Stop Bleeding Members: Why 3% vs. 5% Churn Makes or Breaks Your Gym

In this episode of “Run a Profitable Gym,” Chris Cooper presents hard numbers and explains why the gap between 3% and 5% churn can be the difference between stability and collapse.

He shares lessons from two decades of studying the science of retention, showing how most gyms don’t fail because they need more leads but because they can’t keep the people they already have.

Coop explains why contracts aren’t the answer, why chasing Facebook leads and six-week challenges can actually erode your community, and how gyms with 300+ members can get into trouble fast if they’re bleeding members.

Chris also breaks down the two key metrics every gym owner should track to boost retention and revenue—length of engagement (LEG) and average revenue per member (ARM)—and explains why retention is really just “sales over time.”

Tune in for Coop’s full retention playbook, then apply his tips to keep members longer, change more lives and build a profitable business that lasts.

Join Coop’s free retention workshop on Sept. 30 at noon Eastern in Gym Owners United (linked below).

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0:19 - When clients stay longer

7:10 - 3% versus 5% churn

11:29 - A better retention metric

13:11 - Onboarding and goal reviews

17:24 - Keeping people for 2 years

Transcript

Chris: 0:00

What's the difference between a 3% and a 5% churn rate? It could be the difference between the life and death of your gym. I'm Chris Cooper. This is Run a Profitable Gym, and retention has been my obsession now for two decades. Years ago, when I met my first mentor, Dennis, I was talking to him about putting people on contracts and how I would do that and where I would get the contracts and how I would enforce it. And he said, Chris, do you want to spend your time helping people or do you want to spend your time suing people? I thought about it and he said, well, you know, if you put people on contracts, are you really willing to enforce these contracts? Are you willing to take them to court and force them to pay you when they don't want to be at your gym? And I said, well, no. And he said, well, then let's stop wasting time talking about contracts and start studying the science of keeping people around. Today, I'm going to tell you what I've learned on this 20 year journey, diving deep into the science of retention. I'm going to tell you what metrics you need to track and what you can actually do to improve retention at your gym versus what's just BS and guessing. Most gyms fail not because they don't have enough leads or even because they're not getting enough clients in the door. They fail because they can't keep those people. Even a flagship gym with 300 plus clients can fail without retention. I'm going to talk you through that math in a who's ever walked through your door. Even if you're only two years into gym ownership, but especially if like me, you're 20 years in, we're talking about dozens, hundreds, thousands of people. Now imagine if each one of those people had stayed six months longer. What difference would that have made to your business, to your family's income, and to the client? What happens if a client stays six months longer? Well, they adopt habits that hopefully they'll stick with longer. You can actually impact their healthspan and lifespan just by keeping them six months longer. And that's how important this is. Good retention is not just a feature of good business. It is our duty as coaches to understand the science of retention, what keeps people around so that they can meaningfully change their lives. Now, years ago, I was a CrossFit gym and the most popular CrossFit gyms, the ones that got featured a lot in CrossFit media, were these gyms that had 300 members. And there were some really amazing gyms out there that had 300 members, like great coaching. Awesome. You know, and you find out years later that the owners weren't making a great living and the owners weren't even really enjoying it because with 300 members, if they were losing, you know, 10 people a month, they'd have to replace 10 people a month, 10 new members every single month just to break even. And in the early days, this seemed like no big deal because it was really, really easy. People were attracted to CrossFit and you can apply this same example to any franchise now, right? And metabolic row Fit Body Bootcamp, F45, like go down the list. You get this early wave of clients and you think, wow, I'm great at business. And you don't really notice when these clients are flushing out. And I'm going to tell you in a minute, like why that's so important to keep an eye on. But also it's easy because new people are coming in and replacing them until one day that trickle of new leads slows. And now you've got 10 people going out and nine people coming in this month. Well, not much to worry about yet, right? And then you've got 10 people going out and seven people coming in the next month. And you think, well, maybe it's a downtick. You know, we'll wait another month, see what happens. And the next month you got 10 people going out and now you've got four coming in. Oh, what do we do now? Well, if it's 2018, you buy a bunch of Facebook ads, you run something like the new you challenge or gym launch, and you flood your gym with leads. And in the short term that works, boom, you've got the most members you've ever got, but then suddenly 15 leave and then 20 leave. And you've reached this tipping point where now the outflow is impossible. possible to keep up with. And before you know it, in a couple of years, you're down to an