see where to intervene in order to improve customer retention. If the curve looks like one of those Olympic ski slopes that the ski jumpers use and there is a cliff almost straight away, that tells us there is a different problem than if there is a fairly flat line for the first three to four months, and then it starts to drop away. So the first thing we would measure would be the time that someone actually spends within the club.
The second I would look at if I'm just choosing three, is monthly active users. We have been able to identify that overall. If customers are visiting less than once per week, the likelihood of them dropping out increases significantly. I know that once a week is not sufficient to change someone's physiology, change their muscle configuration and so on, but it is enough to keep them into the routine of exercise.
I would want to know which customers have not visited in the last month and which customers have been in less than once. Then I would start to group them; once a week, twice a week, three times a week or more. I would be mapping that out every month. Sometimes I would do it weekly. I'd be looking to see what proportion have not been in or visiting less than once per week. All of those are under less than once per week or those of the 'at risk' membership. In some businesses we have looked at, that can be 53% of the customers. 53% of the customers are not visiting even weekly. That can be really high risk to a business.
The third one that I would use is the net promoter score. I want to see how customers are ranking the experience they are having relative to visiting the club or the facility. I will use the zero to ten net promoter score. I do see some people using one to ten, not sure why that is. I would use the zero to ten net promoter score, but I would do it like this. I want to track the same person, so I don't want to do a sample of a thousand and then in six months time, a different sample of a thousand. I want to track people, I want to see what's happening to their net promoter score, because what we have seen is that over time as people get exposed to the business, their net promoter score is likely to start to decrease.
The other thing I would do with the net promoter score, is identify how many customers are not responding because we have seen in data that the non-responders quit much more quickly than those people who even score you zero.
I would track those who are the promoters and the advocates, those people that are neutral who are the sevens and the eights and those people who are the detractors, the zeros to six, but also there is a fourth group, those people who do not respond.
They would be my three main KPIS that I would kick off with any business I'm working with.
Q2. If you were given a billboard related to retention or customer experience, and you could post anything on it, what would it be and why?
I would post 'when are you in next?', obviously with the company logo, some images of the business, but always prompting the next visit. Visits are the currency by which we exist. If customers are not coming in, they are more likely to cancel. So Iwould want to say, 'when are you in next?' I want to prompt that and I want to keep it top of mind with people.
We also use that expression when people are leaving the clubs. So we don't just say thanks for visiting and have a nice day. We are always going to ask 'when are you in next?' We are always going to prompt that next visit.
Q3. Many clubs think hiring a customer service or retention team is a waste of payroll as they find it hard to determine the return on investment. Do you agree, or have you seen a value in creating a team with dedicated focus? If so, what activities performed by that team that bring the highest return on investment?
It would probably not align with my values and beliefs if I said, I didn't think it was important. Here is a brief example.
In the last club that I managed, we got rid of personal training. We stopped having personal trainers in the club. We reverted to just having fitness staff on the gym floor, but those fitness staff were given specific tasks, particularly around helping customers, interacting with customers and creating a positive experience for customers.
In that club we measured the retention time of the customers and we found that the majority of our customers stayed at least six months, then they started to fall away. So this is the deal we did with our staff. Each member of the fitness team had to look after somewhere between 300 and 500 customers. We made it almost like a case load, like a doctor would have. For every customer that made it through to month seven we gave that member of the team a dollar.
They had 300 to 500 customers that they were looking after, if they could get them from month six to month seven, we would give them a dollar. That would be $300 to $500 bonus that month for getting their customers through.
If they made it through to month eight, we would give them another dollar, month nine, we would give them another dollar. So our staff were able to earn $300 to $500 extra on top of their salary each month, just by doing the tasks and activities that we used.
We didn't see that having a 3% to 5% penetration rate within our membership base for personal training had anything like the return on investment, that the extra months of memberships did.
