Retention is the period of time between when someone joins and they either stop exercising or when they stopped paying. Depending upon the markets we work in, it depends which one of those two or if we measure both.
Attrition is the number of people that cancel from your business. So one is measured in months and the other is measured in people, so they're not the opposite of one another, Like many people think. They're related, but then they are separate measures completely.
Lots of people say, oh well if your retention is this, then your attrition is the opposite.
We use traditional statistical analysis that's found in medicine insurance companies to actually track and plot what people are doing. Some of the things that the Fitness industry use to measure attrition just have no value. You might as well measure the size of a room with an ice cream.
Retention needs to be measured in people, not percentages.
The approach that's most appropriate, is called survival analysis. Survival analysis was originally developed in medicine to measure how successful operations or medicines were after their introduction.
So if you'd had an operation and they would say, if this is the day of your operation, how long do you survive after that operation based on that treatment. Then you can do comparisons between what if you didn't have that treatment, how long would you survive?
That would give a clear indication of, when people start doing something, when they stopped doing something or something happens.
Interestingly enough, it's the last event is called a termination, which is often what clubs you use to describe their members.
We use that as our standard measure and it gives us a number of things. It can give us our average length of membership. It can give us information about how long members are staying members at any particular point. So how many members get through from start to the first three months, six months, nine months. Then we can split it by lots of different variables to see which factors are actually having the impact on the business.
There are software solutions out there that have been made for the fitness industry that will do it for businesses. Lots of businesses will really struggle with this because it's a statistical approach and it's not a traditional accounting XL process.
Even if you came produce the outputs, it's interpreting those outputs into what your behavior should be.
If you're looking at a survival curve, it looks like a decay graph. So it always comes down and if there's a sudden deflection in that down, let's say at three months, most operators we've got identify a problem at three months, but they often don't know what it is about their business that they need to do or change to change or recover that deflection point.
It's not as simple as just looking at a spreadsheet each month. If you've got half decent retention, anything you put in now might take six months to see if that had any impact because you've already got people in the business and they might not be impacted by your new intervention.
It's not like sales where you can ask , what did we sell today? What's our current sales promotion doing? You have to have to put it in and wait but you can get early indicators or early markers.
We've done a lot more work recently on being able to plot; if people do this in the early stages, we can expect them to do this in the latest stages. We can get an early indicator now, but we need a lot of data to do that.
I have a very simple philosophy when it comes to individuals.
If you don't get their head, you don't get their body. On any given day it's their head that makes the decision whether they're going to train or not.
I think our industry's really got it nailed in terms of what you need to do to change your body, but there's a massive gap between that and what we need to do to understand people's behaviors and help them adopt or adapt the fitness behaviors.
There are people who are already doing a good job of that, but I think there's also a lot of opportunities in that area.
I go to a lot of the trade conferences and I go to a lot of the trade shows and what I see is a lot of things that are very attractive to those already adapted to exercise and enthusiastic about exercise. But if you took someone from outside the industry and walk them around, a lot of people would be intimidated.
I do think there's a lot of opportunity. I think there's been more in the last two or three years. A lot of the research we've done is around interaction and the impact human to human and digital to human interaction creates. But we're at the infancy of that and I think clubs have been able to be successful in the past because they had great equipment, great training, great pts.
We've almost got to the point where the market that already wanted that has already got it and the rest if we look at the 75- 80% of the population that don't and only half of them wanted to come in, we're not yet in a position to, I think psychologically help them. I think there are the training plans, but there should also be psychological plans for people, which is a very different way of looking at fitness.
So are you saying then that the people, that percentage, whatever it is in the market ,of between 10 and 20% those people have already kind of generally made that mind and lifestyle shift to say working out and fitness is kind of what I do and we're sort of circulating those people. But the other 80 or so percent that have not done that, they're the ones that need that sort of mind shift to understand that they've got to make it a habit.
If you think of a spinning wheel, like a kids type of roundabout, there are those people are holding on for dear life in the middle who are into it and there's those people trying to get on being thrown off.
the people, that percentage, whatever it is in the market ,of between 10 and 20% those people have already kind of generally made that mind and lifestyle shift to say working out and fitness is kind of what I do and we're sort of circulating those people. But the other 80 or so percent that have not done that, they're the ones that need that sort of mind shift to understand that they've got to make it a habit and get thrown off the wheel.
I think there's a lot of low hanging fruit would be a business description, but there's a lot of people who keep trying. It didn't work for me here , I'll go to another club. It didn't work for me there, I'll go to another club. They want in but if you just focus on the physiological changes and the training that doesn't bring them on board, I think there is a step to be made.
My interest is always in and solely in people who want to use health clubs or facilities. I'm less worried about the people who were in running groups outside. I want people to come into clubs and use clubs.
People who have never ever been in a health club before, they're new to exercise, so they’re completely new. At the other end of that continuum, I use the term savvy. Savvy is somebody who could walk into most clubs and get a workout. That doesn't mean they are savvy on everything you've got, but they know if they do functional training they could go over, pick up some battle ropes, get on with it but there will be areas of the club that they don't know.
