With health and fitness being a core sector for us we are highlighting the top five essential KPIs your business needs to stay business fit.
Number of clients or customers
This is your headline figure and the one you should prioritise over everything else.
It doesn’t matter how much money you invest in state-of-the-art equipment, IT, property or the best people. If you only have three paying customers then you’ll never pay the light and heat costs, let alone rent, marketing, staff and then have any left over to give you a profit.
Your lifeblood is your number of customer who pay you. Without these, you have no regular Cash Flow, only the occasional meandering peaks and troughs. It is therefore essential that you place this at the heart of your strategy for growing the business.
Net growth in customers
The success or failure of that strategy can be seen in its impact upon membership growth. If you have more members this month than last, then great. You’re building your revenue stream. The larger the growth percentage, the more successful you have been at doing so. If that number is falling, and has been so for the last few months, then it’s time to start examining how you can improve your customer retention, whilst also looking at ways in which you can re-engage those lost customers. Find out how to measure it in CrunchBoards
Even if you’re gaining more members than you’re losing, you may have a problem with customer retention. A business that gains ten members every week but loses nine clearly has holes that need to be filled! Measuring Churn Rate is the most effective way of identifying whether such holes exist. This examines how many members you have lost during a period relative to the total number of members you had at the start of your chosen reporting cycle. The lower the number, the more successful your business is at retaining customers. If this number is high then it’s time to start investigating what’s causing clients to become disengaged and what steps need to be taken to correct this. Find out how to measure it in CrunchBoards
Rather than waiting for a cancellation to happen, there are steps you can take to predictively monitor the signs of future Churn. The most effective way of doing this is by measuring Customer Engagement. If you have members who rarely or never use your service, you have a surefire indicator that they are at risk of cancelling their contract with you. By recording Weekly Gym Usage, you can identify those members who have been cutting down on their sessions and those whom haven’t visited since Christmas. Through effective targeted marketing, you can then start re-engaging those users at risk before they stop using your service altogether.Find out how to measure it in CrunchBoards
Average Lifetime Value
But how much revenue should you dedicate to retaining Customers? Or on Winning them back? Or on gaining new ones? In order to know the answers to these questions, it is important to measure your Customers’ Average Lifetime Value. This is the amount of revenue which you earn on average from each member for the duration of time in which they use your service. By knowing what each Gym Member is worth, you can more effectively evaluate how much resource should be dedicated to retention, to growth, to marketing and other associated costs.