Retention as a Profit Center — Not a Cost, but an Investment
Member retention is a key source of profit that should not be seen as a way to save, but as a real opportunity to increase revenue.
We often think of retention as an abstract concept, but most clubs never analyze the costs and returns associated with customer retention. As a result, they do not see the true value of actions based on retention.
Any member who leaves the club is a lost source of income and a negative impact on the bottom line. In addition, the cost of acquiring a new customer is 2-5 times higher than the cost of retaining an existing member.
Purpose of this analysis
1 ️ ⃣ Breakdown of Retention Activities for specific, manageable elements.
2 ️ ⃣ Assessment of financial benefits of any retention initiative.
3 ️ ⃣ Proving that retention is a profitable venture.
Sample fitness club
(Average values, you can substitute your own data)
- Number of members: 2000
- Average monthly sales of new members: 50
- Average Membership Fee: £50
- Cost of acquiring a new member: £150
📌 1% increase in retention = £15,000 increase in annual revenue
Profit Center #1 — Better orientation of new members and follow-up
🎯 Actions:
- Fitness instructors spend an extra hour introducing a new member.
- An additional 15 minutes for follow-up calls (by phone).
📌 Cost:
- Hourly rate (£15) × 1.25 h × 50 members × 12 months = £11,250
📌 Expected increase in retention: +1% or more
📌 Net profit:
📈 Revenue: +£15,000
📉 Cost: -£11,250
💰 Profit: £3,750
Profit Center #2 — Communicating with Low Attendance Members
🎯 Actions:
- Attendance monitoring and proactive communication with customers who started coming less frequently.
📌 Cost:
- 30 min/week per attendance report (£7.50)
- 20 h/week for customer contact (£300)
- 30 min/week for data review (£25)
- Total weekly cost: £320
- Annual cost: £16,640
📌 Expected increase in retention: +2% or more
📌 Net profit:
📈 Revenue: +£30,000
📉 Cost: -£16,640
💰 Profit: £13,360
Profit Center #3 — Marketing Programs for Low Attendance Clients
🎯 Actions:
- Reaching out to members with low activity and letting them know about available activities, new programs, and events.
📌 Cost:
- 30 min/week per attendance report (£7.50)
- 20 h/week for customer contact (£300)
- 30 min/week for process review (£12.50)
- Total weekly cost: £320
- Annual cost: £16,640
📌 Expected increase in retention: +2% or more
📌 Net profit:
📈 Revenue: +£30,000
📉 Cost: -£16,640
💰 Profit: £13,360
Profit Center #4 — Combining #2 and #3 strategies for greater efficiency
🎯 Actions:
- Combining communication with customers with low activity and promotion of programs.
📌 Cost:
- 30 min/week per attendance report (£7.50)
- 30 h/week for customer contact (£450)
- 30 min/week for process review (£12.50)
- Total weekly cost: £470
- Annual cost: £24,440
📌 Expected increase in retention: +4% or more
📌 Net profit:
📈 Revenue: +£60,000
📉 Cost: -£24,440
💰 Profit: £35,560
The choice is yours! How to implement a retention strategy?
1 ️ ⃣ Do it yourself: Analyze what worked in other clubs, use industry publications and research.
2 ️ ⃣ Talk to others in the industry: Many managers will be happy to share their experiences.
3 ️ ⃣ Hire a consultant: Professional analysis and individual recommendations can help you achieve your goals faster.
4 ️ ⃣ Outsource the key elements of retention activities: Take advantage of modern marketing tools.
Summary — Retention is a real profit!
🔹 Maintain high standards of service — cleanliness, professionalism and friendly atmosphere are the basis.
🔹 Take care of new members — onboarding, personalized support and communication is key.
🔹 Monitor attendance and respond to drops Early detection of problems increases the chances of customer retention.
🔹 Inform and engage customers — remind you of classes, offers and events.
🎯 Every retention strategy should be evaluated in terms of return on investment — retention is not a cost, it is the center of profit. The better you plan it, the more financial success you will achieve. 🚀
