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Member Churn Prevention & Warning Signs

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Learn how to spot warning signs and retain members with our guide: http://hubs.ly/H05wsFR0

Across the board, member retention is a top concern for gym owners everywhere. Even if a gym is adding new members, building relationships and retaining existing members it is still a top priority.

One of the main reasons it’s so important to retain members is that it costs up to ten times more to win a new member than it does to keep a current one. So letting your member churn get out of hand is bad for your business, regardless of how many new members you add. Plus members are more valuable the longer they stay at a gym. They refer their family and friends and add value by building your gym community.

This guide walks you through the process of recognizing warning signs and addressing concerns before a member leaves. We cover the importance of having personal relationships and frequently surveying your members. We also take you through some common pre-churn scenarios so you’ll be ready to handle them when they come up. To finish up, we give you key retention metrics and show you how to calculate them so that you can stay proactive and ahead of any retention issues that may arise.

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Member Churn Prevention & Warning Signs

  1. 1. MEMBER CHURN PREVENTION & WARNING SIGNS.
  2. 2. zenplanner.com 2 OVERVIEW. Across the board, member retention is a top concern for gym owners everywhere. Even if a gym is adding new members, building relationships and retaining existing members it is still a top priority. One of the main reasons it’s so important to retain members is that it costs up to ten times more to win a new member than it does to keep a current one. So letting your member churn get out of hand is bad for your business, regardless of how many new members you add. Plus members are more valuable the longer they stay at a gym. They refer their family and friends and add value by building your gym community. This guide walks you through the process of recognizing warning signs and addressing concerns before a member leaves. We cover the importance of having personal relationships and frequently surveying your members. We also take you through some common pre-churn scenarios so you’ll be ready to handle them when they come up. To finish up, we give you key retention metrics and show you how to calculate them so that you can stay proactive and ahead of any retention issues that may arise. It costs up to ten times more to win a new member than it does to keep a current one.
  3. 3. zenplanner.com 3 There is great value in knowing your members personally. Knowing them helps you understand if they are getting what they want. It also builds bonds that keep them loyal to your gym. Having open and friendly relationships with your members is one of the best ways to combat member churn. Of course, we’re not suggesting you invite them to your house for a weekly cookout. But we do suggest knowing as many members as possible by name and keeping the lines of communication with them open. The easiest way to get to know your members is to show you’re interested in them. Greet your members and ask them how they are doing. While you’re listening to their stories, actively listen and give them the time they need to feel heard. This is especially important if a member is addressing a concern, and we’ll cover the value of complaints in the last section of this guide. As you get to know your members, you’ll be able to notice subtle changes in their behavior. If the changes are concerning, treat them as warning signs that a member could leave your gym. For instance, you might see a change in attendance patterns or get a series of unusual complaints from a normally happy member. Since it’s common for a member’s attendance to drop off or behavior to change before they cancel their membership, noticing this early can make all the difference. THE IMPORTANCE OF KNOWING YOUR MEMBERS. Velocity Fitness, Zen Planner customer since 2014.
  4. 4. Businesses usually only hear from about 4% of their unhappy customers. The other 96% just take their business elsewhere. Maybe this happens because customers assume nothing will change if they speak up, or maybe they just want to avoid an uncomfortable conversation. Either way, this will happen at your gym if you don’t show your members you always want to know how they’re feeling. Set up a general feedback or comment box to solicit suggestions from your members. Also, conduct regular satisfaction surveys to seek out candid member’s insight. You can use free and easy tools like Survey Monkey or SoGo Survey to send questions by email. Email automations through your member management software make this process simple. Or you can use paper surveys and leave them (with a collection box and pens) by your check-in desk. Businessess usually only hear from about 4% of their unhappy customers. The other 96% just take their business elsewhere. WHY YOU MUST ASK FOR FEEDBACK. zenplanner.com 4 Here are a few questions you might want to ask: • Are there classes or class times you want but we don’t offer? • Are the childcare hours we offer sufficient? • What improvements would you like to see us make? • What are your favorite and least favorite things about our gym? Make sure you do what it takes to encourage participation. You can make each returned survey or comment a single entry for a prize drawing to incentivize participation. Once you have the surveys back, use the information you gain to give your members what they want.
