Why do Members cancel their Contracts?
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Gym members come and go. That’s perfectly normal of course. But why do they actually leave? Find out the top 5 most frequent reasons for ending their contract!
Customer-retention processes, which prior to the pandemic were discarded as cumbersome “side shows” at best, have become part and parcel of everyday gym operations in 2022: an industry that always invested more in selling new memberships rather than in the satisfaction of existing members, is now forced by external factors to re-think its attitude. And it’s never too late for that.
First things first
If we as the fitness industry jointly develop strategies to retain our customers, we will remain competitive over digital offers, outdoor and personal coaching as well as new home-workout trends in the long run.
There are many varied questions revolving around customer retention: what are the true reasons for members to cancel their contracts? What can I do as a club operator to counteract a high rate of cancellations? Which KPI should I track for a precise overview of the trends at my gym at any given time? Read on for the answers to these questions.
The top 5 reasons for cancelling gym contracts
According to IHRSA, approx. 50% of all cancellations are avoidable (IHRSA, 2016). These include members not giving up training due to moving, financial or illness-related reasons. This means that we as an industry have control over the remaining 50% of our cancellations. There are many varied reasons for members to turn their backs on a gym. Often, there is no one-fits-all answer to this question due to the different target groups and club concepts; and yet we do have figures demonstrating that there are recurring patterns.
1. 73% of gym users miss their targets
At the beginning of the year highly motivated people flood the gyms. They are willing to pay a lot of money to keep their New Year’s resolutions and achieve ambitious goals. Unfortunately, 73% of members miss their targets (Harris Interactive, 2019). It is not in the nature of man to look for faults in oneself. Members instead blame others for this: in this case either the gym or the instructor – or both.
The task of gyms is to actively enable their members to reach their goals. But how do you do that efficiently? After all, customers themselves have to lift the weights, run the kilometres and drink the shakes. The solution here lies in intelligent on-boarding. If you succeed in clearly outlining the roadmap over the next 30, 60 and 90 days, in making appointments with instructors and in manifesting various milestones, you boost customer commitment. Thanks to a study commissioned by Precor we know that a member’s length of stay increases by 5% with every visit in the first month (Miller & Miller, 2016). The be-all and end-all of this onboarding process are the appointments with instructors. Instructors are the public face of a gym and the ones building personal relationships with members. Two conversations per month can already reduce a member’s cancellation probability by 50% thereby ensuring a longer membership (Pixformance Sports GmbH, 2018).
Andreas M. Bechler is an author, consultant, lecturer and podcaster in the fitness sector. In addition, Andreas is the spokesman of the “Arbeitskreise Fitnessbranche des VSD – Verband für Sportökonomie und Sportmanagement e.V.” (Working Parties Fitness Industry of VSD – Association of Sports Economy and Sports Management). You can contact him via LinkedIn https://www.linkedin.com/in/andreasmbechler
Till Pitschel is an expert in customer turnover management and customer retention processes, author, speaker and personal trainer. Together with two partners he manages the start-up “Keep Your Members” to consult gym operators comprehensively about customer turnover processes and customer retention strategies. You contact Till via LinkedIn: https://www.linkedin.com/in/tillpitschel/
2. Dissatisfaction with the quality
With regards to the quality of a gym as seen from the members’ perspective we have to focus on two parameters. On the one hand, we have to consider the service quality (staff), on the other the quality of the facilities as such (hygiene, furnishing, atmosphere, services offered, ...).
In terms of staff quality the German fitness industry has made quite some progress – or has it? Podcast host and author Andreas Bechler sheds some critical light on this topic in his article “Looking for future executives won’t get you skilled labour.” (Bechler, 2021). According to him, staff recruitment all too often still focuses on executive training. However, looking at customer needs that are increasingly developing towards high-quality health promotion, it becomes clear that this cannot be achieved with executives alone. Those wanting to survive long term will need more than just good executives; genuinely skilled labour is needed.
Poor quality in terms of furnishing, hygiene, classes and the general portfolio of services offered is a reason for 32% of members to cancel their contracts (IHRSA, 2016). Here, it is worthwhile constantly touching base with members to find out which parameters have to be improved at the gym. This approach not only demonstrates your high regard for members but also helps to avoid a certain degree of operational blindness.
3. Poor customer service
It will certainly come as no surprise that good staff and quality service pay off. As part of a loyalty survey 86.1% of the customers polled said customer service was the third most important reason for a repeat purchase after product quality and price (ingenicio Marketing solutions GmbH, 2021).
Provided service is excellent, 78% of customers would even stay loyal to a company if they made a serious mistake in terms of customer relations (Salesforce, 2020). However, if customer services are bad 51% of customers state they would refrain from doing business with this company again. And not all customers with negative experiences feel the need to communicate this with the company. One in eight customers report their bad experiences to on average 15 people in their immediate environment, whereas only one in 26 also shares this with the company without being asked (Kolsky, 2015). So it is not only worthwhile investing in your customer service, constantly training your staff in dealing with customers and showing more goodwill than contractually required; it also pays off to cultivate an open and close-knit feedback culture at the gym. From the customer to the team and from the team to the management. These feedback loops make short response times possible and always make both staff and customers feel that problems can be solved quickly.
