…then focus on your beginners.
Why?
Because it is your beginners who quit very early into their memberships… 30, 60, or 90 days. And it is these early dropouts that drag your retention figures down.
Why?
Because retention is calculated using average beginning monthly memberships and average’s are sensitive to outliers (an outlier is an observation that is numerically distant from the rest of the data). Outliers actually skew your data, often significantly.
For example, imagine you have a club with 10 members and their membership terms (in months) were 36, 42, 24, 18, 56, 36, 2, 1, 3, and 1. The average membership term is 21.9 months… not bad, but the average actually hides the fact that there are two cohorts of members, 6 who maintain reasonable membership terms and 4 who don’t.
The average membership term for our first group is 35.3 months and the average for our second group is only 1.75 months.
If we could bring the average of our second group up to even half of the average of our first group (17.65 months) our overall average membership term would be a much healthier 28.5 months.
That’s an additional average 6.6 months of membership dues… now if our members are paying $40 a month that’s $246 per member or $2460 for our 10 members.
Of course, if we had 1000 members that’s an additional $246000 of revenue.
All of those beginners who dropout very early into their memberships are actually pulling your retention figures, and your profits, down… so eliminate the outliers by improving your beginners experience in your club.
Comments