Alister Rollins is the founder and CEO of MoveGB, a free online platform that enables fitness operators to offer their services to a network of 100,000s of active people in the UK. Think ‘Netflix’ for physical fitness outlets. Prior to MoveGB Alister ran The Retention People, the fitness industry’s leading loyalty solutions business, where he used data from over 15 million member records to make predictions about their behaviour and recommend intervention strategies so that clubs could improve member experience and retention.
We met with Alister to learn where he believes the market is going wrong and what clubs could do to enhance their retention rates.
The Fitness Network
How do you think the market generally handles member retention?
Not well. There is a major flaw in the current model – it’s based almost entirely on ‘bad’ profit. i.e. making money from customers that don’t use the service. Clubs need to be more concerned about whether or not people are using their facilities enough to see benefit in short term profit. Instead, most are still too focused on increasing their direct debit income, rather than their member experience. This creates high attrition which in turn increases the pressure to find more sales to maintain the direct debit line.
This is a trap that is easy for any business to fall into. For a long time I believed the solution was to try and manipulate consumer behaviour to adapt to the current commercial model of the health club. However, our industry has been relying on a model that disengages members after two or three months, whilst often tying them into contracts that financially restrict them from going anywhere else! This model causes high drop-out rates after the contract expires but, more concerning for the industry, creates mistrust in the ‘product’ and results in a huge time gap before the person would consider rejoining, if at all. Current industry data shows there is only a 9% rejoin rate over the three years that follow someone cancelling their membership. Combine this with initial customer life of just a few months and lifetime value per customer is much lower than it should be.
The hard fact is that, as an industry, we rely on a commercial model that harms member retention and artificially lowers the true cost of exercise. The market then ‘price anchors’ itself to the value of exercise and it makes it very hard for the industry to pull itself out of this environment of high customer churn. Not only do we fail to keep members engaged, but we ignore the fact that to create true life-long fitness customers we need to collaborate and form an ‘ecosystem’. Most people want to try lots of different activities from functional fitness to boot camps to yoga, spinning studios and climbing walls. At the moment operators make it hard for customers to leave and rejoin and create a lot of friction which only succeeds in pushing them further away from our brands and fitness as a whole.
The Fitness Network
What impact does this have on total membership rates?
In the short term, this focus on ‘bad’ profits may result in some additional bottom line income, and if your goal is to sell the company in the near future, then fine. But in the long term, the industry and its consumers suffer as the churn results in revenue that was going into the sector going elsewhere. How else do you explain the fact that in spite of such considerable government and media support for our industry and millions of people in the UK signing up to new fitness routines, the growth in the market has been so marginal?
The Fitness Network
So what needs to change?
The market needs to find a way for it to be commercially viable to offer people the right experience, where they are engaged, achieve their goals and there are minimal barriers to entry and exit between the different operators in the market. The boutique sector in London and the US has proven this can work by charging high per session rates and only collecting payment when customers receive value. The question is, can this model and high rate per class work outside of tier 1 cities and how will the other segments of the market adapt their models to pursue good profit offerings, where they gain revenues only when the customer benefits from their ‘product’?
The Fitness Network
What would your advice be to a club looking to learn from these mistakes and encourage longer term participation?
1. Offer members variety
Most people don’t want to follow the same routine year in, year out. You should offer them as much variety as possible, and encourage them to take part in additional activities outside your club, even engaging in collaborative marketing efforts with other local providers.
2. Intervene early and encourage interaction
We are lucky in the industry as we don’t need loyalty cards to track customer usage data – our booking and access control systems do it for us. This means you can see very quickly if a member needs additional support and encouragement. If they are not showing up at least once a week from the outset then they are probably going to stop coming altogether unless you intervene. Something we used to do with the clubs we worked with in my last business (The Retention People) was to get their staff to gather small groups of members who were at ‘high risk’ of leaving and do a little session with them together for 10 minutes. When you walk away you see that they’re not only continuing but they’re chatting and building relationships. If someone makes a friend in a gym they are far less likely to cancel.
3. Remove unnecessary barriers
The process in and out of membership should be as frictionless as possible. If someone wants to leave, let them leave – and if they want to rejoin then keep the paperwork to a minimum.
4. Don’t enforce contracts
Long term contracts are really dangerous. I can understand the temptation to capitalise on bad profit, but not only is it a major barrier to sale, it can kill the brand relationship in the long term. We’ve consistently seen that if someone leaves when they want to leave, they will rejoin a club far sooner than if they are forced to wait until their contract expires.
5. Focus on what’s unique to you
As an operator, there is a temptation to broaden your offering in the hope that by catering to a member’s entire fitness need they’ll never have to go elsewhere. Clubs need to focus on what they do best, and strip out everything else. From the moment a member walks through the doors that physical experience should be their sole concern You can throw millions of pounds on attempting to become a software or digital company but if that is not your core competency then you will struggle to keep ahead of the game. Get the basics right – physical service and experience is the key to success.
6 Stop worrying about the competition
If someone wants to use another venue or participate in some other activity that you don’t control, then let them. The more engaged they are in physical exercise the more they will use your facilities and the less likely they are to cancel. Data from our platform at Move shows that people using 2 or more operators are twice as likely to still be active 12 months later.
It’s a hard one mentally to overcome, but we walk our own talk and it is exactly the philosophy that we apply at MoveGB. About 20% of our customers stop paying their subscription to the Move app and leave us to join one of our partners directly, and that’s absolutely fine with us. The more engaged they are in fitness the more the industry as a whole benefits and we’re confident that if they ever want the additional variety MoveGB can offer, they’ll come back as it was so frictionless to deactivate their subscription.
7. Make the club experience easy
You need to follow the customer’s complete journey from start to finish and see when it gets frustrating. Are booking requests responded to quickly? Do you get put on hold when you call up? Every moment of friction is chipping away at your retention rates.
8. Invest properly in your staff
As an industry, we underpay and undervalue our staff. One of the things I’ve noticed from my time in New York is that people treat the instructors like celebrities, and they’re paid good money. We need to recognise the value a great instructor can bring and get them all aligned to the mission of the business. Instead, many operators hire trainers as freelancers, provide little or no training and essentially allow them to roam the gym floor attempting (usually unsuccessfully) to promote their own businesses rather than the vision of the club.
9. Measure your staff on the right things
Most clubs measure their staff, instructors and trainers on revenue, whereas in my view what they should be measuring them on is their engagement and experience rating of members. Not only will this lead to increased retention and profits but recognition is one of the biggest drivers of staff morale. A happy team equals happy members.