In the middle of that, there's a group that I call yoyo and the yoyos are the most misunderstood because the Yoyos have probably been a member of a club not being successful and left and then they come to a second club or they've come back to the same club.
When we go through our sales processes and our gym induction processes, the question we often ask them is, have you ever been a member of a gym before. They can answer, yes they have. but they often treated like savvy, when actually they're more like new.
We assume that because they've been a member of a gym before, they won't want an induction. So we push away some of the services they actually need before even giving them a choice or we make assumptions about them.
On the periphery of that, you've got all those people who want to be involved but haven't yet made the step or they are just cycling through from new to yoyo, out, new to yoyo, out and they never become savvy.
Which one of those would you say represents the best opportunity at the moment, if you look in the developed markets like North America, Europe?
If you think about savvy excisers, they've already adopted that behavior and so they're looking for a place that's going to give them what they want. They're more astute about business in terms of if they're a group exercise person, they'll walk in, they'll look at a studio time table and instead of thining wow, there's 120 classes, they'll think I do yoga, they'll count your yoga classes and see you've got 10 yoga classes and they can only attend four of them. The savvy are much more likely to say well if I'm into yoga, aren't going to a yoga studio.
The savvy will also need less support. They're more likely to use a facility as a utility turn up, train and leave as opposed to some where they dwell and spend time.
The traditional format of health clubs still works in areas where people want to use it as a utility. Those clubs that we see where there's big cardio areas, big resistance machine areas, free weight areas, functional areas, studios, I think they're going to find a real challenge in the next few years because the savvy just want what they want and don't care about everything else. We've seen some of that in the boutique market.
There's a big opportunity for the new and yoyos, in terms of just finding an excise environment where they're just comfortable to train, where they feel like they're part of something.
I don't think there's one particular area that's really going to make a difference. You will have to do different things in different areas. You will have to support in different types of customers.
It's now more important than ever, even in the emerging markets because the emerging markets, if they do it properly they should not make the mistakes everybody else has made in the last 20 years. They should look at what's happened. They should look at the businesses that grew and then collapsed and grew and collapsed and what worked and what didn't and pick the best things.
Emerging markets like Asia should be able to start with boutiques, but it should also be able to start with low cost. It should be able to start with the best of everything just in the way they develop their businesses.
There's certain brands or companies that own different brands and they kind of have their, low cost style model, which would be for that more new and YoYo type of client. They have the boutique, which would probably be the savvy and they've got the of premium service would you say having this portfolio approach of you as the investor would probably help to?
I think you can mitigate some risk by having multiple types of products, but I'd certainly have them branded as individual products. I wouldn't have a house of brands like here's our, Bedford's low cost, Bedford's boutique, Bedford's premium. I'd have distinct brands, distinct marketing and separate them out.
There is a worry with big operators announcing; we're going to go into the boutique market when actually what makes boutique a boutique is often the fact that it is very contained. It's very owner operated. It is very small and I see a lot of big operators looking at the building the equipment and say we can replicate that. Where actually the experience is the product and I can go and replicate perhaps what some of the more boutique operators have done in terms of buying the same equipment, painting logos on the walls, having the same process, but it's the experience that is the product for Boutiques, not the equipment and it's that that makes the real difference.
Equinox - soul cycle , rumble blink, you wouldnt know they are part related
I've been fortunate to be able to share data and conversations with people who work within those organizations and this is public knowledge. It was presented at some conferences. The people using blink, which is their low cost model, the number one thing they searched for in the club on their phones were classes. So blink did a very good strategic move, thye already owned soul cycle, so they're going to nudge in the direction of soul cycle, but they looked at what other types of classes the blink customers were purchasing and are working on developing products to match those needs in separate studios or they've linked with types of studios that those customers are searching for blink saying are saying , well we're not even going to try and be blink that does group X. We're blink but we'll partner with for our customers to get to use that.
People are looking at business models in a very different way
When I've been mapping stuff out recently, it used to be really simple, small clubs, big clubs, nice straight line, low price, high price, low end premium. And it was really easy. Now it's just like the big bang. It's just gone all over the place.
People pay $35 for a class, but they only pay $17.99 for a month and some of the data I've seen, we've been able to look at things and see that people who are members of low cost also go and buy boutique. So they keep a low cost membership for their general fitness, but they're actually using boutique classes to compliment that or supplement that almost in some cases like a social night. Run on the treadmill here, but go and have fun in the Boutique.
Do people's behaviors change then in different situations? Yes
We used to think from a psychological perspective that if we for one way then we'd behave appropriately. A lot of the research around behavior now, shows that if you behave like that your thinking changes to meet the behavior. If we start doing that behavior on a regular basis, we change our mindset. i
If we can change people's behaviors, we change their mind as opposed to changing their mind to get them to do a certain behavior. You almost have to like fake it till you make it. It doesn't matter whether you're motivated to come and train or not because it was thought motivation drove behavior, but actually you can get as much motivation from doing the behavior and then be motivated because you're doing it as opposed to thinking I need to do this. Don't wait for motivation, just get on with it.
Servicing those three different types of member
Let's start with the savvy because if you are the central business district somewhere at like a downtown financial area, you are going to get a lot of people who are experienced exercisers and you'll get a proportion who are new. With the experienced ones, you don't want to slow them down when they start.
