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Retention Article April 2010 Measuring Retention Supporting Slides

Retention Article April 2010 Measuring Retention Supporting Slides. Measuring Retention. Why Is Measuring Retention Important? Membership retention is the largest problem facing our industry today. The average member stops paying about 7 months after joining a health club*

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Retention Article April 2010 Measuring Retention Supporting Slides

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  1. Retention Article April 2010 Measuring Retention Supporting Slides

  2. Measuring Retention • Why Is Measuring Retention Important? • Membership retention is the largest problem facing our industry today. The average member stops paying about 7 months after joining a health club* • To understand the size of the problem, you need to rely on the measures you are using • Proper measures enable actionable decisions to be made that will improve retention and secure a business’ profitability in the long term • *Where no minimum contract is in place

  3. Measuring Retention How Do Most Operators Measure Retention? Monthly Attrition % calculated as: No. of Cancellations Starting Monthly Membership OR Annual Attrition % calculated as: No. of Cancellations Average Starting Monthly Membership

  4. Annual Attrition Rate = 2612 (average monthly starting total ) / 1542 (total leavers) = 59% Measuring Retention The Attrition %

  5. Measuring Retention • Why Is Attrition A Flawed Measure of Retention? • The attrition percentage is heavily influenced by membership sales i.e. attrition can ‘improve’ through selling more memberships rather than keeping more members. Attrition ‘improves’ even where there are more cancellations!

  6. Measuring Retention • Why Is Attrition A Flawed Measure of Retention? • The attrition percentage does not take into account how long a member has retained their membership – this is what translates to income. Two members cancelling on the same day have stayed at the club for very different durations

  7. 12 = 50.4% 24 = 27.7% 36 = 17.1% Measuring Retention What Are The Correct Retention Measures? 1. THE RETENTION RATE defined as: The proportion of members who stay for a predefined period of time e.g. 12, 24, 36 months etc. 48 = 10.7%

  8. 7.4 16 45+ members stay 8.6 months longer than 18 -24 year olds ‘Lifetime value’ = £344 more per member! (8.6 mths x £40 = £344) Measuring Retention What Are The Correct Retention Measures? 2. LIFETIME VALUE defined as: The average length of time members stay and therefore how much they pay in membership fees.

  9. Measuring Retention Using the correct measures means real actionable decisions can be made to improve retention Read the full article at http://hur.theretentionpeople.com/articles/measuring-retention/

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