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Membership Attrition and Club Profitability, Part 2

There are many reasons attrition continues to challenge fitness center profitability.

In last month's column, we highlighted the value of a member and the importance of creating a retention strategy. This month's column highlights the barriers to winning the "retention battle," and touches on why they can seem insurmountable.

Why the industry isn't winning the retention battle

A number of fitness center operators have been incredibly successful at winning the "retention battle." For example, Western Athletic Clubs, San Francisco, Calif., boasts retention rates at or above 90 percent in many of its facilities. In addition, ACAC in Virginia, Eastbank Club in Chicago, LeClub in Milwaukee, Maryland Athletic Club in Maryland and Red's in Louisiana have achieved retention rates that far exceed the industry average of approximately 66 percent. These facilities are winning the retention battle, but far too many fitness centers are not. The industry as a whole has fallen short in its effort to enhance membership retention. Among the reasons that contribute to this scenario are the following: We're repeating history. Our energy and resources are still focused on the front door, and not the back door. We concentrate our efforts on commodity selling, which encourages individuals to join clubs for as little down as possible, and at the lowest possible dues point. When fitness centers sell low, the data clearly shows that little or no barrier exists for individuals to forgo their membership. In fact, such an approach may actually create an incentive for members to depart. We're failing to connect. The fitness industry is notorious for offering little connection to other members and staff for new members. More often than not, new members are given a fitness assessment and a few complimentary personal training sessions, then sent off to explore the facility on their own. We're focusing inward. Fitness centers focus on what they believe is important, rather than what is important to their members. Too many facilities see their job as completed once they sell a membership, or once a member buys an internal service. In reality, members want results, want to be connected and want to know someone cares. Satisfying this yearning requires some handholding - something the industry does not do particularly well. We're not tailoring our product. In general, fitness centers do not tailor their product or experience to the demographic and psychographic profile of their customers. For example, some operators offer a $29-a-month, no-frills membership in affluent markets where the average customer profile would otherwise dictate that a more service-oriented and higher-priced facility would be successful. Such an approach is like the proverbial "great salesperson" who can sell a fur coat to a person stranded in the desert. He might sell to that particular person once, but buyers soon discover they have little need for such a coat. In addition, they will never refer anyone else to buy a coat from that salesperson. The point for the fitness industry is clear: Why not offer a product of value to prospects who will continue to buy? We're serving only our interests. Most individuals in the industry enjoy exercise. As a result, they tend to offer experiences that appeal to their personal passion. But everyone doesn't share their passion for exercise. They don't like to be physically active, and they don't experience the endorphin rush from working out. Inexplicably, facility owners continue to sell a product that appeals to their passion instead of tailoring the membership experience to the general population. To win the retention battle, fitness centers need to serve the interests of their members, rather than themselves.

A change of approach

These are just a few of the reasons why the industry, as a whole, has not been successful in its fight against attrition. Fortunately, it appears that the majority of professionals in the industry want to change their approach. As with any change, however, at least two significant barriers exist: Disregarding tradition. Accepting change is not that difficult; forgetting what the industry already knows and does constitutes the real challenge. Until the industry is willing to forgo its old ways of dealing with membership (sell, sell, sell), fitness centers will never be able to execute retention strategies (connections and service). If clubs truly want to win the retention battle, they must first disregard their traditional ways so that newer, more relevant steps can be more easily adopted. Embracing change. Changing from a sales-and-attrition model to a retention-and-service model requires new skills, a new mindset and a new center of influence. For most operators, this step involves entering uncharted territory. As a result, they tend to feel intimidated, out of control and on unfamiliar ground. One of the consequences of such feelings is to resist change and to try to find loopholes that can help avoid change. In reality, if fitness centers want to win the "retention battle," they must recognize their limitations in this key aspect of operations, and change accordingly.
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