Client Retention Metrics Every Studio Should Track

In this episode of "The Pilates Business Podcast," host Seran Glanfield explores the pivotal role of client retention in the boutique fitness industry. Delving into the nuances of using data to foster customer loyalty, this episode is full of insights for studio owners seeking sustainable growth. It sheds light on how a deep understanding of studio management data can transform client experiences to powerful retention tools. 

Learn about the critical retention metrics that can guide your business decisions, from the financial impact of client satisfaction to leveraging the Net Promoter Score for early detection of retention issues. 

Tune in for strategic wisdom and actionable tips to elevate your studio's success.

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Transcript

Speaker 1: 0:00

Do you want to know? An often overlooked yet absolutely essential element of growing your boutique fitness studio business? It's your retention activities. And how do you know if you are indeed retaining your clients as well as you think you are? Well, we take a look at the data right, and that's exactly what I'm going to be diving into in today's episode. It's a quick but insightful conversation that will leave you feeling truly excited about running and checking your numbers in your studio management software.

Speaker 1: 0:33

Well, hi there, I'm Sarah in Glanfield. I'm a business and marketing strategist just for boutique fitness studio owners like you. If you're ready to be inspired and make a bigger impact, you're in the right place. All you need are a few key strategies, the right mindset and some support along the way. Join me as I share the real life insights that will help you grow a sustainable and profitable studio. This is the Pilates Business podcast.

Speaker 1: 1:07

Welcome back to the Pilates Business podcast. I'm Sarah, and I'm so happy that you're here with me today because we're talking all about numbers, one of my favorite topics Now. This is usually where I start when I work with studio owners, because it truly shows just exactly what is happening under the hood of your business. And if you've been listening for very long, you will know that it is not just about the top line revenue number or even that bottom line profit number. There's a lot more to it than that and I truly love the numbers. I really, really do. When I open up the spreadsheets that I have that I share with my studio owners and I take them through, step by step, how they can analyze and assess their data. It takes away all of that.

Speaker 1: 1:53

Perhaps I don't know that feeling of like, oh, I don't know what I'm looking at. What does it mean? Because when you see it very, very clearly, step by step, in black and white, a lot of things just become very, very clear to you, the business owner, because you see a lot of things in your business, and I think one of the things that we often rely on when we're running a business and we are wearing a lot of hats is we rely a lot on our intuition, which often is very, very powerful, especially when you're in a business like you're in, where you are connecting each and every day with your clients. A lot of the decisions you're making about what is or isn't going to work in your business is based on this intuition that is derived from conversations that you've had with your clients and feedback you've gotten and chats you've had and what you've overheard your clients talk about, and that intuition is incredibly powerful. And I think when I see studio owners that are successful, they do have this level of just deep, inherent gut instinct that they know what is working with their business, and that is a fantastic thing. But it's really interesting because sometimes it can lead us a little bit astray and sometimes it doesn't really show us what we need to focus on in our business. And that's why checking your numbers regularly is always a very good idea and, like I said, it's one of the tasks that I share with my studio owners that I invite them to do and encourage them to do on a very regular basis inside of my programs, and it is incredibly eyeopening. Not only that, but once you really truly master the ability of understanding what the numbers are telling you, it just gives you a lot more control and comfort and confidence in your business.

Speaker 1: 3:55

So, when it comes to looking at the data, one of the things that I look at and one of the key areas of your business that we look at is your retention. Data Retention, as you know is based off of how long and how well you are keeping clients in your business. So this is often tied to some of the things that you know intuitively that your gut tells you is a good idea. So maybe you've invested in some nice towels that are smell nice and maybe they're scented and warm or cool even. Maybe you've got that great playlist going to set that environment of great energy and atmosphere in your studio, and I'm pretty sure that you've invested in your teacher training, your instructor training, and even elevating your teachers around you that you teach in your studio, with ongoing workshops and continuing education so that they are really sort of knowledgeable and have a certain level of expertise that you require for your clients.