You don't want to say, Okay I know you've been training for years, but you're going to have our gym induction because you're going to nod and smile in, in your head. There's going to be a lot of other words going on, or you will book it and then not turn up and then that's a waste of people's money and time.
The first thing with Savvy's is respect the fact that they've got some experience. I advise all my clients, the savvy exerciser must meet a member of the staff before they can use the gym. That doesn't mean they have to have an induction but they must meet someone who represents the company just so they've got a visual point of oh ok, I've gone in today, , I'm the new member, I've got to meet Matthew just to say hi before I go and do my first workout. We exchanged some pleasantries. Then you've got at least one point of contact where if they haven't ever used a particular machine, they can ask how it works.
The importance of interactions, the more interactions you can get, the longer these people are going to stay
If I look at it purely from a retention perspective, not from a physiological change to my body, the training results perspective, there's a couple of numbers to bear in mind. As long as people visit once per week, they're less likely to quit. Significantly less likely to quit once a week isn't sufficient to change your body.
There's a difference between wanting to change someone's body and keeping them longer. If you're an operator, if you're the business side of things, you might think , well actually I want people to change their bodies, but actually I need them to come in first of all in order to do that. As long as they come in once a week and they will keep coming in. Now it could be that they're doing other things outside, that's fine.
So once a week is the threshold. As soon as they drop below visiting once per week or what we call four times per month, the risk of them cancelling goes through the roof. As long as they're coming in Monday night and doing something fine.
If when they're in and they have an interaction with a member of staff, the risk of them cancelling reduces by 20%. If they come in and I speak to them on two or three occasions within a month, the risk of them cancelling drops to 50% if I speak to them on four or more occasions, which requires four visits, the risk of and canceling drops by 80%
It's really important that we get them to visit because if they visit we can interact with them and bizarrely if we interact with them we can prompt them to visit again. So we can create this sort of virtuous cycle of you do something, we do something, you do something, we do something and it keeps the wheel moving.
There are different types of interactions you can do and some of the most advanced forms of interaction where you are with the customer or the client and you are getting them to make commitments about behaviors. A Simple one might be 'when are you in next? I'm in next Monday' .
The one interaction can reduce the risk of canceling by 74% so you don't need four, you need one but you need the right type of interaction.
Some customers don't want to interact, some of the savvy's definitely don't want to interact because they're using it as utility in out, they just want to get their workout done. But they do want to be acknowledged or recognized they've made an effort today. They may not have time for a conversation but they do have a desire to have a member of satff acknowledge and say I saw you this morning. Well done for coming in. When will I see you next? Will I see you tomorrow and they might reply yeah, I'll be in tomorrow. Those interactions are really, really important.
The other thing to bear in mind is the way in which customers rank those interactions varies by staff and by activity. If someone walks through reception to a club and the receptionist says high on a scale of 0- 10, they might rank that as a three or a four because they expect reception to say hi. If a gym instructor, personal trainer, or a group exercise teacher speaks to them while they're doing their activity, they rank that much higher because they perceive that person to be more relevant to what they're there to do. So they rank that higher.
If we think about front of House, the time when that score goes from a 3-4 up to a 9 or 10, is when front of House are solving problems or answering questions. So if someone walks in and says, oh, what classes are on today? and the reception team can go, oh, it's this, it's, this is what you normally do. Oh, you'd like this. That ranking goes up really, really high. But just the normal good morning, how are you ? , is low.
If we can operationalize, make some of the interaction almost automatic some of the basic process like entering and exiting the club like we do with swipe cards, it can actually free up time for our front of House staff to do something that's of more value to the customer. We can play around with the types of interactions that happen, where they happen and the timings of when they happen to get the biggest impact. So it's right time, right place, right content.
Low cost set up their whole agreement with the customer based on transaction. It's about the price. It's, it's never about the service. So they don't tend to build a relationship with the customer because it's mainly a transactional process rather than the relationship process.
I've worked with quite a lot of low cost operators now and the idea that if you sign them up cheap, you keep them on a month by month so they can cancel whenever they like so they'll stay forever. It doesn't happen, really doesn't happen.
You get huge volume, so that's okay because you get a lot of people going through that process, but they don't tend to stay or they will stay for a period, then have a break, stay for a period, have a break.
In some of the UK data that I've looked at and some of the US data, we see that over a 12 month period, someone might be a member for a total of nine months, but they go three months, month off, three months, month off, three months, month off. So over 12 months the revenue they get is only nine months worth of revenue even though they maintain their membership or continue a membership over a 12 month period.
There was a thought when the low cost market started that if you don't charge them very much and you make it easy for him to leave, they'll just carry on paying.
The customer is more savvy than that and think I can cancel this month, I'm not going to be here. I might as well cancel, save my money, come back.
I joined eight low cost operators on one day and remained a member for six months to see what all the communications. I only had to wait three days to get an offer to rejoin and We'll give you no joining fee so they understand that they have to keep getting people back on board. So they'll churn or turnover a lot, but probably about 30 to 40% of their customers have been customers before. They're just returning customers. Whether you call them new or just renewals would depend on the business.