average size gym. We're going to figure out what went wrong here. I'm going to use science to tell you how to reverse it and make sure it doesn't happen to you. And I'm going to tell you how important this actually is to your gym using numbers. The first thing I want to do is get your mindset right. Retention is sales over time. That means that every single day we have to sell every single client on coming back tomorrow, on making the next appointment. Showing up is not their default setting until they've been with us for about two years. Every single day, they have to make a conscious decision to go to the gym or not. And of course, a conscious decision to go to your gym or to try something different or not. You have to resell the value of the program. You can't count on your programming or your coaches or your clean bathrooms to do that for you. I'm going to tell you how to do that in a moment. But I want you to have that mindset first, that every single time... a client comes into your gym, you are selling them on showing up the next time. That's what retention means. The other frame that I'm going to give you right now is that the average gym, average coaching gym, whether it's CrossFit or whatever, bootcamp, whatever, has 122 members, not 300. And the reason is not that they don't get 300 members. The reason is that they don't keep 300 members. Nobody sustains that very well. Sustainable growth creates less pressure on your marketing to keep up and more lifetime value from each client that you get. So let's break down the actual numbers here of how important this is, because I want to make sure we're on the same page with like how critical it is to understand this stuff. So first, let's talk about retention versus churn. Churn is how many people leave your company in a given month. Usually it's expressed as a percentage, okay? And this comes from the software world. Nobody was talking about churn until the software world started talking about it. And that means it's become a buzzword. A buzzword is like, oh, that's a catchy phrase, but what does it actually mean? In the software industry, you want to track churn as a percentage because you've got 10,000 or 100,000 clients and you don't know their names. You don't know anything about them. All you're looking at is like, what is our churn rate? But in a gym, you have a one-on-one relationship with everybody. And so talking about a churn rate makes you overlook, hey, Mary left. Why did Mary leave? Billy quit this month. Where did Billy go? Now, I'm really passionate about this because the there's some dangerous industry BS going around saying like, oh, there's no value in pulling your churn below 3% and your target should be 3% to 5% churn. But there's a massive difference between 3% to 5% churn. The average coaching gym has 102 members, as I just said. If you have 122 members and your churn is 3%, you need to have a net gain of four clients per month to say the same. A net gain, okay? A positive growth. Now, the average gym is getting about 70 clients a month and losing four. Okay. Now check, you know, against the state of the industry data that we produce and publish every year without two brain, nobody would even know these numbers. At 3% churn with 122 members, you are treading water. You're just staying the same. You're not growing, but you're not failing. If you have lower than 3% churn, you're growing, you're gaining clients. But at 5% churn, you need a net gain of six new clients every month. And again, the for a net gain of three. So at 5% churn, the average gym is shrinking by three clients every single month. The difference in three to 5% churn is not small. It's the difference between keeping and losing your business. Focusing only on your marketing and accepting a high churn level is what leads to business collapse. We turn a blind eye to keeping people and instead focus on the new people. Stop doing that. And I'm going to tell you what to do here. But first, I want to just drive this point home with an even worse example. So I said back in 2018, Facebook ads were cheap and super effective. And a lot of challenges started to emerge. First, there was New You, and then there was Gym Launch, and then there were a thousand different copycats. And every one of these worked on the same premise. You would bring people in for a six-week challenge of some kind, and you would sell that at a high value. So, you know, double, triple what you normally sold your membership for. And you'd run them through this challenge, and then at the end of that challenge, you could sell them on membership. You know, and And new you and gym launch, they changed their business model over time. But basically, they had a peak and then they rapidly disappeared. Like, I don't even know where new you is anymore. You know, it's a shame. Here's what happened. And this happened in my gym. And I've got 100 other examples of this happening. The people coming in for the challenge were numerous, especially the first time you ran the challenge. So they'd come in, they do the six week challenge, and then they'd say, mission accomplished. Goodbye. The retention rate for from these people after three months was less than 10%. Sure, some of them converted into long-term membership, but after three months, they were almost all gone. Nine out of 10 had gone. So what did you do? Well, that worked. I'll do it again. The cash was great, right? And some people built their entire business model around this. It was wild. So then you do it again and like, okay, well, last time I had 30 people. This time I had 24. Okay. And two of them quit early. Two of them defaulted. Okay. Well, that's okay. We'll keep doing this. So the third time you run it, you've got colder leads and you You have to sell harder and now people are defaulting and the quality of the client gets worse and worse and the people who sign up get lower and lower. But here's the worst part. With this tidal wave of new clients coming in and going out and coming in and going out, you start to wash your best clients out with them. It's like a tide running under the pier at the beach. Eventually, it starts to undermine the stones that the pier are sitting on and the whole pier starts to weaken and collapse. A lot of gyms have told me this story. They would do these challenges. 