Has the month-to-month contract been a success or a failure?

Michael Scott Scudder recently wrote in his Fitness Industry Group newsletter that the “value play” of the last decade, open-ended memberships have by far the worst retention of any type (45% or higher)… plus a very short “shelf life” (average 7 months).

When month-to-month contracts first came on the market many industry experts and pundits were heralding them as the saviour of the industry. It made sense of course… remove the long-term commitment and hefty price tag and “cha ching”.

Month-to-month contracts continue to be a popular option with consumers so why the apparently poor performance?

Actually, it makes perfect sense… month-to-month contracts remove some of the risk for consumers (price and long-term commitment)… those consumers most interested in reducing those risks are going to be beginners… and beginners are going to have the highest attrition rates.

The fact is that month-to-month contracts often aren’t a “value play” as Michael describes them as much as they are a “low risk” play (month-to-month contracts are often priced higher per month than term contracts).

What month-to-month contracts don’t do is improve the member experience or improve their chances of success in the club… beginners simply fail a month at a time.