The "Low Dedication" Hurdle Might Be the Most Important Metric I've Ever Found (Project X)
Long ago (while conducting the AF Project) I found that most people who quit the gym do so during their first 6 months of membership.
The implications on gym growth are profound — if we’re losing members immediately upon acquiring them, we’re setting up a cycle of frustration, wherein “successful” acquisition efforts are immediately dashed by poor retention efforts, and the gym fails to grow in spite of effective marketing and sales programs.
Now, thanks to Project X, I’ve identified an even more important set of facts:
In our anonymous gym, those who use less than 40% of their available classes have a much shorter lifetime at the gym than those who use more (19 months versus 24 months)
These “low dedication” members have a lifetime revenue value that is a staggering 31% below that of moderate, high, and very high dedication members — $2,949 versus $4,256.
And “low dedication” members are remarkably more likely to self-rate as “not fit” — with 70.4% selecting this choice in our Member Survey.
On a purely economic basis, every “low dedication” member at CrossFit X represents a $1300 opportunity for improvement. And on a humanistic basis, we’re failing to deliver fitness for the vast majority of these people — a telling gut punch to those of us who believe that the highest calling of any business is to deliver on its intrinsic promise.
And the kicker?
Out of the 305 active members of the CrossFit X, 104 of them rate as “low dedication”, meaning 34% of the gym’s clientele is at risk for:
A shorter lifetime at the gym, representing 520 months of paid membership
(104 * (24 months - 19 months))
A smaller lifetime value to the gym, representing $135,928 in lost revenue
(104 * ($4,256 - $2,949)
The opportunity is clear. Fix this, and we keep many more of our members for much longer (and we might even garner enough revenue in the process to support one hell of a marketing budget).
A Quick Criticism
For as long as I’ve been consulting with gyms, the standard “retention” move has been to reach out to non-attendees after a set amount of days or once it's clear they’ve quit.
I’ve long likened this approach to apologizing to your significant other after your stuff has been rudely stuffed in a trash bag and thrown on the lawn — your suit might succeed, but odds are it’s too late. In other words, a significant stretch of non-attendance is a lagging indicator, showing that someone is already out the door (rather than the fact that they’re at risk for leaving).
Now (finally), we’ve got a leading indicator, a way to see who is at risk to leave before they stop attending — a metric that relies on the attendance level of current attendees rather than the non-attendance level of former attendees.
Here’s how I got there.
Calculating Dedication Level
Dedication Factor = (Avg. Attendance Per Month over the Last 3 Months / Total Available Classes)
Dedication Level = (Dedication Factor keyed to ranges, below)
The first step to identifying “low dedication” members is to establish ranges for every level of dedication. I (somewhat arbitrarily) set my ranges as follows:
Very High: Attendance Greater than or Equal to 80% of Total Available Classes
High: Between 60% and 80%
Moderate: Between 40% and 60%
Low: Less than 40%
I then established a number to constitute 100% usage, a.k.a “Total Available Classes”, the figure that becomes the denominator in our “dedication factor” calculation.
CrossFit X has two primary levels of membership: all-access and 12 classes per month, respectively. Accordingly, I decided that Total Available Classes for an all-access member would be 20 classes per month, while the figure for 12 classes per month members would be self-evident.
Here, we take a quick break to remember and recognize the utility of our Membership Management Software deep dive (and spreadsheets in general):
CrossFit X uses TRIIB, from which I pulled monthly attendance figures by member as a .csv file.
I added these figures to my spreadsheet as a separate worksheet, named “Attendance by Member”.
I then averaged the last three months of attendance (in this case, January, February, and March 2019) into a new column on that worksheet, using the AVERAGE function (representing the numerator in the Dedication Factor calculation).
Heading over to my main worksheet, “Active Membership Master”, I used the IF function to assign a Total Available Classes figure to each member based on their membership level. If All-Access, this figure was 20, if 12 Pass, this figure was 12 (representing the denominator in the Dedication Factor calculation).
I then used VLOOKUP to bring my average attendance from “Attendance by Member” over to “Active Membership Master” and calculated Dedication Factor. Necessarily, this is a number between 0 and 1 that represents the percentage of Total Available Classes used.
I then used the IF function to assign a label to each Dedication Factor — low, moderate, high, or very high.
Voila, Dedication Level.
A Worthwhile Note on Relative Attendance
It’s worth seeing at this point that we’ve made no judgement as to the utility of absolute level of attendance. Instead, we’re talking about relative attendance — how many classes out of the available total a member attends.
Somewhat counterintuitively, we’re not worried about whether a member comes 20 times or 12 — as long as their attendance is congruent with their membership selection. We examining whether they’re using what they’ve purchased.
Here’s how it played out at CrossFit X:
When contrasted with All-Access, the 12 Pass option actually has a higher percentage of members with Very High Dedication, many fewer with High Dedication, approximately the same with Moderate Dedication, and slightly more with Low Dedication.
What you should notice — Low Dedication members comprise 43% of the 12 Pass population and 35% of the All-Access population. This is hardly a screaming difference, and a subtle non-endorsement for the idea that our primary mission should be to turn our 12 Pass members into All-Access members.
Rather, we should be striving to move all members into a higher level of participation — relative to their number of Total Available Classes.