30 people would come in. They would quit. And when they quit, two of their best members would go with them because they'd say, hey, I'm not getting any attention here anymore. It's all about the new people. The coaches are paying attention to the new people. They don't know what they're doing. They're getting in my way. I'm in a class. I don't know anybody. Where's the community? And then the more this happened, the more desperate the gym owner would get, the more people they would bring in, and the more existing OG stable bedrock clients that were holding up the pier left with them. And so after After a few rounds of this, they found themselves worse than ever. The bedrock of their community was gone. The people who held everybody else together had gone to another gym. Leads were harder. Sales were harder. They were getting defaults. Rude people. The ads weren't working. They were doubling ad spend. And this is because they focused so hard on marketing, they didn't stop to think, am I bringing the right people in? And they didn't have systems for retention in place. This is what can happen. You can actually reach a tipping point where so many people are leaving that everybody goes with them. Now that's an extreme example, but what can actually happen in your gym? If you've got a 5% retention rate and 120-ish members, you're slowly bleeding out every month. And every so often, one of your best people, clients, you know, the people on whom your whole nation is built, they will go. And when they go, the whole thing gets weaker. And you won't even see the flood happening as quickly, but it will be happening at a trickle instead of at a flood. So we do want to know our churn rate, but the more important metric we want to track here is length of engagement, okay? L-E-G, we call this leg. Average revenue, remember, is arm. Length of engagement is leg. The two together build lifetime value of a client. So you want to know how long the average person stays, because if they stay less than two years, you're not meaningfully changing their life. But you also want to know, like, all of your marketing, is it worth it, right? And the longer we keep a client, the more value you're getting from your marketing. So if you got poor retention even if you're selling a high ticket item and getting lots of leads in your arm is really high but your leg is tiny and so yeah you become a marketing machine where that's all you do all right hopefully i've made my point here about how important this is so how do you actually keep people longer we're going to go step by step here and we're going to start by looking at your leg okay you need to know what your leg is how long the average person stays but you also need to know where the average person is likely to drop off so if i'm looking at my leg. I'm not just saying like, okay, yeah, 17 months, my retention's doing okay. But when people quit, they tend to quit at the three-month mark or they tend to quit at the seven-month mark. You want to know that, okay? I'm going to give you points throughout the first two years of what to do depending on where your clients quit. All right. Now, if you don't have this broken out yet, you know, go to your gym management software, say, how do I do this? Kilo, you know, how do I do this? Wattify and let them tell you. But you can also just go by your knowledge. Okay. So think like, where are people quitting right now? So first off, if they're quitting from the time they signed up to the first two months, okay, here's what to do. If they're dropping off in the first two months, that's a head scratcher to you. But the reality here is that we haven't bridged the gap from purchase to becoming part of the community. Okay. You need stronger onboarding systems. You need an on-ramp program. That's what this is for. So that they don't have time to think about buyer's remorse because they're always thinking about your gym. This means they've got appointments for one-on-one on-ramp with you. They've got text messages from you in between. Hey, Chris, I want you to do this stretch. Hey, how was that workout yesterday? They've got appointments to meet you and try a group class with you toward the end of their on-ramp. They've got an appointment with you at the end of their on-ramp to talk about their next best steps. Joey Coleman, in his book, Never Lose a Customer Again, calls these the admit and affirm phases. Admit, you're getting them into your gym. You're teaching them your system and the philosophy. Affirm, you're not giving them time to second guess their decision and have buyer's remorse. If you look at the new year's resolution effect, everybody that joins a gym January 1st, right? They drop off before the 90 day mark. Usually it's like February 27th is drop off day for commercial gyms. They've paid for a year in advance, but that's when they stopped coming on average. And it's because they haven't transitioned properly in that admit and affirm phase. You