Doug Young, the chief operating officer at Easalytics, shares how purchase predictions can increase your club’s revenue and profits.
Predictive models using machine learning to analyze a host of variables to predict consumer behavior are commonplace in many industries. Some predict which among a myriad of products or services a consumer is most likely to buy, while others might make a time-based prediction of when a consumer is most likely to buy one specific product or service. Both are useful tools for increasing revenue and profitability, and both are unfortunately underutilized in the fitness industry.
How could a purchase predictive model benefit your club? Let’s take a look at a time-based model that predicts the probability a member will purchase personal training within the next three months. By focusing messaging and offers on only members with a higher probability of purchasing, the following benefits are achieved.
Increase margins for highly probable buyers. You may not need to offer free sessions or even discounts to high probability buyers as they may respond to just the right value proposition message — segmentation on member demographics or personas can be very powerful here. Studies have shown only about 20% of buyers are “discount junkies” who will buy only with discounts, so leading with a discount or free session offer to those buyers is needlessly throwing away profit margin.
Increase revenue with new buyers. Your current sales process may be good at closing personal training sales at a few key touchpoints, such as when a new member signs up, or after a member attends group classes and forms a relationship with a trainer. But what about members who slip between the cracks of those touchpoints? A predictive model can identify members who are likely to purchase, but also unlikely to be “caught” at the right time by your current sales processes.
Reduce costs of low-value outcomes. Free personal training sessions and deep discount offers are a cost. If the right members bite, the ROI can be well worth it. However, opportunistic bargain and “freebie” hunters unlikely to convert to long-term buyers can reduce this ROI. Target higher-probability buyers with your offers and you can win a higher percentage of high-value, long-term buyers.
Avoid ad fatigue. For many types of purchases, timing is everything and personal training purchases often fall into this category. You don’t want your best messaging and offers having become worn out and tired background noise by the time they would be most relevant to a member just nearing their likely time of purchase.
Reduce email unsubscribe rates. Your member email list is one of your most valuable marketing assets. Unfortunately, the fitness industry is tied for first with highest unsubscribe rates among 46 industries, according to MailChimp. Poorly-timed, high-frequency, low-probability touches are not worth permanently losing access to a member who may have become a high-value purchaser with the right messages, at the right time.
Most clubs have more than enough member data to effectively utilize a variety of predictive models, and the costs of deploying them have decreased significantly over the last few years. You’ve invested in systems to collect that data, isn’t it time it started paying you back?
