Monday, 25 February 2013

Is staff turnover higher at budget clubs?

We’ve been reading a lot about staffing in clubs, budget club staff turnover, and Personal Trainers lately on various blogs and LinkedIn groups (n.b. member only groups)

There is a perception that turnover of staff at budget clubs is higher than at other clubs, and that member attrition is also higher. Here’s why:
Member attrition is a well-known problem in the fitness industry. However, staff turnover is also an industry-wide issue, and poor member retention can be a symptom of the staff issue.
If we consider a ‘standard’ low-cost club model of minimal staff, long opening hours, automated member communication, centralised operations, it is a different environment than fitness professionals expect, or are used to.
There may be member inductions to carry out, but thereafter, what is expected of instructors in the budget club? For those happy to effectively be ‘lifeguarding’ a gym, it’s OK, but not terribly fulfilling. Young instructors often don’t have the initiative to interact and get to know members, and can quickly lose direction and purpose, and will move on to something else. If you have less staff to start with, then staff turnover is more noticeable.

Many low-cost clubs employ Personal Trainers (PTs) to carry out inductions and provide a presence in the club, but the PT needs to be very business focused and driven to make it work for them. Getting inductions done is one thing, but engaging with members at the start of their journey is quite different. If this is done well, it can have a big impact on member retention, as well as the likelihood of selling PT to members down the line. Some people question the presence of PTs in budget clubs, but it can work well for those members that want PT (usually is a small percentage, budget or regular club). In a budget gym, those who want PT are more likely to pay for it as their monthly membership fee is lower. It’s all about identifying and converting the prospects, and if you’re doing inductions, there’s your opportunity to identify. Whether a PT should be rewarded for delivering good inductions is down to the club’s business model. Maybe the bonus is that they are more likely to get PT clients. These conscientious and devoted Personal Trainers are out there, but are they working in a low-cost club?

Gym Managers certainly need to be a different breed at a low-cost club. Whereas the gym manager often comes up the ranks, or is the longest serving instructor at a regular club, a budget gym manager is closer to an operations manager role. They need to manage staff and PTs, deal with customer queries, run reports and work with the clubs systems and processes and do a lot of this work independently. There is little time for gym instruction, but the gym manager needs to develop his or her people skills to the fullest. For the right person, this is great, but when a budget gym manager does not fit in, or under-performs, it impacts more on the retention of staff and members.

Member retention is expected (or accepted) to be lower at budget gyms, but in our experience, retention is similar or better than at regular clubs. This is because of the processes in place, constant communication and smart use of member data (which centralised operations can help with). And we should mention that the so-called ‘standard’ low-cost club model is an amalgam of many budget gyms. Not all operate on a reduced staff basis, for example, The Gym Group has been recognised as an Investors in People organisation, showing commitment to staff training and development.


Frank.B said...

Low-cost clubs are changing the landscape and the humble budget gym is here to stay - along with 99p stores, budget supermarkets and low cost airlines. Back in the late 80s and early 90s this was certainly not the case. It used to be a badge of honour to have the most expensive house, car/ ‘gym membership’ – now it’s seen as socially and personally unacceptable to spend our money as frivolously as we’d done, say, 10-20 years ago.

However, the humble budget gym’s business modal isn’t focused around customer retention; it’s a ‘nice to have’ rather than a ‘need to have’. Their primary focus is on high acquisition levels IE “100 people leave the club each month; we’ll simply replace them”, and assuming that customers will stay with them solely because their club is the cheapest deal out there.

The only reason budget gyms have been able to offer those low cost memberships is by cutting out the expensive bit – staff. Minimal wage bill, just 1 small club management system to compensate for - and hardly any tax to pay due to their employer’s NI payments being cut by not employing any instructors. Other clubs such as DW & LA Fitness have followed suit and are solely relying on their team of freelance personal trainers to do the customer interfacing for them.

Baring in mind that personal trainers operating on a fitness club franchise scheme have high drop out rates IE PT turnover is ridiculously high in my experience, leads on to Guy’s important point that staff retention is the primary link to higher customer retention levels within health clubs.

I worked for many fitness companies/ leisure facilities in my career to date and on one end of the spectrum was a privately owned facility with minimal/ nil physical investment within the business I.E new equipment, building upgrades and group exercise expansion - and on the other end, a local government funder leisure facility; a facility who had more money than they knew what to do with. Guess which facility had the better customer retention level?

Many businesses from various sectors would be scratching their heads if I told you that it was the former (the privately owned facility with minimal investment) but the most successful businesses out their who are reading this of course would not be surprised.

In reality good facilities, expensive marketing campaigns and lots of infrastructural investment doesn’t automatically make customers stay IE happy and satisfied. What customers/ members primarily want from your facility is, of course, the physical results from training with you and now more than ever ‘value for money’ but what ultimately keeps them with you for the long-term is to allow your customers to build long lasting relationships with your staff - not your physical facility (which one previous facility manager said to me once upon a time – “I believe our facilities sell it for our customers itself”, he arrogantly said.).

Ultimately, people relate to people; a person cannot have a relationship with a building (bricks and mortar) or equipment. They can only do that with other humans.

If your staff turnover is high your retention levels are almost certainly going to be low. If, however, you reverse this trend and concentrate on investing, training and giving them the correct financial compensation I.E retaining your staff in return they will stay for longer, will cost less in the long-term to repeatedly train new starters and put them on numerous group exercise and H&S courses etc, have customer service orientated staff IE have the ability and experience to build and maintain a personal report with your customers and will be able to treat every member as an individual ‘not a number’ and most importantly, will be able to maintain more ‘personal’ relationships with your customers/ members than new starters could ever achieve.

So here’s my final point:

Staff turnover high = Customer retention low

Staff turnover low = Customer retention will be HIGHER…

This equation will always balance out. Guaranteed!

Guy Griffiths said...

Thanks Frank,
I like the formulae - might re-use those!
You're right of course... investing in people and having great staff is the best way to get great gym member retention.
However, it is interesting to see low-cost clubs reaching adequate retention rates by focusing on communication ahead of staff. There are many different variants of budget gym business model, some are working, some have already failed. But be aware that their 'adequate' retention is better that some so called 'full service' clubs, so there is a lot to learn.
A combination of great staff and great communication (both verbal and written) is the key to member retention success.