Numbers for your business

What is a gym retention rate and how to calculate it

What is a gym retention rate and how to calculate it
Written by GEORGE Published on 2020-08-03 3 minutes read

The gym retention rate is one of the most important data you should constantly track if you own a fitness center. The formula for this rate is relatively simple, and it will help you get an insight into the revenue you can count on in the next period. Though this is a notion many people talk about, not everyone knows exactly what it means and how to calculate it. The formula for this rate is relatively simple, and it will help you get an insight into the revenue you can count on in the next period.

What is the retention rate for a fitness center

The retention rate means the percentile of members that are still members after a certain period. Usually, this timeframe is similar to the contract duration you are selling, like 1, 3, 6, 12, or 24 months.

Therefore, the retention rate shows you the percentage of members still engaged to the end of that period. This way, you get an overview of how your business will evolve in the next period and the minimum revenue you can expect.

Since one month is a pretty popular contract period for members, you can use it to calculate the retention rate. That way you'll know how many members you will have next month.

How to calculate the retention rate in fitness

Though it might seem complicated, the formula for the retention rate is rather simple:

((ML-MN)/MB) x 100

ML
 = the number of active members on the last day of the period
MN = the number of new members recruited during the period
MB = the number of active members at the beginning of the period

Example:

Let's say you start the month with 1350 active members (MB), and throughout the month, you recruit 150 new members, and 10 members expire. That means you got 140 new members (MN). At the end of the month, you have 1200 active members (ML).

((1200-140)/1350 x 100 = 78,5

That means the in that month, your retention rate was 78,5%. Consequently, this is the minimum percentile of members that you can count on next month if you don't recruit any new members, and no membership expires. If you calculate this every month, you can see how this rate changes and better understand your business trends.

Don't forget about the attrition rate

Though the retention rate is an excellent indicator of your gym's success, it would be great to keep track of other numbers. One of them is the attrition rate, or the percentage of members lost. Just as the retention rate, it's essential to set out a period depending on your contract period.
The formula for the attrition rate is the following:

(ML/MT) x 100

ML = the number of members lost during the period - their membership expired, and they didn't renew it
MT = the number of active members at the beginning of the period

Example:

If you start the month with 1600 active members (MT), and 450 members expire and do not renew (ML), the formula is as follows:

(450/1600) x 100 = 28,1

That means that in that month your attrition rate is 28,1%.

Bear in mind this value can be heavily influenced by your sales team. If you have an outstanding sales team that recruits a large number of new members, then your attrition rate will be low, which is good. But, this value might hide the fact that your members also expire relatively quickly.

That means that you probably don't allocate enough resources for member retention, so they will not drop out after a short amount of time.

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A quick catch up...

It is critical to keep track of the way the number of member changes, both those who drop out and those who stay. The retention rate and the attrition rate are essential when you make any decision regarding your business.

Only with these numbers, you can spot trends and find your busiest and, most importantly, the slowest months of the year. That way, you can take action before the latter happen.

That is why it's essential to make sure your management software provides all this information simply and easily.



GEORGE
GEORGE

George works in the fitness industry for over 12 years, during which he combined his advanced IT skills with the ability to solve problems with ingenious tech solutions. As a result, he has become very familiar with the challenges that occur during gyms' daily tasks and their solutions. His experience always takes shape into practical features for our platform

Fitness Business Romania
Fitness Business Romania

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