Retention: The Importance of Self-knowledge (HCM Review 2019)

There’s no one thing that will fix your member retention, but clarity of mission, a strong culture and an eye for data will drive significant change. Kate Cracknell reports from the 2019 Retention Convention

“The fitness industry today is a place of blurred lines between a proliferation of business models,” said Dr Paul Bedford at last month’s Retention Convention. “Before you can define your customer experience, or create your customer journeys, you need to define who you are.”

Bedford was speaking at his fifth annual Retention Convention – this year sponsored by Precor, The Retention People, DFC, Coach AI and Willmott Dixon – which saw a series of high-performing operators sharing their retention best practice.

Bedford’s message: Be absolutely clear about who you are and who you’re targeting, and build a company culture that reinforces this at every touchpoint. Only then will you be in a position to deliver the sort of compelling customer experience that will keep people coming back for more, and paying for the privilege. 

Embedding a culture

The first speaker, California-based Chris Stevenson – owner of Stevenson Fitness – took up the theme of culture.

“Your company culture must revolve around creating an unparalleled customer experience,” he said. “Our mission statement is: ‘Everyone leaves feeling better than when they arrived.’

“We then live that culture; we wrap our purpose, mission and values around it; we promote it internally and externally. We want customers to know what they should expect, as well as our staff.

“We evaluate around our culture too. We don’t look at basics like punctuality and appearance, but rather our employees’ ability to uphold our core values. And we hire and fire by our culture. We demonstrate that creating an amazing customer experience is the most important thing.

“When we recruit, we actively seek the right people. If I have a great experience in another service-focused environment, I’ll ask: ‘Have you ever thought about working in fitness?’ We approach our most passionate members too. They’re already part of our culture, so if someone is at the front of class every week, we might ask them to be a guest instructor. And we embrace employee referral: ‘You’re a great employee. Who do you know who’s similar to you who might want to work for us?’

“With all of these groups, they might not be thinking about it until we suggest it.”

He continued: “We’ve refined our hiring process too. The first interview is all about culture. We bring everyone together so we can see their interaction skills. We give them a job description that includes our mission statement; we ask a lot of our staff and they need to know what we expect. We ask questions that fit our company culture, such as ‘tell us your top five’. That can be a top five of anything – whatever’s important to them. It helps us understand their values.

“Then we do a Secret Interviewer – a tour of the club with a staff member – so we get a sense of the real person. And we give them homework: writing just a few sentences on why they’d like to work for us. If they don’t do it, they’re out. We need to know they’ll do the little extras we ask of them.

“At the end of all that, it has to be a ‘hell yeah’ or a ‘hell no’. If they’re a ‘maybe’, it’s a no.”

Once recruited, culture and member experience training come before any of the job-specific training. “We tell them the story of our company – they need to feel part of it. We describe our core values in detail, bringing them to life and helping people visualise how to deliver them. We explain what our mission statement looks like in practice – how it shapes our decisions: ‘If I do this, will our members leave feeling better than when they arrived?’ If not, we don’t do it.

“With member experience training, it’s about understanding that everyone has their own story, their own things they’re dealing with. If we want to be the best part of their day, we have to understand that.

“And we continue this training on an ongoing basis, from monthly meetings to weekly emails – with face-to-face follow-ups to make sure they’re being read – and on-the-spot coaching wherever we see things that aren’t right.

“Ultimately, we aspire to the highest level of customer service where we anticipate every member’s needs. Where we go above and beyond, as with our free Mother’s Day cards recently – members could help themselves if they’d forgotten to buy one. Where we don’t just answer questions with directions, but go and help the member with whatever it is they need.

“But be warned, once you achieve this level of service, you have to do it consistently. Members start to expect it and are disappointed if you don’t deliver.”

He concluded with a few golden rules from Stevenson Fitness: “When a member is present, everything else stops. They are the most important thing. Then it’s ‘eyes and teeth’ – smile and acknowledge, including a warm welcome and fond farewell. Use names 100 per cent of the time and introduce yourself to everyone you interact with. Introduce members to each other too – connections drive retention – and introduce prospects to members who love you. They’ll do the selling for you.

“Get your body language right: show you’re engaged and you care. And choose your words carefully: we have a list of approved phrases. So, it’s ‘Let me find someone who can assist you’ not ‘I can’t help’; ‘What I can do is…’ not ‘Unfortunately…’. We also explain why we do things in a certain way, rather than just saying ‘That’s our policy’.

“The result? Posts from our members on social media with comments like: ‘My club is cooler than your club.’ And NPS scores of over 80 per cent.”

Trust the data

Jose Teixiera of SC Fitness in Portugal – owner of the Solinca mid-market chain, Pump low-cost chain and Lagoas premium club – then wowed delegates with data from 100,000+ Solinca members that allowed him to assess retention by every imaginable variable.

“We know, for example, that if a member joins between June and August, they will leave earlier than if they join in January-February or September-October.