One of the low cost operators I worked with, we had a lot of data, 800,000 records we looked at and 10% of the customers joined, didn't never visited, but they paid for one to two months. So let's say that was £20 . So they get £40 per customer.
Customers who joined and only visited once. There was about 10% of them, but they stayed up to five months, three to five months. So the revenue generated even there is somewhere between £60 and £100.
So one of the first tasks and activities they asked me to work on was help us get people who've never come to come once beause from a revenue standpoint that just pushes it up.
10% on 800,000 is 80,000 people. An extra £60 per 80, 000 people, That's a significant amount of money and the only thing you had to do was get to come once. So from a business perspective, huge.
Take some of the more expensive options within the industry. Let's say someone's paying £100 a month. You don't have to do an awful lot to get them through to the next month. If you've got a business of 5,000 people and they're paying a hundred pounds a month, over the lifespan of those 5,000 people. , 5,000 people at one extra month at £100 each ,that's a lot of revenue.
One of the big chains that I did work for in the states, we looked at, that if they got all of their customers to stay one extra month, now their average length of stay for their customers was already 13 months. But if they went from 13 months to 14 months that would be worth $28 million extra to their revenue and it would probably take them about two years to get that.
Just keeping people longer or getting them to come in in the first place can have a significant impact, but not only that, we've seen again with different data sets we've got and these tend to be more of what I would call the destination clubs, the clubs that have got, bars and restaurants and you go there to dwell. So they're more like a country club. Even if they're in the city. You can end up generating 40% extra revenue per member after about nine months, additional to their membership fee.
So if their membership is 100 after about nine months, you're probably going to get £140 out of them per month because they get into the habit coming in, working out, I'll grab a coffee. That one off coffee becomes part of the routine. So it's now I go to the gym. I have a coffee, while I'm having my coffee, I have this or I grab a smoothie and that all adds up. But it seems to stack up over time and has to become part of the behavior.
Some of the sites that I would describe as utilities where people just come in and train and leave. If they tried to do that, it wouldn't work because they're competing with specialists, coffee houses, they're competing with the people who do that for a living. You have to make a decision on are we somewhere that people come and dwell or are we utility and we just really focus on what we do well, which is the fitness side of it.
And we'll leave the coffees and the shakes to whole foods and Costa coffee and Starbucks. I'm not suggesting any of them are quality, but we leave it to them because that's what they do. Although I've seen some boutiques where they have partnered up with kind of juice companies that are on the front or on the side and that's convenient and that makes sense if they can do it to a quality that matches the place down the road but if you can just having a vending machines not going to do it.
The savvy, you want to give them respect for the fact that they've educated themselves. They've got to the point where they can come in and train.The new, you need to provide them with more support.
So the idea that we might just give them a 30 minute, 60 minute gym induction is ridiculous because while the equipment now and a lot of the services have been made simpler to use, it's still a lot to try and learn in a short period of time.
In psychology there's a thing called cognitive load and that's about how much thinking you have to do to remember it. An example would be driving lessons. When most people have driving lessons, they sit in the car, the first lesson they just get to go around the block and that's it. Then over six, seven, eight, ten ,twelve or more lessons, you build up your skills and competencies.
Often we expect people to be able to do all the things in one 60 minute session and the cognitive load is so huge that they can't do it.
When I'm looking at these processes for a lot of business now they're trying to push so much in or there's so much extra to add. You've got to download our APP. You've got to, have a three d body scan.
With a client of recently, we mapped out the 60 minutes they spent the customer. The customer spent 12 minutes being educated about equipment because the rest of the time was these all the things we need to do to set up, all upselling and if I break away from that and say, look, if you are taking someone in yourself who'd never exercised and I use my mum as an example. How long would you spend with her, showing her how to use a bike, a treadmill, a chest press?
How far along the journey would you look at introducing functional exercises? You could introduce them straight away but in terms of her confidence and competence in coming in, what would she get?
Too many clubs think when they do their induction processes as about as a one off rather than perhaps the first three, six or twelve months and say to people in the first three months we're just going to focus on this. You're going to get changes in your body, but then we're going to start layering in these other activities if you want them and if you don't, you don't.
This can lead you you into a second and third interaction,
The Zeigarnik effect is used really effectively in gaming, not to be confused with Gamification, but it's used a lot in gaming. The Zeigarnik effect is we like to have a sense of we started and finished something. So we like parameters of a beginning and an end.
Now often when we give people training programs, there's a beginning but there seemed to be an infinite end and our brains don't cope well with that. For example we e like to know with TV shows, how many episodes have we got to watch. We want to know that when it starts, is this six episodes? Is, is 17 seasons of 23 episodes, we need to know that.
We're really missing a trick in terms of excise programming in terms of harnessing this Zeigarnik effect. It's a six week program. It's a 12 week program. After 12 weeks we'll move on to this. Some of that we used to do in the past, because we give someone a program call and say in six weeks we'll update that. Then they never followed the program and we never followed up and it drifted.
