Retention and Marketing Strategies
Retention rates average around 70 percent for fitness clubs. Rates are higher among members who sign membership agreements. Members who pay monthly are also more likely to renew than members who pre-pay for a year, which is one of many reasons most clubs have adopted monthly rates.
"We've found that high usage correlates with high retention," Poppler said. "Members who use multiple services at a club have higher retention rates than members who only use one service. Therefore, clubs encourage members to branch out and experience all the different services and programs the club offers. And, of course, the clubs that regularly invest in facility improvements (as well as their staff) have higher usage and retention rates."
Thomas, of Fitness, Management and Consultant, said, "We help our client clubs conduct networking meetings inside their clubs. This helps to attract between 50 and 60 guests per week, and it's traffic that would not normally walk into a health club. There are many keys to member retention, but we first start with keeping the member heavily involved the first 90 days."
Social media, like Facebook, YouTube, Twitter and even Groupon can raise awareness of a site, and through "friends," build membership through viral word of mouth.
Whatever the marketing program, in the end, design matters. Even when it comes to retention.
"Here's what I do to help my clients' marketing efforts," Fabiano said. As an architect, he believes it's important how the club looks before someone comes into the facility. The look of the building is a factor in providing that first impression. But more importantly, he said, what do they see when they are looking through the windows? Most clubs put all their cardio at the window because they are looking at the club from the inside out. A person drives by and they'll often see a very busy club. But that's not necessarily an ideal way to sell.
"We like to present a softer image," Fabiano said. "With more social spaces. But I certainly don't want to look in and see an empty aerobics studio. So when it comes to the placement of what's going on inside the club, one has to be conscious of how it is going to be perceived by someone driving by, and also walking in."
Navigating Through Hard Times
As with any business segment, some clubs are doing well, while others aren't.
Nationwide, health clubs are still a growth industry. U.S. health clubs in 2010 showed a 10.8 percent increase over 2009, Poppler said. Also, the number of non-member patrons increased by 8.2 percent to 7.8 million in 2010, up from 7.2 million in 2009.
"Clubs that have been successful in this economy are those that provide a great value," she explained, "and those that pay close attention to servicing their members, even while they are looking at every expense very carefully. Industry growth or new club development has come from clubs with a specific purpose, like the 24-hour access model, niche training or sport-specific clubs, and/or upscale women's only clubs."
Make your "cost" centers into "profit" centers, suggests Thomas. "A cost center is usually front desk, nursery and group exercise. We help clubs conduct training classes and raise expectations for these departments whereby they have an expectation to not only produce revenue, but also control expenses."
"I know the price point of the low-cost model is really affecting everybody's perspective," Fabiano admitted. "The challenge comes when clubs start competing on price only, and then it becomes an economic factor. If someone is shopping by price they are going to choose a $19 club over a $25 club, so I think some clubs are doing worse because of that mentality than just because of the overall economy in general."
What Fabiano encourages his client clubs to do (if they can) is borrow against their own existing building to make improvements and get the facility in shape for when things do turn around.
"Very few people in the last few years have been able to ramp up and start building lots of clubs," he said. "Get your club in shape. Now is the time to go through it, do a full evaluation of things that are OK, of things that you have neglected, of things that aren't working, of programming that you should implement, that you don't have the space for, and get your club in shape incrementally. You don't have to do it all at once."
It's easier to borrow money and to find financing for an existing business than if you wanted to start a new business somewhere, Fabiano said. "So protect your own base and get your club looking good and feeling good and being efficient. Take care of your current members so that you don't lose them, and when the economy does turn around you'll be in a position to be very competitive in your offerings and get new members."