Most gym owners think their retention is pretty strong, but most gym owners also don’t know their numbers.
In this episode of Just One Thing, we get into the weeds on the numbers behind great retention for training gyms (and what you can do to achieve it).
Tune in to find out:
- Why you should have everyone on 12 month agreements
- What good retention numbers should look like for a training gym
- The one month you’re most likely to suffer from client attrition
Plus much more!
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Watch The Full Episode
Sumit: Yeah. All right, Tom, welcome back. And uh, this time around, I want to talk to you about retention from a viewpoint of knowing my numbers. I talked to a lot of gym owners and they say we have clients staying with us forever, and we don’t have any retention issues and we’re adding four or five clients a month.
And then I’m asking them, well, how many clients do you have now? And like, I have a hundred clients. And how long have you been in business? Oh, easily, six, seven years. I’m like, well, that doesn’t add up, you know, you’re losing clients, but, but you’re, you’re able to give me names like John and Joe and Susie who had been there forever, but you lose sight of the people that stopped coming in.
So, so let’s break it down. Like, what is the average term, if you will. Uh, in the elite training gym environment that I should be shooting for. How do I track it? Like what a benchmark
Thomas Plummer: The pure way to look at this. And this is a lot of work, so obviously no one does this either, but the pure way is that each month I get an old school notebook and I just have tabs in it.
So this month in January, I signed up 12 people. I put your names in it. And, um, then next month I add 10 people and the month after that, 13, and then each month, then I go back to the list. So if I lose somebody, I, I, I make a note. So this guy went five months and then moved. So I go back to the original guy and put down, he lasted five months and I know what month he quit.
And then why, if I do that for two solid years, I, I find out. Two things. One what my Loss rates are. And two what my real retention rates are. So we have to understand both of those to talk about loss rate about retention. So starting with loss rates, loss rate is losses are money. I should have collected, but didn’t, for some reason, So if somebody pays me signs up and says, I’m in Tom 12 month contract, let’s go.
And he disappears in seven months. That’s a loss. I lost five months of potential income. Why did I lose him? So we lost rates are usually for three reasons. One, the client moves over 25 miles in most markets, which most states requires to cancel them at that time two the client die. Or three, for some reason, the client just decides not to pay us stiffs us and
Walks way at that point. So I have to go back and I know I’m going to lose at least a point a month out of this. And then you also throw on permanent medical. So I, I got hurt at work. I got divorced. I just, I can’t pay anymore.
Well, I’m, I, I’m going to lose a point a month guaranteed on that. No matter what that that’s, that’s always going to happen. So if I start with a hundred clients in January, 12 months from now at the end of that, I’m only going to have 88 left, but. We also tend to lose more because of customer service issues, other secondary issues like that.
So safely looking when I build a business plan, we use 0.88, and I use that many of the examples of projecting revenue. But if I look at 0.76, I’m losing 2% a month. So I lose one again, a guy moves 25 piles, permanent. Uh, he just he’s out of here, you know, something like that he’s injured or he dies.
Well, I know I’m going to lose at least a point a month of those it’s the wild card is the fourth. One is people that just elect not to pay. So I’m still probably going to lose about 2% a month. So if I look at this and you’ve got your magic calculator there, I believe so. If I look at this number, so if I start with a hundred.
Times point. So I’m going to lose, you know, get down 0.76. So I take that, you know, minus four times 0.76. I get 76 clients at the end. And then if I renew 80% of those, which is a good number for a training gym. So going into the 13th month, I’ve got 100 minus 24 equals 76 times point 80. What, what, what’s that number? Come up?
Sumit: 61, rounding it up.
Thomas Plummer: Yeah. So that’s a good, good training gym. So this is assuming everybody’s on 12 month agreements, which they should be. That’s what a real business, like a training gym should do.
But if you look at this, I start with a hundred clients I’ve got, I’m adjusting down to 60 at the end of the 13th month. And that that’s a good, yeah, that’s a good gym.
Sumit: So I lost 40 people and that’s a good gym.
Yeah. Yeah. This could be smaller. So, uh, take your calculator again, just to show the contrast.
Thomas Plummer: So if I lose a point a month, so at the end of the year, I’ve got eight clients times. Point 80. Yeah. And that gets me one
Sumit: Second point. So idiot clients into 80%, 70, 70.4. So
Thomas Plummer: 70. Okay. Yeah. So that’s the other end of the range. Yeah, that’s usually the range. So if I’m that much better. So somewhere in there, that’s our reality.
So back to your original statement, when somebody goes, Hey, you know, that’s, you know, I’ve been in business five years and I’ve got all these original clients. But you also have, you’ve got all these clients that just disappeared, you know, that like that because you, there are, there are exceptions to that rule.
Yeah. And there’s guys, but again, if I only have 30 clients, And I’m in a little bitty, you know, 1200 foot gym, somewhere like at 30, 40 clients. And I may lose three a year. So I feel like, yeah, I I’m really exceptional, gym, but when you get up to a real commercial training gym, you know, you’re adding eight, 12 new clients a month.
