future of fitness

Future of Fitness: Manage Business Better with Data Analytics

It’s no secret that fitness businesses have felt the squeeze since the start of the COVID-19 pandemic. 

The health and fitness industry lost $13.9 billion in the US alone from March 15 to August 31, 2021. Naturally, many clubs have needed to redesign their operations to cope with COVID-19. For many businesses, this has meant embracing data. 

You only need to look around the gym to see that data is already an integral part of the fitness industry. 

And if you want to drive your fitness business forward, it’s time your club joins the trend. In this article, we’ll show you how fitness clubs can use data to analyze their customers, improve their club, and design a solid strategy to cope with the financial impact of COVID-19. 

What data analytics means for health and fitness clubs in COVID times 

While the fitness industry has taken a beating throughout COVID-19, it’s far from dead. In a study of 2,000 fitness businesses in the UK, Australia, Hong Kong, Malaysia, and Ireland, researchers found that gym attendance bounced back 91% to pre-COVID levels

However, the habits of gym-goers have changed. Before COVID-19, 74.1% of active gym-goers used their membership at least once a week. Now, 16% of adults in the US alone have switched to online exercise. 

And the rise in online exercise isn’t the only thing COVID-19 has changed. Now, businesses in the fitness industry need to worry about:

  • Retaining health club members through lockdowns (as 14% of clubs closed for five months or more in 2020)
  • Member satisfaction 
  • Keeping attendance numbers up (as social distancing requirements limit attendance)
  • A drop in revenue from poor attendance 
  • Attracting new members with a limited marketing team and budget

Naturally, this has led many clubs to turn to fitness data analytics to maximize the profitability of their operation.

How fitness data management works

In previous generations, businesses in the fitness industry have hand tallied their membership numbers, revenue, and attendance numbers in large ledgers stored behind the counter. For obvious reasons, this isn’t practical today. 

Instead, many clubs have now moved towards a digital data integration model. Following this model, clubs integrate data collection, analysis, visualization, and interpretation into their weekly operations. 

Specifically, this means they:

  1. Collect member data through either their Point of Sales (PoS) or Customer Relationship Management (CRM) software
  2. Clean and organize the data 
  3. Scrutinize important data by comparing it to data from previous weeks, months, quarters, and years
  4. Generate data visualizations to understand clients behavior
  5. Draw Business Intelligence (BI) insights from the visualizations (BI insights are nuggets of knowledge that help businesses make data driven decisions

Integrating data into your fitness business may seem complicated, but several BI tools exist today to make this task easier.t. 

To start leveraging member data in your business, you first need to decide what data you will collect and establish Key Performance Indicators (KPI’s) for that data. Then, you connect the data to a business intelligence tool like ClicData,. Or, if your current operations can collect data, you can leverage those tools instead. 

Let’s cover some KPIs now. 

Top KPIs fitness clubs measure today 

Fitness businesses are a unique type of business, so naturally, your club’s KPIs may be different from the KPIs other businesses use. Here are six specific examples of fitness-industry-centric KPIs.

1. Average revenue per member

Your average revenue per member figure is precisely what it sounds like: how much revenue you earn from each member on average. Sometimes, it’s referred to as “Revenue Per Client” or RPC. The average revenue per member is a crucial KPI for clubs to determine how each member impacts the business’s bottom line. 

To calculate your average revenue per member, follow this formula:

Revenue per member = Total revenue / Number of members

For example, if your gym earned $230,100 in a single year and had 155 members, your revenue per member figure would be $1,484.5. 

To get the most from this information, you compare it to your average cost per member. You can calculate your average cost per member with this formula:

Cost per member = Total costs/ Number of members

Once you have your average revenue and cost measures, you can subtract the cost figure from the revenue figure. This will tell you how much profit you generate from each member. 

2. Client retention rate

Your client retention rate is the percentage of clients you retain long term. This KPI is entirely subjective, as you’ll need to decide how you define “long term” when you calculate it. 

To find your client retention rate, follow this formula (and substitute “month” for whatever period you want to measure):

retention calculation formula

For example, if you had 120 members at the start of the month, acquired five new members, and finished with 122 members, your retention rate would be 94%. 