With the current technology, we could do so much more, so much more to harness the behaviors of exercise and get people adapted to exercise. We're so desperate sometimes to get them involved. You never learn to drive in a formula one car.
Take martial arts as an example, you start with the basics and repeat and repeat and the progression may be slow but you can see the steps. In traditional Jujitsu you start with a white belt, you know the next belt is the yellow belt, but there's was a clear definition. If you want a yellow belt, you must be able to do these things. You want the next belt up, you need to be able to do these things. If you want it a black belt, you need to be able to do all of those things and you know it can take you three, maybe four years if you go on a regular basis to get to black belt. But there are defined steps and it's really clear, everybody in the room knows where you are and what you are capable of.
If you ever get up to spa and you have a white belt and your oponent is a black belt, they never expect the white belt to win because it's really clearly defined.
In fitness we don't really have that. I can look in the gym, some people look fit, some people don't. I don't know where they are on their journey.
I have had investors approach me and say we are thinking of creating this fitness product or service, but the struggle is around identifying what the defined next step would be. I want to make it all based on skill, you know how to use this area, how to use this area and how to use this area. They wanted to do it on VO2 Max and body fat percentage on more physiological measures. I want to do it on skill and that wasn't part of where they wanted to go with their business.
The 'new' need support, but I think also the Yoyo need the same support as the new. Depending on how you present things, and I would always suggest you present them as a choice because we know people are more likely to stick to something if they're given choice over something. Whereas if you're told you get what's called reactance, we push back. Even if we think it's a great idea, we go, I didn't have the idea, I'm not doing it.
Rather than forcing people, if you've got someone who's a Yoyo, I'd be saying to them, okay, so you've described your previous experience to me, which was whatever it was and this is where we are now. Now I've got an option for you. You can either have the, we'll just let you go and try and meet a member of the staff or if you want, we can support you with some additional follow ups.
They might only be on the gym floor for five or ten minutes. We'll check in with you every four weeks but it will all be on the gym floor. I think you'll find a lot more of the yoyo's will want the support because they didn't get it the first time they tried it, but having that support is something need.
In the three groups, there's the savvy, respect them, let them start and be there, but be there for them if they need it. The new you say, okay, you can understand we will need to show you what to do and for the Yoyo has go well if you didn't have a great experience before, why don't we come back to here, you've already got some knowledge, but we'll just add to that and support you would that support be of value and then drive that.
Instead of having a one size fits all induction. We're tailoring it, but we are tailoring it down two routes. It's either this or this. I f I say to you, which one those do you think would be of most value to you or help you be most successful? Most people who are in the Yoyo cattergory will say actually I want the support because I wasn't successful the first time.
Before I came into the health and fitness business, I worked in nightclubs. I was a promoter and an owner and an operator. We knew running nightclubs, if you spoke to customers on their way in, they were over the moon. If you spoke to them when they were leaving, they were over the moon. The manager spoke to me and if you knew them by name and they were with their friends suddenly gave him Kudos that they'd never had before.
It's about respecting whether people want the interaction. We've noticed more recently on some of our studies that people are more keen to talk on their way out than the way in. On their way in they want to just get in and get on with it. Afterwards, they almost want to talk about what they did so that someone can validate their training sessions.
There is this balance between interaction and interruption. I think people who have more experience in the industry, can look and think, yeah they want interaction or they can interact by saying morning and how you respond determines how they continue. If you say morning to them and they keep going, you understand that they didn't want to talk or are too busy.
On another day you might just stop and say oh how are you? It's being able to react to that and not think, oh he didn't speak to me today , that's it, he doesn't ever want to talk to me again. We don't know what's going on in people's minds at that point in time and We just have to give them that space.
Some technology can replace some of that human interaction. I never used to think it could I'll be honest, I thought, you'll never replace human to human interaction and to a level, I still believe that. I think that if you can get the right quality of interaction at the right time, then that's far more impactful. We are starting to see technologies now that it's the interaction when they're not in the facility being done using technology that drives them into the facility so that then someone can talk to them. So it's getting that balance right.
Some of the artificial intelligence programs available now that are prompting behaviors,, we've just tested a number of email sequences with SMS and videos and we've improved visit frequency from four times a month to eight times a month. That doesn't require any human interaction.
You could mess that up by doing a great job digitally and then they turn up in the club and somebody ignores them. As a rule we can mesh the two together.
Operators and investors have approached to me with, we want to do this technology or can you suggest a technology and I say yes but if you don't actually look after them when they turn up, all you are goinf to do is increase the frequency of them turning up to get disappointed. So you have to work on both sides.
Personal training is a revenue generator but It does little to improve retention because it doesn't impact enough of the customer group. If your penetration for pt is , 10% for the gym users. So treat them seperately fom group ex because PTSD often oferf to people who are using the gym. There's still 90% of the customers aren't getting affected by PT. Whereas a good retention strategy will impact 100% of your customers and you get the revenue from those who have PT.
We do know that people have PT on a routine basis, so set days and times, end up staying much longer than people have PT on an ad hoc basis. When I'm in businesses and they're saying, how should we sell our PT? I would look at selling packs of PT, goes back to this gigantic effect.
