Managing for Member Loyalty

October 31, 2013

By: Blair McHaney
VP Strategic Initiatives- Medallia

The fitness industry was an early adopter of retention tactics.  Most added no value for the customer and were designed specifically to make cancellation difficult.  More recently, our industry is adopting new tactics to extend a membership or to influence renewal.  This view can be short sighted, requiring gyms to focus on driving an incremental relationship with members.  It can also be very expensive and will not always yield great results, yet most gyms still don’t focus on loyalty strategies. Loyalty strategies don’t just focus on a one-time renewal, or a tactic for those most likely to quit, but rather they focus on creating fans for life.

The latter causes one to think more deeply about the design of the business and how it interfaces with a customer in everything it does.  It forces more of a philosophical approach that can transform the way owners think about their strategy overall. It’s also harder to do, as it requires owners to step back and really define the elements of strategy on which they will differentiate.  That’s why we see parity in the fitness business, especially for fitness-only type clubs competing in the lower and middle of the marketplace.   There are many clubs competing in the high-end of the marketplace asking the right questions; how do we create loyalty?  But no matter where you compete across the pricing spectrum, those willing to move from mere retention tactics to a loyalty strategy will be rewarded.

How can you tell the difference between strategies that are tactically focused on retention, versus strategy focused on long-term loyalty?  Look no further than HOW you use data. The kind of data you lean on and how you use it to inform decisions and actions reveals your focus.

The more you lean on usage data and other member behavioral data, the more tactical you end up being.  It looks something like this; you call people when they stop using the club and try to re-engage them; you find people in your club that are most likely to quit and make it a point to go talk to them. You use customer behavioral data to try to predict what an individual might do next.  Doing this is not a bad thing at all, but doing it without really looking into the reasons why a customer will possibly churn is a missed opportunity to create real changes in your business that lead to real loyalty.

Imagine if the broader member experience is horrible or even just mediocre.  What if members feel staff is unfriendly, the club is unclean, services are difficult, and management is uncaring?  What if they feel the club is just indifferent to their experience?  How genuine will your retention tactics seem to the member over-time?

Take ownership of your loyalty strategy and build your brand with data that measures YOUR behavior.  This is only captured through the members’ eyes.  It is their PERCEPTION. Once you understand how customers perceive YOUR behavior, you have the information to move to “great.”  Perception data includes friendliness metrics captured for each critical touch-point.  Servicing metrics that reveal the customers’ perception of how easy you are to do business with.  Cleanliness and equipment condition metrics that measure how the customer is experiencing your plant and equipment. All of these things represent the quality of your overall product as seen through the experience of your customers.  Remember – your behaviors ARE the customer experience and you have total control over YOUR behavior.  The value of understanding your members’ usage and behavioral data will greatly increase when you have “member perception” data and use it to build loyalty.   The big AH HA and empowerment that comes from doing CEM right, is that you seek to understand and adjust your own behavior and align it to improve the customer experience.

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Suppose you have a friend that never exercises, is overweight, smokes, only eats junk food, and drinks way too much.  He asks you for advice on what vitamins to take to get healthy.  Your say – “You have to change your behaviors.  You must start exercising, stop smoking, eat better, and drink less.  Then let’s talk about vitamins.”

You know to address the behaviors that are causing him to be unhealthy – then let’s add the vitamins. The same thing holds true for the health and fitness of your business.

CEM stands for Customer Experience Management – not Customer Experience Manipulation.