Calculating Lifetime Value for Gym Members
Once I had Dedication Level calculated, I turned my attention to current lifetime value for each member. Current Lifetime Value = (months of membership thus far * membership rate)
Note that this method of determining lifetime value is “data-lite” — rather than attempt to determine what the future aggregate lifetime value of each member might be, as determined by examining a large historical data set of members who both joined and quit in the past and then overlaying those lifetime averages on current membership, we went the more direct route, simply asking “how much is each active member worth so far?”
Here’s how I did it:
The “Active Membership Master” has a MMDDYYYY join date for each active member, established during our previous data aggregation efforts.
Using the TODAY() function, I subtracted the join date from today, giving the number of days that have elapsed since each member joined.
I then divided that figure by 30.5 (the approx. average number of days in any given calendar month) to determine how many months each member has been active.
And multiplied by their current monthly membership rate (in dollars) to establish a “Lifetime Value”.
Now Comes the Fun Part
Once we’ve got Dedication Level and Lifetime Value determined, we can do all sorts of slicing to see how things shake out.
In service of our mission at CrossFit X, I decided run three pivot tables:
Membership Duration (Months) by Dedication Level
Lifetime Value by Dedication Level
And Personal Rating of Fitness by Dedication Level
Keep in mind that during the initial run, I had no idea how this was going to play out — dedication level could’ve been completely unrelated/uncorrelated with any of these factors.
Instead, what I found was nothing short of astonishing.
First, those who rated as “low dedication” (using less than 40% of their classes) had a universally shorter membership duration than their peers — 19.8 months versus (22.3 to 24.6 months) in the other groups.
Of course, this is rather unspectacular as a fact; people who don’t use a service in the micro tend to use it less in the macro — but the implication is rather more profound. Once members get beyond 40% usage of their Total Available Classes, their lifetime of membership is remarkably stable, ranging from 22.3 to 24.6 months.
This means we’ve established a primary attendance hurdle to get our members beyond in order to dramatically bump up membership duration — adding 2.5 months of membership (at minimum) if we can get them above 40% usage.
This extended duration turns out into additional dollars when examining Lifetime Value (“LTV”). Those who rated as “low dedication” were worth $1300 dollars less (on average) than their peers.
Again, this is rather pedestrian as a fact — people who aren’t dedicated to a service spend less money on that service — but the implication for gym management is huge. If we want to bring our lifetime value per member from the $3,000 level to the $4,200 level plus, we need to move them from low dedication to ANY OTHER LEVEL.
(Note the remarkable consistency in LTV above the ”low dedication” level. Once a member is using more than 40% of their Total Available Classes, their lifetime value lives within a tiny $53 range.)
Finally, I wanted to see how Dedication Level played with self-reported perception of fitness. Using data from our Member Survey, I ran a pivot table in answer to the 4-point Likert scale question “How would you rank your current level of fitness?”
The vast majority (70.4%) of low dedication members rated themselves as 1 or 2 on our question, a.k.a. “not fit”.
As you might suspect, this rating marched down with higher dedication levels, flip flopping at the Very High Dedication Level — with only 26.7% of members at this level rating themselves as “not fit”.
What to Do About All This
Our biggest problem at CrossFit X isn’t these relationships or lifetime values. It’s the fact that a whopping 34% of gym membership falls into the “low dedication” category, a.k.a. the predominantly “not fit” category.
The members of this gym are not getting what they came for — and the knock-on economic effects are real.
And before you start thinking that this is endemic to a single poorly-run gym with sub-standard instruction, know this — CrossFit X offers a tremendous class experience. They objectively have some of the most engaging, well-educated coaches on the planet (and I’ve seen A LOT of coaching staffs). The gym is clean, friendly, and in a fine part of town, and the pricing structure is bang-on. The programming is do-able, regularly scaled, and challenging enough for the best.
What this implies is that the gym’s issue is not one of quality product, but of human behavior — people having a hard time building a regular fitness habit into their lives. And so we begin a secondary journey, the harder one (the one that all data leads to…)
We’ve got to design an experimentally-valid, effective intervention to see if we can upgrade the attendance level of 104 members of the gym.
Some of the questions to answer as we brainstorm the intervention method(s):
Should we make people aware of their low dedication level? Could this approach backfire, and cause them to quit rather than up the ante?
Can we design effective social methods, such as calling and inviting them to certain workouts, establishing explicit “goal” attendance levels during on-boarding, or helping them find “accountability buddies”? Can we do so without causing undue guilt?
Are we missing certain services for our low dedication population that are essential to their increased attendance, such as child care?
Can we establish a system for intervention that doesn’t rely on a single person, repeated “auto-emails”, or similarly onerous processes at the gym?
I’ll be working on the “dedication problem” with the staff of CrossFit X over the next few weeks (details to come) along with three other efforts:
Analyzing the marketing-focused questions from our Member Survey and incorporating the findings into a website redesign.
Establishing a digital marketing/sales funnel to increase our rate of new client acquisition (using Instagram and Facebook mobile).
Benchmarking CrossFit X’s current rate of client acquisition to ensure our marketing and sales efforts are effective.
Our next post will focus on the first item.
As always, if you have any questions on Project X and/or implementing my methods in your business, feel free to email me at email@example.com or schedule a preliminary consultation. I’d love to help you get started with data-driven decision making, client discovery, and creating a robust digital marketing funnel — the underpinning of every successful business I’ve ever run.