  5. 5. zenplanner.com 5 We talked about being ready to spot the warning signs of churn. Now we’ll run through some scenarios for addressing the signs and saving cancelations. Our list of scenarios and remedies isn’t exhaustive, but it will give you some ideas to get you thinking creatively about using the warning signs to stop churn. Warning Sign: A Member’s Attendance is Steadily Declining Using attendance metrics and observation, you and your team can pick up on changes to regular attendance patterns. When that happens, your obvious goal is to reengage the member by making sure you’re meeting their needs. Depending on the client and your gym, you can call, email, or send them a note in the mail to connect. When you talk to them, check that: Of course, you can get a head start on the communication process by using member management software automations. With automations, you can preset personal emails to go out to members if they miss a specific number of classes or time in the gym. For instance, if your members normally come in a few times a week, you might want to automate an email to be sent if they don’t come into the gym for two weeks. Or you can set an automation to alert your team as a member checks in if that member hasn’t been in to workout lately. Your team member can then tell the client that they’ve been missed. Usually just saying that opens up a valuable conversation between the coach and that client. Warning Sign: Unusual Issues or Complaints If you have a client who’s visibly unhappy, it’s time to personally check-in to see if their concern is resolvable. Maybe it’s a one-off complaint, like not having classes on New Years Day. Or it could be something serious like a concern with someone on your coaching team. Just be sure to receive your member’s complaint graciously and assure them that you care about their happiness at your gym. Complaints are usually a positive thing in the end. They give you a chance to show you care and address an issue before a client leaves. Complaints are especially valuable since many people won’t tell you directly what is bothering them. So take advantage of the information you receive in complaints. Train your employees to welcome complaints as well. SPOTTING WARNING SIGNS & SAVING MEMBERS. • Your programming meets their needs and will help them achieve their goals • Your class times and gym hours are still convenient • They feel welcome in the gym community
  6. 6. zenplanner.com 6 Warning Sign: A Member Removed Their Payment Method to Shut Off Autopay We are big fans of automating your billing and payments. It takes away that monthly decision point, so your members don’t have to rethink the value of your services more than once. Automated billing and payments also make it easy to be your member. However, if your members are set up on autopay and someone asks to be taken off it, it’s time to check-in with them. Find out if they are unhappy or simply unable to pay your monthly fees. Specifically, ask if: • Your programming meets their needs and will help them achieve their goals • Your class times and gym hours are still convenient • They are engaged and interested in your programs • They feel welcome in your community Warning Sign: A Member’s Workout Partners Canceled Their Membership If you have a friendly relationship with your members, you will be able to address a scenario like this. You would probably already know why the partner left and be working on any issues that caused the loss. Of course, there are times churn is beyond your control, like when a member moves. But if something like this happens, take it as a warning sign and reach out for a personal conversation. If you have a strong community with some key leaders, you could ask a leader to include this member in social activities. All it might take to keep this member is for them to feel comfortable working out with other people in your community. During the transition process, your coaches could make sure to give the member a little extra care. The personal attention might help the member make their commitment stick as they find a new workout partner in your gym. Axistence Athletics, Zen Planner customer since 2014
