Some are suggesting that a 50% cancellation rate immediately upon reopening is not out of the question. There will be a lot of different reasons for those cancellations, but an important thing to keep in mind is that most of them are fundamentally different from pre-pandemic cancellations. Assuming you had an average pre-pandemic monthly attrition rate of 5%, about 90% of those cancellations are people who weren’t likely to leave if the pandemic hadn’t hit.
Hopefully you’ve identified and intensified pre-reopening engagement with your highest value/most engaged members during your closure, and will be using analytics to track their critical first and second check-ins. Unfortunately, a number of those are going to cancel anyway when you reopen and resume billing, and it’s those high value members in particular who you want to segment as a high priority for win-back efforts. The fact that they were previously spending and checking in a lot indicates they were most likely happy with their membership, so they’ve canceled for other reasons, such as personal/societal caution or financial uncertainty.
Those are not permanent conditions, and these high value members are just the people you want to be sure to reacquire. They’re proven good members, you know what you’re getting. If you have to spend a little more time/money to get them back, there’s most likely a better ROI for them than an unknown new acquisition.
Exit surveys of all canceled members is a great idea as a standing practice, but this group in particular is worth going further with a direct personalized outreach for listening and, if possible, problem-solving. Did they suffer a temporary financial setback during the shutdown? Take a long-term view of that member’s value and ask yourself what it’s worth to keep them around until their situation improves.
I’m looking at one gym’s high value member report and seeing nearly 300 members who averaged more than $300 per month in non-dues discretionary spend prior to closure. This is in a gym with $10-$30 per month membership dues. Clearly the membership fees collected from these members is a fraction of their potential lifetime value. If IHRSA’s reported $88-$118 average customer acquisition cost applies to you, wouldn’t a $90 cost for 3 months of waived membership fees (for example) for these select members be a better investment than spending $90 or more to acquire a new member you know nothing about?
Obviously, you can’t make an offer like that to everyone, but by leveraging your membership value data you can make smart, targeted offers that could retain a superior member worth more than 10 average ones. If your facility’s occupancy capacity is going to be reduced for some time, perhaps permanently, all the more reason to intensify efforts to win back these high value canceled members. Maximizing revenue per square foot is going to be a quality over quantity game now.
Your member behavior data can tell you which quality members you should work the hardest to retain or win back. Your data has never been more valuable than it is today!