There are several ways to look at retention or attrition. Since I don’t completely trust the numbers that many clubs put out, I decided to look at some different things. Rob Bishop (Why Attrition Numbers Don't Add Up, March 2008) was the first to put the concept of “Average Length of Membership” ( ALM) into my head. ALM is one way that may be more accurate in determining how a retention program is working. It’s relatively easy to figure out. Just take a random sampling of your members, see how long they’ve belonged to the club, total up the number of months and divide by the member number you used. If you have 1200 members and all 1200 equaled a grand total of 11,420 months since you opened, then your ALM is 9.52 months.
We started our retention program (The SLED System) in the fall of 2007. The gym opened in January of 2005 (65 months as of May 31st). Of the 65 months we’ve been open, the SLED System has been in use for the past 31 months.
When I first started looking at our numbers, I thought about the ALM numbers and put a couple hundred together, but there was something bugging me about them. One thing is that we have contracts (6/12/18 months), so figuring out those numbers didn’t seem accurate as to whether or not my retention program was working. So…I decided to look at how long people stayed members AFTER their membership contract expired. Either people sign a new contract or they roll over into month-to-month when their original contract ends. I think it’s a better indicator of how a retention program is working, as the longer people stay, the more money we make. Of course I have nothing to compare those numbers to in the industry, but comparing them to myself from month-to-month and year-to-year is the most important thing.
Here they are. I took the first 150 current members and the first 150 expired members (or cancelled). I just went alphabetically assuming that was as random as anything. At the time we had 670 active members and our club had been open for 65 months. I did not factor out medical or moving as many clubs do when calculating retention numbers. I used everybody from the expired/cancelled list regardless of why they cancelled.
The average for CURRENT members came out to 29.46 months after their original membership expired (150 sampled).
The average for EXPIRED/CANCELLED members came out to 6.07 months after their original membership expired (150 sampled).
Overall, the TOTAL average came out to just over 17.76 months that somebody stayed AFTER their original contract expired (300 sampled).
Averages when original contracts were included were 44.74 months (current members), 20.1 months (expired members), and 32.42 months average for both groups combined.
Are these numbers good? I don’t know. I’ve not seen anybody else in the industry report numbers calculated this exact way. As our club gets older, I expect these numbers to continue climbing. With the expired/cancelled members, if they didn’t stay past their contract, they got a zero; same if somebody defaulted on their contract, moved or cancelled for medical reasons.
The second number I looked at was the usage numbers. I had written our membership numbers down for a nine month period starting a few months after we opened. The months went from Sept ’05 through May ’06. I then stopped recording those, thinking our check-in software would be able to track it for us. However, our check-in software has no way to go back and see how many members we had on a given date except the ones I had written down (oops!), so this is the only data I have from past months and years. I did start writing the membership numbers down at the end of each month again last summer. So I have those for the same time period up to the present, plus a few more. We do have the ability to check usage for any given day in the past, but that does little good without knowing how many members we had.
For the first nine month period (Sept ’05 – May ’06: no SLED System) we averaged five visits per member per month. For the current numbers (Sept ’09 – May ’10: with the SLED System) we now average just over seven visits per month for the same time period.
A 40% increase in usage.
As Thomas Plummer would say: If members are using the club, they’ll be more likely to get results and stay members longer! This is a major key to retention.
Keeping the members using your club can lead to them staying longer. If a club with an attrition rate (however you want to calculate or estimate yours) of 40%, has 1500 members and average monthly dues of $50, can increase their ALM by just one month, this will lead to an increase of profits of $33,750! (From IHRSA’s Guide to Member Retention by John McCarthy)
1500 x .4 = 600
600 x $50 = $30,000
That’s a lot of money. What if you could increase that stay by six months? That’s $180,000.
Wouldn’t it be worth it to try something that could increase your member’s usage and length of stay?
