We’ve spent a lot of time time on this blog discussing the benefits of new member onboarding. We’ve posted data and put up graphs demonstrating how onboarding is the single-most effect strategy available for long term member retention. Onboarding works. But, if you are leader at a fitness center or Y considering initiating an onboarding program at your facility, there’s really just one question you must answer: Is it worth the time and investment to do so? If I dedicate the resources required to make the change, how much of a difference will it really make? How much will it affect the bottom line? It’s one thing to look at graphs showing decreased churn rates, but how does that translate into dollars and cents? If I get serious about onboarding, what type of returns should I expect on my investment?
Meet Barbara
In order to answer those questions, we performed a study. The results are best grasped by considering Barbara, a hypothetical director of a large fitness center. Let’s say there are 20,000 members at her facility and around 200 join each month. But, due to increased competition in the her community, both of those numbers are now in decline. As a result, Barbara is more concerned about retention than ever before. Millennials are particularly worrisome since they represent the largest and youngest demographic in the market.
But Barbara has heard about the effectiveness of onboarding. So she did her homework and put in a system similar to the one prescribed by Dr. Paul Bedford at her facility. Here are the changes she instituted as a result:
- First, her Membership staff now classify every new member as either a high, medium, or low retention risk. Their risk level is determined by their answers to questions about their current exercise habits.
- Next, Barbara instructed her staff to pitch the onboarding program to new members as an essential step to success. Members in the high and medium retention risk categories receive top priority.
- Finally, she had her coaches trained in Behavior Modification techniques. She then worked with them to create an onboarding program that involves four meetings with new members.
The ROI of Onboarding
Now here’s where the rubber meets the road. What kind of results should Barbara expect? How many members will it affect? How much longer will they stay? What kind of impact will this new program really have on her revenue stream? How much staff time will she have to commit to see results?
Here’s where we have done the math for you! Let’s assume the average monthly membership price at Barbara’s facility is $35. We’ll also say that she asks each of her three Wellness Coaches to spend 15 hours each week in onboarding appointments. Her onboarding program involves two hours of staff time per new member (4 appointments: 1 hour, 30 min., 20 min., and 10 min. spread a week apart). The number of members onboarded per month represents the number her staff could feasibly onboard with 45 hours per week dedicated to this activity.
For the sake of this study, we also assumed:
- That her staff could match the results of the onboarding program instituted at the YMCA of Northwest North Carolina.
- Her staff could successfully identify the highest retention risks. For instance, if she had the staff hours to onboard 30% of new members, the 30% at highest risk would be onboarded.
- Her staff operated at peak efficiency. Every time there was a staff hour available for onboarding, it was filled with a member appointment.
Based on those assumptions, here’s the returns Barbara should expect to see:
The Impact of an Onboarding Program on New Member Revenue
Let’s explore these numbers. The revenue numbers are just those realized from new members, members that joined since Barbara started her onboarding program. In the first year of this onboarding program, her facility would receive $92,043 more revenue from these new members than they would have if she had not started her onboarding program. That amounts to a 17.5% increase in revenue without any additional membership sales!
And the numbers keep improving. During the second year of her program, all the members who joined the first year will still be staying longer because of the onboarding effect. Of course, the members who join during this second year will also be retained longer. As a result, the numbers are even better in this second year. There is a net revenue gain of $444,031 over the two years with $350,998 of that being realized in the second year. This is 28.75% increase in revenue from new members over those two years compared to not having an onboarding program in place.
You can begin to see that the onboarding process has a snowball effect on revenue. With each successive year a higher and higher percentage of the total membership base is affected so there is a greater and greater increase, not only in the new member revenue, but also in the net membership revenue.
The Impact of Onboarding on Member Lifetime Value
Finally, we can think of the return of onboarding in terms of the value of each new member that joins. From our study of over 1 million Y members, we know that the average new member at a Y stays for 11.4 months before terminating their membership. If the average monthly cost for a membership is $35, then the lifetime value of an average member is $434 (11.4 months x $35). (This figure is just the membership dues the member would pay and doesn’t include additional revenue from programs, personal training, etc.)
Now the value of onboarding shines. Dr. Bedford proved that an onboarding program focused on the first month of membership didn’t just help keep them to the second month. Since they were being more successful in reaching their wellness goals, they stayed months or even years longer.
So if Barbara matched the results of the Northwest North Carolina YMCA, the median membership life of new members who went through the onboarding program would go from 11.4 months to 22.3 months! As a result, the average lifetime VALUE of these new members would climb from $434 to $816. Every member who goes through the onboarding program has a lifetime value almost double that of those who don’t! As before, this just includes expected membership dues. Since the onboarded member stays longer, they will certainly spend more on programs, personal training, etc. Thus the revenue boost of onboarding will be multiplied. In an age of fewer new prospects, this increase in the expected value of each new member is of immense value.
What you can expect at your facility
We’ve just seen that installing an onboarding program at Barbara’s facility had a tremendous impact on revenue. But what could you expect at your facility? With different staffing models, variable membership dues, and new members joining each month, every facility is unique. If you’re considering an onboarding program, or looking to improve retention, we can help. We’ll work the unique parameters of your facility or association. And we will help you determine the exact ROI you should expect from launching an onboarding program. Best of all, we’ll do it free of charge!
In order to learn more about using MobileFiT to help you discover your ROI for onboarding, contact Kelly Kidd at kelly@mobilefit.com or (205)529-4616.
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