When you acquire a new gym member, it is important to understand that not all gym members are equal.
Some members will have a much better "lifetime value" (the revenue they generate over the life of their membership). Some members will have little or no value. For example, when you acquire a member, you must factor in the cost of marketing to acquire that new member (cost of acquisition). There is then also a cost to onboard that new member (doing paperwork, seeing a trainer, etc.).
This means if a member-only stays for 3 months before cancelling their membership, it is highly likely that they have not created any profits. In other words, the membership revenue you have generated from them is equal to the cost of acquiring and onboarding them. This doesn't even factor in other overheads like rent, equipment etc.
It is important to understand that not all members are equal. Some are worth infinitely more to your gym.
What if you could identify and attract the only high worth members to your gym?
This may not be entirely possible. However, you can do things to improve the general quality of the members you do acquire.
Here are two strategies that can create an instant impact on member quality.
- Increase your prices
- Changing pricing always scares business owners; however, pricing is an area that many get wrong.Higher prices tend to attract a different quality of member. Members who pay more tend to have a lower churn rate and are likely to commit for longer.
If you buy something more expensive, it puts more pressure on you to ensure you get to use or value from it.
This same principle applies to a gym membership.
This strategy may mean you do not acquire as many members. However, the ones you do acquire will be more profitable and valuable for your club.
- Do less promotional based marketing and selling
- The second way to improve the quality of your member acquisition is to focus less on promotional based marketing.Promotional based marketing is when you have some special offer or sale such as no joining fee or 3 months for 50 dollars.
This type of marketing can attract "opportunities" members who may not be ready to join and commit to a gym. These members take up the cheap offer and then quit a few months later.
It is possible even to lose money on these type of members.
When I drive to visit clients in our local city, there is a gym that I pass that always has a different promotion every single month. They have massive signs and balloons to attract attention.
The interesting thing is that this gym has been for sale on 3 separate occasions over the last 10 years.
This tells me that it may not be very profitable.
I recommend using promotional based marketing sparingly and focus more on "education-based marketing."
Education-based marketing is focused on educating the prospect about why your solution (your gym and programs) are the best fit and highest value for the member.
Good education-based marketing results in a higher quality of member that stays longer and generates higher levels of profits.
Implementing these two strategies can strengthen the foundation of your business and give you some quick wins for your bottom line.
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