haven't onboarded them properly. And so they're gone. So if they're quitting within the first two months you need to build and maybe a better on-ramp if they're quitting within the next three months from two to five months you need to map out the client journey better you need to insert frequent touch points that could be a phone call it could be text it could be a video it could be email you need to do an earlier goal review you need to sit down with them how are how are things going measure their progress update their prescription and you need to introduce them to at least three other people in the gym not just hey i'm the coach not just hey i'm sat across the circle at the 9 a.m. group, but actually introduce them. Give them a touch point. Give them a buddy. They need a training partner. Most resolution clients, as I said earlier, quit before the start of March because they don't have those things. They don't have consistent follow-ups. They don't have emails. They don't have instructions. Here's what to do. Nothing is affirming their choice. They haven't made connections in the gym. That's a really big one. That's why a lot of access gyms now, 24-7 gyms or clubs, have a personal training program. And part of that personal trainer's job is to introduce you to one other member or attend a class with you so you know one other person. But you need to be deliberate about this. You can't just be passive and hope it happens. If somebody quits between the five and the nine month mark, you need to do a goal review with them and you need to ask for referrals. So this is really interesting because a lot of people wouldn't assume that asking for a referral helps retention. In fact, you might worry that it's like infringing on your relationship and it weakens it. That's not the case. Think about what happens when you find a new restaurant and you love it and you take your BFF to the restaurant. You want them to love it, right? So you're going out of your way. Hey, did you try that steak sauce? You should order the fish. I highly recommend the fish. Like you want your recommendation to be a success. You're bought in. And so when somebody brings their friend into your gym, they act the same way. Hey, you got to come to the 6 a.m. class. Oh, you got to meet coach Amanda. Oh, hey, did you notice the soaps in the bathroom? Hey, by the way, didn't you love that workout? The programming here is so good. great. This is exactly what should happen, but in many gyms, it doesn't because the owner doesn't ask for the referral. We wait for it. We're passive. We hope it's going to come. We do a free community workout on Saturday and that works once and never works again. And we do a bring a friend week because we don't know any better and it's not structured and you just hope people show up and you might promote it to your community, but you're not active. Your clients are not marketers. You need to take the initiative and do the marketing with them. Have them stand beside you and introduce you to their friends so that you can bring their friend in. This is Joey Coleman's advocate phase, if you've read Never Lose a Customer Again. If they quit between the nine and 12 month mark, this is a really critical point because when people stay 12 months, they're very likely to stay for 16 months. And if you can keep them past the 16th month, they're very likely to stay till the end of the second year. So drop-offs are highest in the first year, but if you can get them over that one year mark, statistically, you're way more likely to keep them for two full years. The best way to do that is to put somebody in charge of retention. We call this person a client success manager. Now, this is not a full-time role. This is maybe, depending on how many clients you have, it's like five hours a week. It's not a highly paid role because it's not a highly skilled role. All you have to have is an attitude about caring for people. And so the CSM gets a list of your clients and they get maybe an attendance list for the last week. And the first thing they do is text everybody who didn't show up. Thank you for joining us. Send the birthday card, send the anniversary gifts, of course, all that stuff. But this stuff is really important. And the reality is, I'm bad at it. A busy gym owner is bad at it. And the coaches are very bad at it. You know, there used to be this organization called Mad Lab that did business coaching in the gym space. And they really understood the value of retention. And what they used to say is that retention is everybody's job. But the problem, and you and I know this now, is that if something is everybody's job, it's nobody's job. Nobody does it, right? You have to have somebody just like a trained salesperson who is trained in retention. Now, that's not a full-time job, neither sales nor retention, but somebody has to be well-trained on it, and it has to be part of one person's job. You need your best person on this because it's that important. So hire a CSM if people are leaving between the nine and 12-month mark in your gym. If they make it to a year, but they don't make it to two years, it's because they don't see a future at the gym. They don't have a goal that they're aiming for. They don't know their next step is. They've hit some PRs and stuff, but like, man, are they going to keep hitting PRs forever? Why should they keep doing this? People give up when they run out of future. And this is where belt systems like level method or, you know, just a black belt system in martial arts, milestones and gamification really play a huge role. Now, the science here was created and studied by George