Monitoring your client retention rate over time is crucial in identifying if your members are happy – as your retention rate will increase when members are satisfied and decrease when members are dissatisfied. 

3. Average daily attendance

Your average daily attendance figure measures the average quantity of people who visit your club every day. There are two ways to calculate it.

First, you could track your daily attendance numbers by monitoring how many people attended your facility for a set number of days. Then, calculate the average of these figures with this formula

Average Daily Attendance rate = (Day 1+Day 2+ Day3)/ Number of days measured

For example, if your attendance numbers were 164 on Monday, 165 on Tuesday, and 200 on Wednesday, your average daily attendance would be 176. 

Alternatively, you could calculate your average daily attendance for each weekday separately. As fitness club attendance generally fluctuates throughout the week, calculating each day individually will stop a day with typically low or high attendance from throwing off your average. To calculate your average attendance per weekday, simply use the formula and only include numbers for a single weekday at a time.

4. Average profit per session

Your average profit per session figure measures how much each fitness session earns your business. Monitoring it will help you sort the top-performing sessions from the lowest-performing sessions. It will also help you identify popular fitness trainers, timeslots, session rooms, and class types (i.e., CrossFit vs. kickboxing). 

You can measure your average profit per session figure with this formula:

Average Profit per Session = (Revenue S1-Cost S1)+(Revenue S2-Cost S2)/Number of Sessions measured

While you could measure your average profit per session without turning it into an average, this could backfire – as an outlier in your data (on, say, a public holiday) might make a top-performing session look like a bottom-performing session. 

Thus, to truly leverage this KPI, you should monitor it carefully over time and account for seasonal trends (like a rise in attendance in the new year or a drop in attendance over winter). 

5. Revenue per square foot 

Your Revenue per Square Foot (RPSF) tells you how much revenue you make from each square foot of your club. This KPI is perfect for benchmarking the efficiency of your gym over time, as you can compare your RPSF figure to figures from the previous week, month, quarter, and year. 

To calculate your RPSF, use this formula:

Average Revenue per Square Foot = Annual Revenue/ Square Footage of your club

Note: If you want to calculate your Revenue Per Square Metre (RPSM) instead, simply swap feet for meters. 

6. Profit margin 

Your profit margin is the percentage of your revenue left over after you subtract your costs. To calculate it, use this formula:

Profit Margin = (Revenue – Expenses)/ Revenue *100

For example, if your gym’s weekly revenue was $12,305 and your expenses were $8,305, its profit margin would be 32.5%. 

Your profit margin is the most crucial KPI you can track, as you won’t know how management decisions impact your bottom line without it. To get the most from the profit margin KPI, make sure you track it weekly, monthly, quarterly, and yearly, and regularly compare your figures. 

Note: Sometimes, you may hear people use “EBIT” and “profit margin” interchangeably, but there are some critical distinctions between the two. Your EBIT performance accounts for your earnings before interest and tax, while your profit margin only compares your variable expenses to your revenue. 

How fitness analytics can boost your performance

We’ve now covered six KPIs your club can use. But how will they help your fitness business cope with COVID-19? Collecting and analyzing customer behavior data will let you generate insights that will help you:

1. Discover more customers and expand your reach

After COVID-19 lockdowns, research shows that only 69% of members returned to their gym. This presents businesses with a huge problem: they need new members fast. 

As most fitness clubs are currently fighting for new members, the competition is fierce. But data can help you get ahead. By tracking your member retention rate, profit per session, and average daily attendance figures, you can identify trends in your member’s behavior.

This information will help you design a strategy to expand your member-base, as you can use it to inform decisions like:

  • What new classes to offer
  • Whether you need new revenue streams
  • What new equipment to purchase
  • What club features to advertise to new members 
  • Whether you should expand your opening hours 
  • What health and fitness trends to embrace

Getting a deep understanding of your business operations will also help you make big decisions that can expand your club’s reach. For example, many clubs have considered live streaming their classes or offering a fully online program – as HasFit does: 

hasfit
Source: HASFit

By tracking member behavior, you can determine if your members would want this option. 

2. Get an edge over the competition and give your club an identity

As many clubs have faced the same challenges during COVID-19, the fitness industry is more competitive than ever before. But by leveraging data, you can stand out. 