There's a beginning and the named spread them out over perhaps one a week over 10 weeks and encourage sessions in between that as well. That will increase the lifetime of that customer, which will have an impact on retention. But generally, PT revenue is PT revenue and it may contribute a little bit to retention, but it's not a retention strategy. I wouldn't go into any business and say,if you want to improve your attention, you need to drive PT because too few people access it.
In terms of focusing, when you look at revenue, if someone had an option of where to put all their resources to drive and focus on PT, if it's pure profit, let's look at my personal training program and maximize the revenue from that or activate a team of people to talk to them, bring them in a club. To get the best reteurn, there's two bits you have to consider.
The first, if it's a club where someone walks in and joins, so there's a traditional type salesperson. Psychologically they're in a buying mode, they're ready to spend money, they're ready to spend money on a membership and if you package it right they are ready to spend money on PT, because that's their mindset of , I'm coming to buy something today.
Oh, I've got a membership, do you want to package PT in with that. Yes and, the mind will flow naturally.
Once they've bought, when they turn up to train they are in a training mindset. So if you then try and propose PT to them cold, they're going to say no, because actually they didn't turn up to buy today. They turned up to train.
We looked at a lot of data from a number of different operators and what we found was people who buy PT on joining, point of sale, there's quite a bit of revenue generator from that, but we actually found the next biggest was after six months. Customers who are still there after six months and training, when we started interviewing people what it seem to be, was that when they join often because of the sales process, the marketing process; come and join our gym, you'll get all the results you want.
So they believe they can do that on their own and often the clubs make them believe they can do that on their own. You've joined, your body, comes next week. After six months, they're still struggling to get all the results they wanted. Now they are a point where they're thinking , what can I do apart from quitting to try and get this result or go somewhere else? That's often when they're most likely to buy a pt.
One of the strategies that a lot of operators are really not picking up on is, and the pts are doing this as well, they're focusing solely on new customers. Where actually 60% of the people who buy PT buy it after six months. Those people have tried, failed and now you can step in and say, how are you getting on, are you getting all the results you were looking for when you first started?
You raise that level of discomfort and then say, if you'd be interested in finding ways of getting to those results, I'd be happy to talk to you about that. You're suggesting the opportunity for PT or if you want to talk to me about the clients that I've worked with, we've got those type of results that you're looking for. We could shed on a discussion about that. You are opening up for that rather than would you want to by PT now? because as soon as you, they slap you down, they slap you down for good because in their mind they want to be consistent. I said no before and I need to say no again.
If you look at it in terms of buying cars, if I go into the car show room, I pick a car, I'm going through the process. If they say, would you want to add this? do you want to add this ? I'll do that during that process.
If I've bought the car, driven it away and a month later they ring me and say, do you want to add this to your car now? Probably not, I've got my car. But six months in, if they say, we've upgraded the fuel management system or we've got this now, would you like to add that you've had experience of it and if the car is not giving you what you wanted it to, you might go for it then so, but you have to be mindful about how you present that present it.
At some level, group exercise improves retention. I also have data that there's no difference in retention between men and women. Seeing more women do group ex. I would expect to see in the data that women stay longer than men but we've never seen that. We've never seen it anywhere.
I also think if, if group ex did retain more people while aren't all the class's full?, Just because over a year you should sell enough memberships that they retain and the class has just reached capacity but we do know that people who do group do stay a bit longer.
The challenge we've had in terms of measuring group ex and we're about to do some big studies on this, is often the club data doesn't tell us where they went, they tell us they're in. But once they're in, we don't know if they went and sat in the sauna, did a swim, did a work out.
Some clubs and now using different types of technologies to track where their customers are. So we can actually see what that is . But up until now, it's been very difficult to do that.
When we have done studies on group eX, what we found is that people who do group ex tend to stay longer than people who just do the gym. We also found was that most of the people who do some group also do some gym even if it's a run on the treadmill or use some medicine balls, some battle ropes or some kettle bells. They sort of supplement 15 minutes in the gym with their class.
We've also got to think about routine and I know a lot of people like talk about habit. A habit is something that happens without thinking. I don't think apart from those who are really, really savvy, people are habituated to exercise. Exercise becomes a routine. It becomes part of their lifestyle. So if they go to a class on a Monday night at six o'clock, it's Monday night at six o'clock.
As soon as we can create routines and I think that's what we should do with group X, is we should try and find ways of creating routines so that people in their diaries say to themselves, that part of the day is sacred.
That part of the day is sacred, not just for them, but then other people in their work environment, their home environment say I can't ask them to do that because they do that on that night.
We did a report called the black report where we interviewed a thousand customers who had been members of two gyms, so they joined, stayed, left or joined stayed, may have left, may not .
Between them , they had six and a half thousand years of experience. There was a woman that gave me a quote and that quote was
"Thursday night is Zumber night, on Thursday night I do Zumba. My husband knows that's what I do and he has to get home early from work and look after the kids and if he's not going to get home early from work, he has to arrange childcare because Thursday night is Zumba night. "
Now that might have been the one time in the week that woman went to the club, but it was so clearly defined that nothing gets in the way of that and I think that's what group exercise does for a lot of people. It gives them a point of time in their diary where they can say at this time I do this, this time I do this. That's partly where the boutiques are successful. They're also successful because of the social connection. I'm part of something. The cognitive load is low.