Speaker 1: 4:59

But that doesn't always mean that we are seeing the fruits of all of that come to life, and so it's really important that we want to make sure that we are seeing where there might be some gaps and what is working and what isn't working. So, although all of those things sound like a really good idea and they usually are a pretty good idea we want to make sure that the numbers tell us and actually confirm what your intuition might be telling you Right. So maybe you are doing a lot of these things and you're investing in your experience, and maybe it is leading you to having a high retention rate, and that's great, but oftentimes there is expense that is being made that might not be actually supporting retention, and there's usually more so than that. We are seeing a lot of gaps where there might be opportunities to improve retention, and you only know that once you start to look at the numbers at certain places in your business. Okay, so your numbers truly matter, and while I love the gut instinct and intuition and when you've been in business a long time, you kind of have developed that over time and you really have it down but the data really tells us a lot more about what we might be missing. So it's super important that you have the ability to check this data on a regular basis, and usually we rely on your studio management software to be able to go and look at retention data. So let's just talk about this for a little bit more, because I have a few things that I want to share with you, and, specifically, I want to share with you some specific data points that you should be looking at each and every month when you are reviewing your numbers when you're running your KPIs, your key performance indicators, your retention metrics are a part of those numbers, and this truly is, like I said, a vital tool that you should have in your toolkit of business ownership, which is to develop the habit of looking at your numbers on a regular basis and understanding what that is telling you about your business. And retention isn't just a nice to have, it truly is one of the most important elements of growing a sustainable and consistently growing studio business. Right, we don't want to see revenue go up one year and down the next. We want year over year growth, for sure, and ideally we want to be able to compare months, not necessarily month over month, but one month, year over year, month to month. That makes sense, yeah, kind of. We want to be able to compare February of 2024 is higher than February of 2023.

Speaker 1: 7:39

We want to make sure that our clients are staying and that we are sticking around, for lots and lots of reasons, one of them being is that it is a lot more expensive and a lot more challenging to get new clients into your business than it is to keep an existing client sticky in your business. To keep, retain a client. We know that keeping clients in your business is a very good thing. They pay you every week or every month, or however you set up your packages and memberships. We want to make sure that they stick around and they have been consistent with their payments to you, because that is how you generate revenue and grow your revenue year over year. Acquiring a new client will cost you more money. It will be more expensive to you. Even if your revenue seems higher, you might find your profit isn't. Keeping clients is better than necessarily relying on getting new leads in the door on a super regular basis. We want to keep clients. That is number one. That sounds pretty obvious, but I always want to make sure we are covering all the bases here. We want to make sure that you are keeping your clients. New clients cost up to five times more than retaining an existing one.

Speaker 1: 8:55

What we know about your existing clients is that they often end up bringing you more revenue in other ways as well. They will do things like introduce you to their friends and bring their friends along as well. Their friends often tend to be like them, which means that they also are interested in what you do and are a good fit for your business and become loyal long-term clients as well. There we see this ripple effect start to spread. We really truly see that when you have got a group of great clients, they can truly drive your business forward. Because of this ripple effect the word of mouth people might call it but also because of the connections that they may provide you with in your local community as well, your existing clients are more likely to perhaps bring friends, but also to participate in perhaps additional workshops or events or even upgrade their current level of membership. Do not ignore your retention metrics. Do not ignore the current clients you have. It's really important to stay focused on that existing group of clients and making sure that you are taking care of them and that they are as sticky as possible to your business.

Speaker 1: 10:07

Retention is important. Got it Cool Moving on. So let's talk about some of the data points that are critical. To track on a regular basis when I say regular, I mean pretty much monthly is a good start. Some retention metrics you may need to look at on a longer term, depending on exactly what your retention duration is that you want to track. But when we look at retention rates, what we're looking at really is the percentage of people who have stayed with you over a specific period of time. So if you're looking at a retention rate over one month, then what that tells you is that there is a percentage of people who have been with you from last month to this month and who has stayed Usually in our business. We're expecting that number to be quite high. We're not expecting it to be very low at all.

Speaker 1: 11:00

Typically, people start and they do tend to stay a little bit longer than a month for the most part, but when we start to look at a longer duration, that's when we start to see where there's opportunity in your business, perhaps for some extra TLC along that customer journey. And so I like to look at two kind of periods of time. Number one is I like to look at the year over year retention rate, and that means that you're looking at how many people were, say, clients of yours in 2022, and then how many of those people were still your clients over 2023? Or you can, and that will give you a good sense of how many people you're able to retain over from year to year. You can also look at, for example, how many people were clients of yours six months ago and then how many of them are still active in your business this month and that will also give you a similar kind of retention data point.

Speaker 1: 11:57

But when we talk about retention rate, people get kind of it's not a fixed duration that people tend to talk about. So it's important to say what period of time or to define what period of time you are using as your measure, and what you use and what the studio down the street uses or your fellow studio only uses, or what you see might people might post online, might be well be different. So you want to make sure that when people are talking about retention rate and your talk about retention rate, that you know what duration it is looking at. Okay, now what matters for your business is that you are using that same measure each and every month, right, and so, for example, if you're looking at, say, a six month retention, so you're going to look back six months and see who was active in your business six months ago and how many of those people are still active today, that's your measure of retention for your unique studio business and you're going to do that every single month, moving forward, and you're going to track that number and see how that moves over time. All right, and you may end up adding different ways of different marketing campaigns and so on. That can help you to perhaps keep people stickier in your business, and what we know is that the higher the retention rate over time, the more people will stay, the longer they stay, and that is both good for your revenue and for lowering your marketing budget. Okay, so you want to make sure that you are tracking retention over time of your active clients.