By tracking metrics like your profit per session and average daily attendance, you can identify what sets your club apart from your competition. 

Then, you can leverage this information to create a strong brand identity that will attract new members and retain old ones

To create this identity, combine your member’s data with a member feedback questionnaire about their satisfaction with the club. Then, choose 1 – 3 key selling points your competition doesn’t have. This could be selling points like:

  • Good opening hours 
  • High-quality equipment
  • Clean
  • Great instructors 
  • Friendly atmosphere
  • Aligned with fitness goals 
  • Provides home workouts 

Once you’ve identified these selling points, work them into your marketing campaigns and give yourself a competitive edge by making your identity your focus point.

3. Answer key business questions to design a data driven management strategy

Club owners have many questions about the financial health of their businesses, from “am I investing in my space effectively?” to “what is my most profitable session?” 

Data can help you answer them. By monitoring metrics like your profit margin, revenue per member, and profit per session, you can measure the efficiency of your business. 

Monitoring your efficiency will help you design a data-driven management strategy that only invests in sessions, equipment, and features that will give you a high Return on Investment (ROI). 

4. Boost member retention and loyalty by personalizing your club

If you pay attention to new eCommerce trends, you may have digital marketing experts discuss “personalization.” Personalization is the practice of adjusting service to the buyer’s tastes and preferences. 

And it’s vital in fitness, too. To make their club better, many club owners invest in flashy equipment and fancy new gym features. But this isn’t always what members want. 

By collecting data on your members, you can understand what they want from their membership. This will help you choose ways to personalize your club and boost member satisfaction. For example, depending on your member feedback, you might decide to invest in:

  • Creating a Facebook group 
  • Holding social events 
  • Partnerships with other health clubs
  • Personalized discounts for loyal members
  • A specialized fitness center (like a yoga room)
  • A new fitness studio personalized to members
  • Workshops with professionals (like dieticians)
  • Outdoor fitness classes 
  • Creating a fitness space for people to enjoy post-workout
  • Producing blog posts that teach members about health, fitness, and sleep (like this ‘How to get the perfect night’s sleep’ article)
eachnight
Source: Eachnight

And of course, once you implement new investments, you can use metrics like your member retention rate and average daily attendance rate to measure their effectiveness in real-time. 

5. Predict membership churn and fix it through good customer service

On average, most fitness clubs and gyms lose approximately 50% of their new members in the six months after they sign up. Naturally, many clubs invest heavily in decreasing their churn rate (the rate that members leave). 

And with data, you can make those investments with confidence – as you can predict when you will churn members. This will help you put data-based strategies into place to retain members, including improving your member experience (as research shows that 91% of customers are more likely to stay loyal to a business that provides a good customer experience). 

To improve your customer experience, go through your customer service process yourself and note any areas that need improvement (including pain points that frustrate customers). Then, invest in potential solutions to ease these pain points, including:

  • Starting a customer service email
  • Integrating Artificial Intelligence (AI) into your club
  • Using a chatbot
  • Investing in Machine Learning to analyze big data from your business
  • Trying a voicemail service
  • Creating a space to collect member feedback
  • Creating a knowledge base so customers can serve themselves

Once you’ve implemented these strategies, use metrics like your member retention rate to monitor their effectiveness and adjust where necessary to reduce your member churn. 

How analyzing data can help your health club thrive

If your health club felt the squeeze of COVID-19, you aren’t alone. In a study of 2,000 US gyms, researchers found that 18% of clubs closed permanently, 32% closed temporarily, and 50% are still open today. However, those gyms are still struggling – as they lost 20% of their members on average. 

But if you’re in this sticky situation, data can help. By tracking fitness studio KPIs like your revenue per member, client retention rate, average daily attendance, profit per session, revenue per square foot, and profit margin, you can design a data-driven strategy to guide your health club through COVID-19. 

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About the author

Zoe is a content marketing strategist for SaaS brands like FollowUpBoss, Mention.com, and more. Bylines: Ecwid, ProProfs, Score, etc. On the personal front, Zoe is a pho enthusiast and loves traveling around the world as a digital nomad.

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