Think about Calculating if 300 customers pay an extra month, how much revenue that generates from one member of staff doing an activity that increases interaction and visit frequency, compared to one personal trainer. How many sessions would that PT have to do to generate the same amount of income? So we got rid of them. It was controversial. A lot of people kicked off about it, but that's one of the things we did. We said we are not even bothering with personal training.
Q4. It's one thing to have data, another thing to apply it. Can you share a case study that shows data collection, analysis, application and results?
I'm going to go back quite a way with this, I think that's fair in terms of protecting customers, but I also want to give you a real example.
There was a club in London called the Reebok sports club. It still exists. It now has new owners, it's rebranded, it's the third space. It's in an area of London called Canary Wharf. That would be the central business district, the financial district in most cities.
I was approached by the managing director there to run some analyses. They wanted to better understand their customers. They wanted to better understand their data. We ran a deep analysis on the data. We extracted data from their membership management system. They had about 7,000 customers. This is a premium club, and even 10 years ago, they were charging the equivalent of $150 a week. They had a large joining fee, but they also had no monthly minimum. You paid month by month by month, no long term contract. It's a big facility, they were getting three and a half thousand visits per day and still do.
The question was; should they introduce a contract, a fixed period term , a discounted rate? Firstly would customers buy it and commit to it and secondly, what would be the financial position of doing that?
We did the analysis, we worked out how long on average customers stayed and at the time for them, it was 16 months. We also then interviewed just over a thousand customers. I think it was 1,012. We asked them, if you had the option to take out a twelve month agreement or twelve month contract at a slightly lower rate, is that something you would purchase? Overwhelmingly the customers said yes they would buy a 12 month agreement if the price was reduced.
When you look at it on the face of it, it looks great. We should introduce a twelve month agreement because people will buy that. But then if you go back to the data and you look at the data and see, actually even without a twelve month agreement they are staying 16 months, which means if they did introduce that 12 month agreement they would have lost money. They would have lost a significant amount of money even on the customers they already had.
This was a situation where actually introducing a contract did not benefit a club. It got in the way or would be detrimental to that experience.
The other thing we were able to analyze at the time, was the data they had on customers who rented a locker on a monthly basis. There were areas of the locker room that were general use, then a slightly higher experience and then a really high end experience. There was separate access and you had to have a separate code.
We were able to show that even in the general locker area where people could pay to hire or rent a locker for the month to keep their own valuables and their own personal possessions in, those customers stayed longer than customers who did not hire a locker.
One of the things that went through the minds of the operators at the time was maybe we should increase the amount of lockers that people could hire, because not only did we get a secondary income from that, but they stay longer than our customer average as well. That's where I think data can be used. We have. covered 70 different topics in the research that we have done looking at how customers behave. So that's just one example.
Q5. What's your favorite book, podcast, influencer or resources in regards to learning more about retention?
This might sound like a cop out but I love YouTube. Why wouldn't you go to you YouTube to learn stuff, it's like having largest library in the world at your fingertips.
Yes there is a lot of stuff that's on it that is rubbish. Go to YouTube with a purpose. I'm interested in listening to people like Daniel Harnaman, Richard Thaler. Top economics, top psychologists, people who I wouldn't get access to day to day. I listen to their presentations and I might listen to the same presentation given in five different locations beause they change a little bit or they make some nuances. Or someone like Rory Sutherland from Ogilvy who is a marketing guy who looks at behavioural economics.
What I do think is challenging is that when you are watching is reframing it into the context in which you are working. I will sit and watch you tube and I'll have some post it notes with some names of different clients or customers. As they are talking about different subjects, I will make notes about how that relates to one business, how it relates to a different business, because it doesn't always all relate to every business. It's about taking that content and reframing it.
If I were going to give any recommendations industry related content, I would recommend the 'Fitness business podcast', I always listen to the 'escape your limits' podcast. I would also recommend the 'club industry' webinars that have relentlessly provided updates and information for the industry week on week on week.
If you've got any questions you can reach me at [email protected]