  7. 7. zenplanner.com 7 Now that you understand some of the basic member variables, you can start doing some calculations and analysis. Net New Members (NNM): The difference between members gained and members lost for a specific period. A positive number indicates your business is growing, and you can expect increasing revenue. (NNM = GNM – GML) Churn or Attrition Rate (CR): Represents the rate of member turnover. To calculate your member churn rate, select a specific period and divide your Gross Members Lost during the period by the number of members at the beginning of the period. Then multiply by 100 for your percent that represents your member churn. CR = (GML/MI) x 100 Churn rate is expressed as a percentage. A high churn rate indicates your members are unhappy with their results, service or some other aspect of the gym or their membership. Looking at monthly churn rates compared to previous months can help you identify trends. Fitness businesses see seasonal variations in churn, so it is often helpful to compare a specific month, season or period with the same period from previous years. HOW TO CALCULATE AND USE YOUR RETENTION METRICS. Your business metrics tell you a lot about your members’ happiness and your overall rate of member retention and churn. Metrics analysis identifies trends, highlights trouble and lets you intelligently address issues as they arise. With metrics you can: • Measure and track attrition or churn rates • Measure and track your member retention rate • Identify positive and negative retention trends • Correlate trends with changes in your market or gym To set you up to effectively use metrics for retention management, we’ll first cover some definitions: Members Initial (MI): The number of members at the initial or beginning of any period. Members End (ME): The number of members at the end of a period. Gross New Members (GNM): The total of all new members for a specific period, regardless of losses over the same period. Gross Members Lost (GML): The total of all member losses for a specific period, regardless of gains over the same period.
  8. 8. zenplanner.com 8zenplanner.com 8 If you want to look at churn year-over-year, use this formula to find your annualized churn. Annualized Churn (AC): Monthly churn rate expressed annually. AC = {(GML/ [(MI + ME)/2] x 12} x 100 If your churn rate isn’t where you want it to be, we suggest methodically implementing the suggestions in this guide. Member Retention Rate (R): The percent of your members who continued their monthly membership. R = ((ME-GNM)/MI)) X 100 Unlike Churn Rate, you want a high Member Retention Rate. (They both tell the same story but look at it from a different angle). High retention is an indicator that your gym is performing well, and your members are happy with your services. Cost of Acquisition (CAC): The cost to gain one new member. To calculate your cost of acquisition, select a specific period and divide the total marketing/advertising costs by the total new members gained over the same period. CAC = total marketing costs/GNM As we mentioned earlier, it costs more to replace a member than it does to keep a member. For that reason, we’re highlighting the cost of acquisition here. Attendance Per Person: This is simply an evaluation of the number of classes or visits your member has per period of time (weekly is standard). Analyzing attendance per member over time allows you to establish your own unique standard. For example, you may consistently see a high rate of three or more classes per member per week. If that number falls to two for several consecutive weeks, you’ll want to figure out why. Member retention is a top concern for fitness business owners. Keeping existing members while bringing in new ones often feels like a never-ending battle. But it doesn’t have to be that way. By knowing your members and soliciting feedback, you’ll be able to recognize the warning signs of churn and address concerns before a member leaves. Retention metrics also help by allowing you to spot trends before they become problems. Member management software plays a key role in fighting member churn. Email automations help you stay in touch with your members so you can send them satisfaction surveys or tell them you miss seeing them around the gym. Reporting capabilities ensure your retention metrics are correct and easy to monitor. If you want to find out more about how Zen Planner will help you with retention, schedule a live demo with one of our Business Coaches today.
  9. 9. zenplanner.com 9 For more information on how Zen Planner can help you better manage your business: With community building email automations, workout tracking features to keep members motivated, an engaging Member App, vital reporting capabilities to help you stay on top of churn, Zen Planner provides gym owners with the necessary tools to keep members happy and combat retention. While some software providers require paid training over weeks and months, Zen Planner makes it easy to get up and running. Every customer gets free sessions with a personal coach, so you can take advantage of Zen Planner’s rich features right from the start. Zen Planner is backed by a team of like-minded fitness fanatics. Our team is made up of affiliate gym competitors, black belts, yoga instructors, dancers, and gym owners. When you do need help, we combine our software know- how with our expertise in your community to help you and your business thrive. Our passion for fitness and your success is apparent in our consistently high customer satisfaction score of 99%. And one out of every two customers refers another happy customer to us. ABOUT ZEN PLANNER ZEN PLANNER’S ALL-IN-ONE SOFTWARE GIVES YOU EVERYTHING YOU NEED TO TURN YOUR PASSION INTO A SUCCESSFUL BUSINESS. Give us a call toll-free: 866-541-3570 | Sign up for a free trial: zenplanner.com/try-now Visit us on the web: zenplanner.com

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