You’ve been, those are the numbers I just gave you are pretty real for that situation. There is a loss it’s always going to be built into them. No you’re going to lose clients. So the point of all this is there is a control factor in this that the owner has. They, the owner has power to leverage these numbers up or down somewhat.
I can’t stop people from moving 25 miles away. I can’t stop people from dying, uh, but I can make sure that the people that want stay have a reason to stay. And we talked about an earlier session. That’s the real power of going with the emotional connection. Building that bridge is to keep clients staying longer and paying longer.
So when I build a business plan, I go into that 13th month. Then I start to see that population, the most amazing thing. But if I’m looking at the 13th month and I start to leverage clients from that point, there is an accumulation where they, they, they tend to build, but the weird thing is the 13th month on.
I only lose those clients at 3% a year. We rate not monthly. So here’s the hard thing. So at 12 months, 12 months, 12 months, the 13th month, I have to make a decision to stay or go. And that’s where the loss is usually incurred. That’s how we get down to the 60 to 70 clients. But once that population stays, whoever’s there, they only lose about 3% a year on that high.
So that’s, that’s why you have a guy who goes, yeah, I’ve got a, client’s been with the 10 years. He made the first one. And then after that they renew year after year, unless they, again, die or move, they that’s a client for life. So that first cutoff point is the magic point where people stay alone. So I want to do is make sure everybody’s first buying point stays.
Sumit: Got it. No, these are great numbers. These are great insights. And like you said, we talked a lot about involuntary retention, you know, moving out dying medical situations to voluntary, which is really still in the control of the gym owner, which. Uh, repetition fatigue, like how do I control the repetition fatigue essentially provide that support line instead.
Sumit: From a view, from your viewpoint, though, since you look at so many gyms across the country, Tom, um, typically how long if I had to look at the average length of stay, right? What would that be in a training environment
Thomas Plummer: for, for one person? Is it.
no, no, no, it’s better. If you, if you look at it, if you look at a mainstream gym, like a big change gym or some big box, their average stage, usually only five to seven months. And that’s, it’s, it’s horrible. I mean, if you think some of them are four months, like gyms, like planet fitness, because of the cheap rate, people will usually linger a couple extra months before they leave, because I’m going to go back and it’s only $10, but even at some point I’ve spent $10 times, five months.
I’m not there I’ve been 50 bucks. I still quit. They just delay it a little, but they’re the numbers and those types of systems are usually much higher than a training gym. So a big mainstream box out there have some national chains probably losing that average client probably stays five to seven months training gyms.
We can go 20 months plus. Wow. It’s amazing. Now, some of the circuit style gyms that are out there, some of those national brands, um, I hear numbers is as quickly as four months and they’re gone because of repetition fatigue. Um, if I sign up for a place on paying you $150 a month, and then I say, I want to come at six o’clock tonight and there’s a waiting list.
Waiting list of my own gym. And I paid $150 a month to be on a waiting list of my own gym. How long do you think that’s going to last? So they, at some point, those clients get burned down and they tend to leave. So those, that type of gym has a pretty high problem with retention because of repetition fatigue.
In this case, in our world. We do the right things. Our clients will stay 20 months out an average plus that means some people are staying much longer and some people are obviously be allowed a little bit sooner, but I still go back to what I said in one of our earlier workshops. If I lost a client, I can’t blame the client because I’ve got nothing to fix.
I always have to look and say, it’s me. What did I do? What could I have done better to keep this going? If you adapt that mentality, you will keep more clients over time because you’re always proactive. Instead of we get, it’s easy to say, oh, this guy, you have an excuse for every client why they left. Oh, this guy, you know, they weren’t real serious or this guy came in, you know, and his wife wasn’t into it.
So I knew she was going to quit. Well, how come you didn’t get her into it? How come you didn’t fix the problem? Well, these guys were good, but they moved a couple of miles further away. If they love you, they’ll still drive a couple extra miles. What could you have done better? Uh, well, and then what could you have done better?
What could you have done better? What could you have done better? You still have to go back and take responsibility for these losses because they are there. So. Kind of summarizing the segment losses and non retention. They, you calculate them separately, but they’re really a derivative that one’s a derivative of the other.
You have to really kind of look at both of them to understand where your clients go. And so you, but every gym has to have losses. And when I see new guys doing their first business plans, there’s no losses and it’s just. You know, you’re going to lose clients. Well, you know, my friend says, he’s got, you know, 30 clients they’ve been with them forever.
Yeah. He’s trained out of his garage and you know that, blah. But if you’re gonna open a real commercial training gym, you’re going to have losses, but you can control quite much more of it than you think you can, but the numbers are never going to be as good as you hope they will be.Sumit: Got it, Tom. thank you. Thanks Tom. I think we should make this as a wrap.