The CEO of a large multi-site health club and I were locked in a disagreement. I was reviewing a Survival Analysis report we had recently run for them that showed that 52% of the new members that had joined their facility over the last three years were millennials. He stopped me mid-sentence and said, “There’s no way we have that many millennial members, the data must be wrong. I can look into the fitness floor and see that. It’s got to be closer to 15 or 20%.”
Our data wasn’t wrong. Yet he saw what he saw at his facility. So, where was the disconnect?
The answer lies in the data. The CEO was looking at their membership base, all their current members. We looked at the last three years of new members. Looking at new members allows us to see how their membership is trending… and there’s a big difference between the two! Low cancellation risk ‘lifers’ often inflate retention numbers, giving operators a false sense of security. Over the last three years 52% of their NEW members were millennials but their OVERALL membership base was closer to 20% millennials. In a sense we were both right. But how is that possible?
The other valuable data point our Survival Analysis extracted was the median membership life of each generation. This gave the CEO insight into something he had never been able to see before. The average millennial member was staying only 6 months before cancelling. OUCH! Compare that to a senior member who stays an average of 16.9 months. Senior and family memberships inflated their retention numbers while the young adult and millennials were churning out very quickly.
What the CEO saw on the floor was absolutely correct, not many millennials. But, it wasn’t for the reason he thought it was. He assumed that there weren’t many millennials because his centers weren’t attracting them. What our analysis showed him is that they were attracting them in droves: 52% of their new members were millennials! The problem was that they weren’t retaining them. They weren’t visible on the floor, or present in their membership reports, because they were staying less than six months (and no doubt stopped attending well before that). The result was a low lifetime value and high customer acquisition costs: big trouble no matter what business you’re in.
As we went through the graphs for each generation and membership type, the CEO was quiet. Graph after graph, it became clear that they were attracting members they weren’t retaining. He started thinking about the marketing dollars, the programs that were designed, the equipment purchased… all serving what he thought his typical member was, family and senior membership types. When the whole time 52% of their new members were not families or seniors.
By looking closely at who you’re attracting and how well each facility is doing at retaining these members you can make a plan for growth. Without it, you might be allocating a disproportionate amount of resources serving people who would never leave you anyway.
If you know you’re attracting a certain demographic you can target those groups for retention strategies, program offerings and amenities they value.
Every day new members are joining, and every day members are churning out because you’re missing a member retention strategy that’s targeted for your most at-risk members. A Survival Analysis is the single best method to fine tune exactly who you need to target. It allows you to measure median membership life, also known as length of stay, down to the individual member, membership type, demographic group and generation. You’ll know exactly who’s at risk and how long each group stayed before cancelling, so you will know exactly where to focus your efforts, and your dollars to have a maximum impact. The result will be a higher lifetime value, lower customer acquisition costs, and more happy members who are reaching their fitness goals.