This article was supplied by The Retention People.
Yes! TRP‘s latest research considered the impact of your fitness team on your bottom line, and found that fitness staff can generate more than 600% more income per member than the actions of sales people alone.The financial success of a health club is dependent on a combination of the number of memberships sold each month, multiplied by the yield per member. The yield per member can be split into 3 lines:
– length of time that they remain with the business
– which is directly related to their length of stay and the frequency with which they use the service
– which are directly related to their satisfaction with the service provided
In order to maximize sales most clubs employ sales teams who are often paid a commission for each membership sold. The presumption is that the sale of a membership is income generating. However, in most cases* the minimum guaranteed income from each sale is just 1 month. A range of other factors in the club, not involving sales people, will then determine how many more months a member will pay before terminating their membership. One of the factors, arguably the most important, is the activity of the fitness staff.
Knowing this, TRP decided to conduct a study in order to analyse the difference in value that sales team are able to add to the business in comparison to an organisation’s fitness team.
TRP has been assessing the impact of fitness staff activity for a number of years and has consistently found that the frequency with which fitness staff speak to club members affects the risk of members cancelling and the average yield from memberships. This study combined previous TRP analysis and found that in members who visit their club at least once during their membership, the average number of interactions with fitness staff is 3 interactions per quarter. TRP research has shown that every 2 interactions fitness staff deliver to a member in a month adds 1 extra visit in the next month compared to members who do not receive an interaction. Every extra visit a member makes in a month reduces the risk of cancelling in the subsequent month by 33% and increases the potential of secondary spend purchases and referrals. In other words, fitness staff interactions increase members’ visits to the club and extra visits equate to greater membership yield.
Fitness staff as ‘sales’ staff
One way to interpret these findings is to think of fitness staff as sales staff. What is it that they are selling you might ask? The answer is repeat visits, and every repeat visit is directly related to increased yield from this member. Every visit a member makes to a club is an opportunity to sell them another visit. The fitness staff are extremely well placed to make this sale given the opportunity that they have to interact with members. Indeed, independently of the number of visits a member makes to a club, if fitness staff talk to members they save memberships. TRP research has shown that for every 100 members a club has, on average 16 will leave each month if they do not receive an interaction from the fitness staff. By comparison, if fitness staff speak to them once then just 7 members out of every 100 cancel each month. That is more than half the number of members each month that the sales team do not need to replace to maintain the membership base. Even better, if fitness staff talk to members 4 times or more during their membership, then for every 100 members just 2 cancel each month. That is 88% fewer cancellations each month and 88% fewer members that sales staff need to replenish.
TRP have also found that the effect of fitness interactions on membership retention is universal. Fitness staff interactions reduce the monthly risk of cancellations in members of any age, both sexes, any contractual arrangement and for any given visit frequency. In other words, not talking to members while they are in the club, whoever they are, increases the chance they will cancel next month.
Do sales or fitness staff generate the most income?
It is argued that the reason sales staff are paid a commission is to motivate them to make sales. Given the low rate of interactions reported at the beginning of this article, it might be argued that fitness staff need some form of incentive or reward to motivate them to interact with members and sell repeat club visits. To illustrate why this might be financially beneficial we present a case study using real membership data from real clubs which we have anonymised and combined to model a ‘typical’ club with over 3,000 members who joined over a 3-year period. For illustrative purposes we will restrict the analysis to members who pay monthly, did not pay a joining fee and are not signed up to a minimum term contract. The members who joined the club have an average length of membership of 11 months (a range of 1-36 months) including both live and cancelled members. Furthermore to keep the example simple we will only look at the financial benefit of increased membership life, ignoring secondary spend and referrals. Therefore the total realisable financial value is in fact higher than then figures demonstrated in the example.
So let us look first at the financial benefit of sales staff. This can be estimated as the average length of membership in members who received no fitness staff interactions. For members in our case study this equates to 4 months of membership which at $75 per month equals $300. If during their membership members receive 1 interaction from fitness staff then the average length of stay increases to 9.9 months, an increase of 5.9 months over and above sales alone. That is a net additional income of $442.50 that can be attributed to fitness staff. If the fitness staff interact with members 4 or more times during their membership then the average length of stay increases even further to 27.3 months, an extra 23.3 months above sales alone. That is a net additional income of $1747.50 due to fitness staff actions. This equates to 600% more income per member from fitness staff actions, compared to those of the sales staff. When including the impact of secondary spend and referrals this figure grows exponentially.
Although no official figures are available, it is reasonable to assume that fitness staff interactions are considerably shorter than the sales process and therefore cheaper and far less resource intensive to conduct. Furthermore, it only takes 8 interactions to save 1 membership. Assuming each interaction lasts approximately 5 minutes (it is almost certainly less) then fitness staff can potentially conduct around 12 interactions an hour and therefore save an average of 1.5 memberships per hour.