“We also know they’re more likely to drop out if they don’t do an induction, or if they don’t work out in the first 30 days of membership; 49 per cent of those establishing this early habit are still active at 19 months, versus 37 per cent of those who don’t, so we incentivise it.  

“Another factor, and I’m sure people won’t like this, but one of the drivers of lifetime membership is contracts, period. At Solinca, where we have 12-month contracts, 69 per cent of members are still active at 12 months. At no-contract Pump, that figure is 24 per cent. Pump is stable, but it survives on sales.

“Age matters too. At Solinca, millennials stay for 14 months, Baby Boomers 27. We therefore pay our sales team different commissions for different member profiles, based on the predicted membership lifetime.

“But our primary driver of retention is group exercise. If a member does 12+ classes a month, they stay with us for 32 months. We have a loyalty points collection scheme to increase GX usage and members love it.”

He continued: “Ultimately, to drive lifetime membership, you have to focus on usage. For each incremental average monthly visit, our contract length is extended by 1.26 months.

“To this end, one of our Key Ratios is interaction effectiveness. Instructors’ interaction with members needs to, at a minimum, lead to those members maintaining the same frequency of visit. Ideally it should increase frequency, and we track which of our instructors are best at getting people to come more often.”

Other key ratios include 1.5 staff hours for every hour the club is open – what Solinca calls ‘interaction opening hours’; a four-day lead time from joining to induction; four days from induction to first workout; staff interaction with ideally 100 per cent of members, but at a minimum 100 per cent of sleepers and high-risk members if they come into the club; and an average of 12 visits a month. All of these have been proven to boost retention.

“These form the basis of our instructor KPIs,” Teixeira explained. “They earn commission based on member behaviour, which means they take the initiative to get members engaged. Sales staff are also expected to give a retention pitch, encouraging new members to start now and do their induction.”

The wealth of data gathered by Solinca shapes the customer journey – a highly complex pathway of touchpoints that’s continually re-assessed and redesigned. “We focus on data and the customer voice, not gut feel,” Teixeira added. “Without data, it’s just an opinion.”

Data informs a journey for those who have left, too, based around a detailed exit interview with every departing member. To date, over 70,000 such interviews have been conducted.

Finally, said Teixeira: “Make sure you’re interacting with those who need interaction. It isn’t just about rapport. You need to do things that change the member lifetime.”

And here he shared an interesting insight relating to retention by NPS category – that is, advocates, neutrals and detractors. Teixeira has added another category: those who don’t respond at all. “These are the members you need to focus on,” he said. “Don’t just talk to detractors. The problem lies with those who don’t respond at all.”

The combined result of the company’s various initiatives? Against a 31 per cent global average retention rate, and a 27 per cent average retention rate in Portugal, Solinca boasts a 55 per cent retention rate – and rising. The proportion of members still active past 12 months has also risen over the last few years, from 47 to 57 per cent.

Meaningful interactions

The final session came from Dean Hodgkin, speaking about his 28 years at Ragdale Hall. His key message: create meaningful interactions.

“People come to Ragdale to create memories, not to consume products,” he said. “We need to make it memorable.

“That starts with looking after our staff, because they then look after our guests better. And our staff do feel looked after: 139 of our 502 employees have been with us for 10 years; some have been with us for 30.”

He continued: “Next up is getting the welcome and departure right. Daniel Kahneman’s Peak End Theory suggests that, when people reflect on an experience, they make a mental shortcut. They remember the emotional high and the last thing that happened. If there hasn’t been a high, all they remember is the final thing that happened – so get your farewells right.

“At Ragdale, we never just say ‘goodbye’. We ask club members to commit to a date when they’ll next visit: 68 per cent then come back within the next seven days. And in general, interactions have to be meaningful. Our staff aren’t allowed to just say ‘hi, how are you?’ because the answer can be given in one word. We also have a guest liaison department whose job it is to walk around and talk to our guests. We put this in place 20 years ago and it’s now a team of four.

“Most dissatisfied people won’t complain, so be pre-emptive. If someone doesn’t look happy, we get someone out there to talk to them before they even complain. Never under-estimate the power of delivering personal advice that satisfies a personal need at the very moment it’s needed.

“We also empower our staff to deliver great service whenever the occasion arises. If we think what they’ve done is particularly good, we make it our new standard. TNTs – tiny noticeable things – are the little touches that can be explosive. That’s especially the case if they can be personalised, so build up a profile of every customer’s preferences.

“The proof that all of this works? In 2018, our hotel rooms were at 98.7 per cent occupancy. In February 2019, 80 per cent of our guests were return visitors. In March, 33 per cent were on their 10^th or more visit, while in January 11 per cent were on at least their 20^th.

“Meanwhile, in the club, we have 812 members, a waiting list of 295, and monthly attrition of around 0.5 per cent. We’ve also enjoyed year-on-year growth for every single year for the last 28 years