I don't have to think about much . When I turn up they say stand up. I stand up, they say, sit down, I sit down. Whereas if I'm in the gym, I have to think ,which cardio, which resistance machines , what free weights, what functional, Ihave to think that through.
Whereas what you're seeing with things like boot camps, with boutiques, small group sessions, Yoga sessions, people don't want to think. I want to be done to almost just lead me through it.
There's a huge capacity to, if we keep some things a lot simpler, we could draw a lot more people in because some of the basic classes start off as basic, but 12 weeks in the customer's have moved forward. The instructor takes it up another level, the new beginner comes in and actually it's beyond what they can do.
Group exercise has a lot of more potential than it's already got. it's a show. There are simple things we could do in a class that actually raise the level of the experience for the customer, which isn't about the person who's leading the class.
Boutiques have thougth about the experience is the product, the whole experience is the product from arrival, to changing to working out. Many of the boutiques that I've tried, someone greets you when you walk into the class, they're actually at the door. You do the class, you watch them lead it. When you finish they are by the door to say goodbye.
It's not, they rush in late, they bend over, I can see their bum They're trying to sort out their music. They say sorry, I'm late and then they rush into it and at the end they're grabbing this stuff and they're off to the next class. They're actually taking time to show they value you. They value the fact that you turned up today and they recognize that you turned up today.
A simple interaction we do in the gym with the gym staff and Front of House staff is we say to them when someone leaves, ask them 'when you in next ?'
We found that to have a really powerful impact on people with them responding ' I'll be in on Friday.' They are then making that commitment to coming Friday.
With Group exercises it's even easier. You stand at the end of the class, the class finishes and you say, 'put your hand up if you're going to be here again, same time next week.'
All the people who think they are going to be, will put their hands up, and all the ones who don't put their hand up, come over and say , I won't be in next week. I'm really sorry, I've got work but in their head they're thinking , I have to explain why I can't be here, which actually drives them to want to be at the next session even more. It's very, very simple.
If the instructor has another class in the same week, they can say 'who's going to be here Thursday?'
If you look at timetabling as well, clubs could do a lot more in terms of timetabling, almost making that routine easy.
For example, they do a boot camp, functional type class six o'clock on a Monday night. Then it's also on at six o'clock on Wednesday night and six o'clock on a Friday night, because If you can come in at six o'clock on a Monday, you probably be able to come to six o'clock on a Wednesday and possibly on a Friday. But then you've got your frequency. Then after the boot camp, I'd probably have something holistic. I'm not a group exercise programmer, but we often just put things on by availability of our instructors.
We've been running some analysis recently where we're actually going to see if the AI stuff we're using can actually predict which is a better class to put on at which time. So it won't be down to the group exercise coordinators to choose the classes. The classes will be chosen by what the customer wants to do., at what time.
It's going to ruffle a few feathers, but if that's what the customer wants, why don't we do what the customer wants rather than what suits us. It's a bit more uncomfortable for us.
I've got a limited amount of data on boutiques but if I go back to my experience of working in the fitness industry, but also my experience of nightclubs, nine months I think is probably what most boutiques can expect out of a customer before they start looking for something else.
When I ran nightclubs, we'd take out a lease on a place and we would know the first two years would be really profitable. The first nine months if you get it right, are unbelievable because it's the new place where everybody wants to go after nine months. The sort of the trend setters are looking to move on somewhere else. But you do then get the people who weren't the trend setters say, I've just heard that's the place to be.and now they're going to it. It lasts for about two years and then it starts to decline.
We will see that in boutiques. You will have those people who are exercise savvy, really on the cutting edge and want something new. Will constantly be looking to move on to the next thing, the next thing and the next thing. The really early adopters.
With such diversity, particularly around La and New York, there's a new type of boutique opening every week, is actually speeding that up. Someone's doing something for a few weeks and it's like, oh, there's another new one, Oh, I'll go to that and there's another one, I'll go to that.
The early adopters are going o speed through them really quickly, and it's whether we can make these boutiques sufficiently accessible to a broader range to maintain that over a longer period of time. The boutiques go through the trend of being super popular, but then just become a well established business, doing a really good job. I think soul cycle of managed that.
My take on boutiques is this, it's generally studio based and then the way in which the content is delivered is designed by that Boutique. So it could be yoga but it's their way of delivering yoga as opposed just being a yoga class. We have yoga boutiques, but we have a lot of yoga studios, which is traditional yoga that anyone could be doing in any environment.
When I'm in Europe and I'm going to different cities like Amsterdam and there's some yoga studios, there wwhere the way they teach their yoga it's their way. For me that's what makes it a boutique. It's a combination of it being studio based, group exercise based and the way they teach it, not just, it's a studio and it's new. That doesn't make it a boutique for me.
Myself and my colleague, Dr Melvin Hills, have done three national retention reports here in the UK. The last one was 357,000 customers over a four year period from a hundred different operators. The one we did for North American market was 1.4 7 million customers over three years and that was the USA and Canada. We've done Australia, which was nearly a million. I think we were 2000 customers, short of a million over 900 sites. New Zealand not as many.
