Imagine you have £7,000 for your winter marketing campaign to grow your member base before the new year. You invest in slick materials and targeted social media ads, and let’s say you acquire 100 new members at an acquisition cost of £70 each. By February, however, you discover that the flock of New Year’s resolvers from last month are dwindling, as 14% of January gym joiners fail to renew after the first month. May finds you budgeting a second ad campaign to compensate for the 80% of members who abandon their fitness plans within the first 5 months. And when December rolls around and your membership count is the same as it was last year, you are left wondering if this is simply the reality of the industry or if maybe there is a better way.
With membership dues accounting for 80% of overall gym revenue, it’s no surprise that the industry has historically focused on customer acquisition. But impressive ad campaigns often do not create sustainable growth as consumers are quick to spot newer and cheaper options and even quicker to lose interest in their fitness journeys altogether. The ideal member acquisition strategy keeps new customers replacing lost ones, but what if we shift the focus from expediting acquisition to increasing retention?
The cost of acquisition
According to the IHRSA’s Profiles of Success, the median cost of sales and marketing per new gym member in 2017 was £52. While digital marketing techniques such as email, social media and company websites have reduced the cost of effective marketing, it remains 5 times as expensive to attract a new member than to retain an existing one.
This is due, in part, to the cost difference between internal marketing and external marketing, and in part to the prices of additional acquisition and retention strategies. Customer acquisition incurs an array of expenses, from free trials to new member discounts. Retention, on the other hand, is often influenced by cost-neutral factors, such as a positive relationship with a staff member.
Fostering a loyal member community is not only cheaper than constantly appealing to new prospects but generates more sales opportunities as well. The probability of selling to a seasoned customer is 60-70%, while the likelihood of selling to a prospect is only 5-20%. In the fitness industry, this means your long-term members are more likely to purchase additional products or services than this month’s walk-ins.
Retention breeds acquisition
Once you’ve mastered member retention, acquisition will quickly follow suit. Long-term members are easiest to please: they’re committed to their fitness plans, they’ve made friends at the club and they’ve developed relationships with staff members. They’ve reaped the benefits of every reward or loyalty program your club has to offer, and you’ve gotten to know them well enough to provide a personalized experience. You’re keeping your long-term members happy, and in return, they’re talking about you.
Although digital advertising has introduced an assortment of new marketing avenues, the cheapest and most successful technique to promote your brand remains unchanged: word-of-mouth. As marketing professor and renowned author Philip Kotler says, “The best advertising is done by satisfied customers.” The implied marketing strategy spares countless expenses and resources: promote club advocates in current members by keeping them committed and content.
The retention crisis in fitness
Despite the compelling case for customer retention, less than one third of business leaders consider consumer loyalty a priority. The consequences of this approach are strikingly apparent in fitness, with clubs losing nearly half of their members each year. The IHRSA calls membership retention, “the Achilles Heel” of the industry, as gyms struggle to maintain a steady consumer base.
Each party holds a portion of blame: the world, the clubs and the members. The world, of course, is changing, as the internet easily provides instant, unlimited and free access to virtually everything, fitness training included. Many prefer to turn on a workout video in their living room over paying a gym membership or hiring a personal trainer. The clubs, as demonstrated, are often more concerned with acquisition than retention. And the members are discovering the fragile nature of motivation: yesterday, they were rolling in it; today, they can’t remember why.
While we can’t stop consumer trends, we can keep up with them. Your club provides distinct experiences that a workout video does not: member-to-member relationships, rewards programs, personalized assistance and more. Shifting your focus to member retention allows you to actively engage and re-engage members along their journeys. In the IHRSA’s Guide to Membership Retention, industry leader John McCarthy suggests four steps to leverage and nurture a member’s initial motivation: first, goal specification; second, the acknowledgement and acceptance of setbacks; third, establishing twofold commitment - the club to the member and the member to the club; and finally, the active tracking of progress and re-engagement of a member who is losing interest.
In business, a bird in the hand is truly better than two in the bush. Your current members are substantially more valuable than your prospects, and your business's profit, longevity and growth are contingent on their satisfaction.
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