3. Three measures of retention
===
I'm interested in how you measure things and I use a certain number of definitions.
I use the term retention when I'm talking about the financial behaviour of your members and I talk about adherence when I talk about their physical activity behaviour.
So there's the memberā€™s financial behaviour and their physical activity behaviour.
I like to use the gauges of a car as an analogy. If you have a car, you have a number of gauges and a number of ways to tell you how well that car's performing. Each gauge tells you something different.
How fast the car is going, the efficiency, the miles per gallon, per kilometer, the acceleration, the CO2 emissions.
They all tell you something different that you can use to improve the performance of that car whether it's to go faster or be more economical.
We have to use a number of different things to measure member behaviour, not one thing and not categorise them as one is the opposite of another.
If I've got group of members, a hundred members join and eighty of them quit, this is attrition. The number that quit and I would report that as a rate.
Reporting attrition as a percentage is inaccurate.
If I have another hundred members join and eighty quit. I've still got the same rate and in terms of percentages. I'd end up with the same percentages as well.
The important thing to me is what's the gap between when they join and when they leave.
How long do they stay?
So I will report it because it gives us an ability to compare like for like.
If we do it as a rate, per thousand members per month, you can then compare clubs of different sizes. You can segment, but you can't do it as a percentage.
The traditional way our industry does it, it says attrition is the opposite of retention.
Rubbish
It says you take all your members that joined that you've already got, over the course of 12 months you add on all these people, you take off all these people and you have a figure at the end.
This is why it doesn't work
You start with a thousand. Every month you join 100 members.
How many people have you joined in 12 months?
1200
Every month for 12 months, you lose a hundred.
So same figure
1200
How many of you got at the end of the year?
1,000
Some people use the percentage calculation. We started with a thousand, we've got a thousand, zero attrition.
You've actually joined and lost more people than you had at the beginning of the year.
In fact, if you do some of the traditional calculations that you'll see on certain websites, this comes out as 83% attrition.
It doesn't tell you anything about length of stay.
We don't know if the people who joined in January left in February, or they left in December. We don't even know if it's these people that are leaving or these people that are leaving.
In fact the challenge is, if you sold 150 each month but only lost a 100 your attrition goes down, not because you are losing less people because you're selling more sales.
You've got two moving points at the same point. It doesn't make sense.
If you look at it from an academic perspective, it's in no statistical or business metric books.
It's something our industry made up during the early 1990s and our industry as a whole has followed that.
Nightmare