We do big scale studies over long periods of time looking at member behavior. Then also we do a lot of work for individual companies. We've collaborated with the likes of anytime fitness. We've collaborated with Marriott hotels, the gym group, lifestyle fitness, a whole range of operators in mainland Europe. KeepCool. A company called Achmia when they existed in, in the Netherlands, Alexia before they merged with sats.
We've done something close to 4 million member records across something like 40 countries. In some of the countries we've only got one club but in some of them we've got r vast amounts of data.
What we originally wanted to do was lots of rows. So 1.4, 7 million rows. We don't have a limited number of columns if you think of it in that way. Now what I'm really interested in is how many columns of data can I get? So I'm working with an operator at the moment where we've got 600 columns. So they are able to collect data on what time they come in, what time they went out, where they visited, how long they dwelled in the changing rooms, if they use the changing rooms, did they have any secondary spend, what did they buy?
Now all of that can get really noisy but if you can pick your way through that, there can be some really interesting pieces of information in terms of where you are even going to stand your staff. If you can work out where people are at certain times, if you've only got a limited number of staff, you might go at six o'clock on a Monday night, you stand in there because a hundred people walk past that point in 15 minutes.
So rather than just walk the gym floor, you won't want them to walk the gym you will want them there. T
In my phd where we ran a randomized controlled trial for 12 months but it took 17 months to study it because of the people joining. It's the only one of its type. We've got a bit of data,
We were able to rank the impact of different things on a business, 1-10 and the first three were visits, interaction and programming.
VIP- if they don't visit, you can't interact. If they don't visit, your programming has no impact at all. So it doesn't matter how good you are, you've got to get them to visit.
Interestingly, if they visit, you can interact. If you interact, you can keep a track of their program. If their program is of a valid type of protocol, interacting with them on one visit or on more regular basis, they will not only come back, they'll start to see the results, they will come back, they'll believe that you can offer more results. So you build a trust, you build a virtuous cycle. So those would be the top three. If you are not doing those you're probably not getting the best out of your business.
We've done analysis on queuing and queing impact on how long people stay.It does and 50% of the people that say queuing is important or a deterrent for them coming are likely to quit but there are only 5% of the membership, so that's 50% of 5%. So if you could sort out the queuing, you'd have some impact, but nothing like if you spoke to people at the right time, right place
The new digital technologies are going to have a real impact. We're getting to this point now where people understand behavioral science from a technology perspective we will be able to harness that and combine that with human interaction and that will be available cross all sizes of business. You're not going to need to be a multi-country, multisite, high end business to have AI in your business.
Clubs of about a thousand members could easily have an AI support product that would help to keep their thousand customers going. Small PT studios, probably a different type of relationship there. They're not going to need the AI type stuff because the volume of customers, they can literally bring the customer up, we' ll take you to the team. The PT Studio has got a different relationship.
We're going to see a massive growth in group exercise. But I do think group exercise has get its act together with regard to retention that isn't just the class. It's almost like, Oh, if we got group X, then they're going to stay and they rely on that. There's a whole heap of things that go around that that could actually enhance that further.I have not seen many people do that yet . The ones who have started to do it are really creating these experiences, really creating a sense of community and belonging.They're just going to grow, grow, grow, grow, grow, grow if they want to or they're going to establish a really sound business.
I've spent the last 15 years telling people pretty much, you know, Eric and knowledge of the industry is evolved, arid, great researchers evolved. But it does come back to a lot of basics. But you'd be surprised how hard it is to get people to focus on the basics. They just want to do what's new, what's faddy, what's trendy or what's the magic bullet?... keep the club clean, if the club is not clean, then it's not going to be a nice environment for people to visit.
If you think about at the high end, first of all, four seasons intercontentinental hotels, they get it right every time. Every country they go into. But it's a formulaic product. Everything's laid out. There are systems, we do this, we do this. They hire the type of people that are happy to do that.
At the other end of the spectrum, you've got McDonald's.No one believes Mcdonald's create the best burgers in the world, but you know, anywhere you go it tastes the same and they've got stores run by kids. The burger goes on there, then we turn it over, it's procedural.
I was talking to an operator recently who said, " our fitness staff don't want to do gym inductions and I don't know what to do." I replied " who did they work for?' "well they work for me "and I replied " then it shouldn't be an option if that's part of your process."
Sometimes they don't run the businesses a business. You actually have to be a bit more procedural.
Too many managers like the title manager, like the money of manager but don't like to manage. When it comes down to it, they don't like the hard bit, which is the tough bit.
The bit you get paid the more money for in managing is the stuff that's uncomfortable. It's not the easy stuff. It's when you have to reprimand someone for not following their processes for not doing. Too many businesses let people get away with stuff because it's easy to let them get away with it. They believe it doesn't impact of business, but it impacts their ability to scale.
Starbucks don't have a problem scaling do they ? They kept it really simple, but it's a good enough product for what they're offering. It's consistent and they can open it in China and Japan and every other country that wants it, unless they've got really good quality coffee like New Zealand.