4. Class participation is too low
Regardless of how you feel about fitness classes: your personal attitude towards these classes does not change anything about their value for the gym. A TRP study showed that the risk of cancellation among members who only work out alone is 56% higher than among members who regularly meet to exercise with others (The Retention People, 2016).
Conversely, this means for us as an industry we have to work hard to not only offer classes but also fill them and leverage this in promotional terms. A proven channel to do this might be social media platforms. At an average of 32%, the 18-49 target group (70.2% of all members in Germany (DSSV, 2021)) attaches especially great importance to interacting in groups and communities (ingenicio Marketing solutions GmbH, 2021). To find out how to build a community like this using Facebook groups, for example, see Andreas Bechler in his article from 2020.
5. Boredom and a lack of motivation during training
A factor often underestimated in terms of customer retention is fun during training. Approximately 33% of gym membership cancellations can be attributed to a lack of motivation to train. Further surveys among drop-outs showed that the training plans of bored customers comprised 15 exercises or less. For customers with a very varied training plan the retention quota remained above 80% (Pixformance Sports GmbH, 2018). Here the art is to strike the right balance. On the one hand, it is imperative to put together varied training plans, while on the other, it is important to not overtax your members.
Regular tweaking of training plans for members makes for more variety in training and, at the end of the day, greater satisfaction among members. This variety alone, however, does not ensure the required motivation. Achieving this motivation is likely to be a trickier task. Here, too, figures show that people exercising in groups or in couples, achieve on average 21% more in this energising environment and spend 10% more time at the gym per unit (Strava, 2018). This is also an area where targeted deployment of staff helps to connect members with each other. If you manage to combine training appointments at the gym for members sharing the same aims and similar training slots and introduce these members to each other, the sense of belonging grows and the gym becomes a meeting point for like-minded people.
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Boredom and lack of motivation to train often lead to gym membership cancellations.
Conclusion: monitoring customer satisfaction regularly pays off
Customer retention is a complex topic that can be incorporated into existing concepts in different ways, depending on the range of services offered, target group and gym location. However, across the board patterns can be detected that can help any gym reduce member turnover. It is indispensable though to analyse your processes internally, break down your member structure and implement processes tailored to these insights.
So it is fundamental for gym operators wishing to ensure their long-term success that they monitor customer satisfaction and check which parameters are of relevance to which target group and how this knowledge can be leveraged. As a basis for this task I recommend taking a closer look at the IHRSA reports at regular intervals and following the DSSV recommendations and those of individual CRM providers. The latter, in particular, are highly competent when it comes to recording and analysing customer data enabling them to flag up real trends beyond data provided by labs and polling institutes.
List of References
Bechler, A. M. (2021, November 1). Wer immer nur um zukünfitge Führungskräfte wirbt, bekommt keine Fachkräfte. Retrieved from LinkedIn: https://www.linkedin.com/pulse/wer-immer-nur-um-zukünftige-führungskräfte-wirbt-bekommt-bechler/?originalSubdomain=de
Bechler, A. M. (2020, Mai 29). Das Potenzial von Facebook-Gruppen für Fitnessanbieter: https://hashtag-fitnessindustrie.de/fachartikel/das-potenzial-von-facebook-gruppen-fuer-fitnessanbieter/
DSSV. (2021). Eckdaten der deutschen Fitness-Wirtschaft 2021. Hamburg: DSSV.
Harris Interactive. (2019, January 09). Press Releases Bodybuilding.com. Retrieved January 2022, from Bodybuilding.com: https://www.bodybuilding.com/fun/2013-100k-transformation-contest-press-release.html
HubSpot Research. (2018). 2018 Customer Service Experience Survey. Cambridge: HubSpot.
IHRSA. (2016). Health Club Equipment Report 2016. Boston: IHRSA.
ingenicio Marketing solutions GmbH. (2021). Retail Loyalty Studie in DACH. Retrieved from ingenico Marketing Solutions: https://www.loyalty-experts.de/studie-loyalty/
Kolsky, E. (2015, September 03). CX Stats. Retrieved from Slideshare: https://www.slideshare.net/ekolsky/cx-for-executives/2
Miller, M., & Miller, M. (2016). Resources. Retrieved from Precor: https://www.precor.com/en-us/resources/new-member-onboarding
Pixformance Sports GmbH. (2018, 08). Research. Berlin: Pixformance Sports GmbH. Retrieved January 2022, from Pixformance Sports: pixformance.com
Salesforce. (2020, August). 4th Edition: STATE of the CONNECTED CUSTOMER. San Francisco: Salesforce.
Strava. (2018). 2018 Year in Sport. San Francisco: Strava.
The Retention People. (2016). Research. Bath (UK): The Retention People. Retrieved from The Retention People: https://trpcem.com/what-impact-does-group-exercise-have-on-retention/#wpcf7-f18047-p17991-o1
About Hashtag Fitnessindustrie
“Hashtag Fitnessindustrie” is a podcast on the German fitness industry covering all its facets and actors. It aims to promote knowledge transfer between interviewees and listeners for the benefit of the industry as a whole. Current trends and developments are just as much part of this podcast as are basic, strategic questions arising in the daily business of fitness service providers.
For more information go to: https://hashtag-fitnessindustrie.de