Speaker 1: 13:28

Now the second number to track and one of, I think, the numbers I really I think is a good kind of spot check to do on a regular basis is your customer lifetime value, and so this is the number that tells you how much a client is worth on average, and there's a kind of a back of the envelope way to do this that you can look at. You know, if you look at perhaps, just taking the last year and taking your revenue dividing by the number of people who have purchased, that's kind of your average for the last year, it's kind of a baseline number to look at, but depending on the management software studio management software you use, you can get additional data in there. You might be able to pull more information than taking that very sort of baseline, generic, average way of doing it. But knowing how much a customer is worth to you is really really important, really really powerful. Okay, because we want to make sure that number is not going down, we want to make sure that number is trending upwards.

Speaker 1: 14:30

And once you have that number and you understand what a client is worth to you, you can make decisions around how much you want to spend to get that client. Is it worthwhile you spending money on advertising, either in digital format or in print format? Is it worthwhile you doing that, that promotion with or that event? And so it's important that you have an understanding of what your lifetime value is, how much a client is worth to your business. Now, the higher a higher lifetime value is often tied to how many kind of levels of membership or upsells you have in your business right, and the higher or more premium programs or offers you have, or extra merchandise you sell or extra workshops you sell are ways that you can increase the per client spend you know, or the average customer lifetime value. And so you want to make sure that if you don't have opportunities to perhaps sell more things to your clients, then that might be a little possibility or opportunity for your business going forward.

Speaker 1: 15:35

Now, the one of the most overlooked, I would say, data points you have in your business is what we would call perhaps in another industry would probably call it something like a net promoter score and that is something which, if you haven't heard of, then it's something that I would you might want to consider thinking about, and this is something where you might have seen it in an email, you know, on a scale of one to ten. How would you, how likely is it that you would recommend our service to a friend? You might often see those in an email you get after being, you know, helped out by a customer service representative. You might get something like that and it gives you, basically as a business owner, it gives you an understanding of your kind of client satisfaction levels. How happy are they with you. And these types of surveys perhaps you might call them are often helpful to do at some point or part of the customer journey, just to get some feedback on how things are going and to open up the opportunity for people to perhaps share with you an experience that might not have been supportive of your long-term retention. Okay, so, if something is going, if people are giving you high schools, then you're doing things really well. But if you don't have this type of a sort of a mechanism in place to gather that feedback or that data, then you might not know where there might be opportunities for improvement.

Speaker 1: 17:04

Okay, the other number to look at is what we call in the in membership world at least, a churn rate, and the churn rate is the percentage of clients you've lost within a particular time frame. So how many people have left your membership over a certain number of, over a period of time? And you know this. Having a high churn rate means that people come in and out of your membership relatively quickly and you see, perhaps membership numbers very stagnant, even though you feel like you're getting more and more clients into your Memberships. So you want to keep track of those cancellations and those pauses, because both of those are going to impact the revenue generated From your membership numbers. Okay, and so these are some of the data metrics that we look at To measure your retention, and what I like to do is look at retention Not just as a one-time thing but as a point in time over the course of the customer journey, so we're not just looking at it year over year.

Speaker 1: 18:00

We're not just looking at it from, perhaps, the intro offer into the membership. We're going to look at it over the course of the customer journey at various different points, and when you're able to do a deep-dye analysis like that of your retention metrics, it really does uncover opportunity in your business. Okay, so there you have it. I hope this is really insightful to you as you go about thinking about where there might be opportunities for more revenue generation this year in your boutique fitness studio business. And I know that data analysis might not be the glitziest part of running your boutique fitness studio, but it really truly does make a huge difference.

Speaker 1: 18:41

Time and time again, my studio owners who come through my programs tell me that this is one of the things they kept putting off.

Speaker 1: 18:46

When they finally bit the bullet and dived into the tools that I share with them inside my programs and start truly tracking their numbers properly, that's when they start to really reach their goals. It's pretty amazing, actually, and so when you start to track your numbers, we definitely want to be tracking retention numbers in your business. Okay, I hope this is helpful to you as you go about building and growing your studio business this year, and if you enjoyed this episode and you want to listen in more and learn more, I would be so appreciative if you could take a quick minute, go to wherever you're listening to this and rate and review this podcast. Did you love this episode and want more? Head to spring3.com and check out my free resources that will help you run a profitable and fulfilling studio business. And before you go, one last reminder there is no one way to do what you do, only your way. So whatever it is that you want to do, create or offer, you've got this. Thanks again for joining me today and have a wonderful rest of your day.