Most clubs understand the value of keeping a member, versus the costs of recruiting new members. However, how do you monitor and promote this profit center?
In conversations I have had with many clubs across the industry, there is often a disconnect about the definitions for retention and attrition, since there is no industry-wide, accepted formula all clubs utilize.
For example, several major clubs in our industry do not include what is considered “uncontrollable terminations,” such as when a member moves or when a member leaves for medical reasons, in their retention number.
But there are some health and fitness clubs across the industry that have a very standard version, which The Atlantic Club also supports and utilizes. When a member is no longer paying their monthly membership dues, they are no longer included in our membership count, regardless of the circumstance. They are considered a termination — whether we can control that or not.
It is time for our industry to define this concept so that valuable comparisons regarding best practices in the area of retention can be shared.
Secondly, retention should be viewed in the future no differently than we view membership sales, personal training, tennis, spa and other profit centers. This approach requires monthly financial goals that are real numbers and not percentages, with a comprehensive business plan, designated management responsibilities and goals assigned each month.
I guess when it comes to retention, our industry, and being able to impact this important part of our bottom line, clubs will need to stop being reasonable with losses that would never be tolerated in other profit centers in our business.
As an industry, perhaps we can all agree on the definition of retention. As you build your 2016 business plan over the next 60 days, will your club be treating it as a cost center or an important profit center? It is all about knowing your numbers.
Kevin McHugh is the chief operating officer of The Atlantic Club. For questions on retention he can be reached at kevinm@theatlanticclub.com.