Lowenstein at Carnegie Mellon, and it's called gap theory. You can Google it. What's important is not the reward for what they've done so far. It's showing them that the next step is really, really close. The smaller you make that gap between where they are now and their next step is what's important. So giving people a t-shirt for attending 100 classes, that's nice, but showing them that if they can attend 200 classes, they will get something valuable, that's way better. The gap theory, it doesn't really work if you're rewarding what they've already done because they weren't trying to do that. They just kind of did it, right? But if they're trying to do something, that will keep them engaged. So, for example, if somebody's got a deadlift that's 290 pounds and they're dying to get a 300 or a 315, they're not going to miss deadlift day, right? That's gap theory. They're very, very close to that goal. It becomes irresistible to them. But if you give them a special hat because they've just had their first 200 deadlift and they didn't know that that prize exists and, you know, they've got other hats, it's not going to do anything to keep them around. Rewarding past success does not influence retention. It's only the promising future success that makes retention sticky. I'm going to say that again. Rewarding past success does not improve retention. Having a short-term goal for future success is what makes it sticky, okay? So the badging and stuff, that's all cool. It's cute, I guess, but like it doesn't actually keep people around longer. What you actually need is some kind of ascension model. And I'll use the black belt method from martial arts. Level Method does this really well in functional fitness, by the way. And in Two Brain, we teach people how to to build a DIY belt system too. So when you start in jujitsu, let's say, you have a belt, it's just pure white. And after you show a basic level of progress and familiarity, you get a little stripe on that belt. And soon you might have a second stripe. And then you get eventually a yellow belt. And then you move up in the belt system and each level becomes more and more part of their identity and the next level becomes irresistible. That's what keeps people in martial arts. It's not that they come in and they win a match or they get in a fight and save their life. It's always striving for that next level. That's what keeps them in, right? Again, it's not historical accomplishment that keeps people around and engaged. It's the promise of future accomplishment and how close that seems to them. So you want to build an ascension model. The reason this actually works is the psychology of hope. People feel hope when they have a clear picture in their brain of a better future and they know the next step to take to get there and they're willing to take that step. Belt systems make this really, really easy. Now, when somebody's brand new, they don't care that much because everything's overwhelming and also the wins come really, really easy. But after they've been in your gym for a year, the belt system can make a massive difference by giving people a clear picture of the next steps so they don't run out of future and it tells them what the next step is to take to get to that future. Okay, so now let's talk about how do you do all this stuff. You don't have to do it all at once. Start by building an on-ramp, then build out your 90-day client journey journey, etc. Then go deep into goal reviews, then hire a CSM, and then build a belt system. Don't try to do these all at once. Do them in that order. The best thing that you can do, though, is track your leg and look at the places where people are quitting. Then refine what you're currently doing, add the systems that you're not doing, and get better at the ones that you are. Only after you've got the human systems dialed in should you look to automate with automated messages and reminders and software like Kilo. Remember that the science of retention is the science of positive habits and hope delivered consistently. It is not enough to have a great product and think you're going to keep people because the rest of their life is telling them to quit. Their wife is saying, I don't want to make two meals anymore. Their kids are saying, why aren't you with us at the beach, dad? Their boss is saying, how come you keep coming back to work sweaty, right? The cookies on the table are saying, why don't you eat me? We have to fight all of that. And that means we have to be really, really great at retention. It's probably one of the greatest skills a can have. It is a powerful tool. Once we learn the science of retention, it's so powerful that sometimes people can actually use it for evil, but we're going to use these tools that I've just given you for good. We're going to use them to actually help people. We want to keep people for two years so that they establish the habits that they will keep for life. If we don't keep them for two years, you know, the habits just go away really quickly. And anybody who tells you to focus on marketing and ignore retention or to accept a 5% monthly churn rate is not helping you. Your mission is to keep every client I'm Chris Cooper. This is Run a Profitable Gym. I sometimes do webinars on this stuff at this free group called GymOwnersUnited.com. And when I do a webinar, I give you the worksheet for free and then I coach you through it. This is one of those times. If you join GymOwnersUnited.com, You'll see when the next webinar is coming up. And of course, at any time, you can ask questions of me, my team of mentors, or the 10,500 other gym owners who are in that group.