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Retention Article April 2010 Measuring Retention Supporting Slides. Measuring Retention. Why Is Measuring Retention Important? Membership retention is the largest problem facing our industry today. The average member stops paying about 7 months after joining a health club*

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Retention Article

April 2010

Measuring Retention

Supporting Slides

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Measuring Retention

  • Why Is Measuring Retention Important?
  • Membership retention is the largest problem facing our industry today. The average member stops paying about 7 months after joining a health club*
  • To understand the size of the problem, you need to rely on the measures you are using
  • Proper measures enable actionable decisions to be made that will improve retention and secure a business’ profitability in the long term
  • *Where no minimum contract is in place
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Measuring Retention

How Do Most Operators Measure Retention?

Monthly Attrition % calculated as:

No. of Cancellations Starting Monthly Membership

OR

Annual Attrition % calculated as:

No. of Cancellations Average Starting Monthly Membership

the attrition

Annual Attrition Rate = 2612 (average monthly starting total ) / 1542 (total leavers) = 59%

Measuring Retention

The Attrition %
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Measuring Retention

  • Why Is Attrition A Flawed Measure of Retention?
  • The attrition percentage is heavily influenced by membership sales i.e. attrition can ‘improve’ through selling more memberships rather than keeping more members.

Attrition ‘improves’ even where there are more cancellations!

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Measuring Retention

  • Why Is Attrition A Flawed Measure of Retention?
  • The attrition percentage does not take into account how long a member has retained their membership – this is what translates to income.

Two members cancelling on the same day have stayed at the club for very different durations

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12 = 50.4%

24 = 27.7%

36 = 17.1%

Measuring Retention

What Are The Correct Retention Measures?

1. THE RETENTION RATE defined as:

The proportion of members who stay for a predefined period of time e.g. 12, 24, 36 months etc.

48 = 10.7%

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7.4

16

45+ members stay 8.6 months longer than 18 -24 year olds

‘Lifetime value’ = £344 more per member!

(8.6 mths x £40 = £344)

Measuring Retention

What Are The Correct Retention Measures?

2. LIFETIME VALUE defined as:

The average length of time members stay and therefore how much they pay in membership fees.

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Measuring Retention

Using the correct measures means real actionable decisions can be made to improve retention

Read the full article at http://hur.theretentionpeople.com/articles/measuring-retention/

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