The 3 metrics that help drive fitness business growth:
Marketing, it is the lifeblood of your fitness business. Generating new leads and converting them into members is one of the most important functions you perform as a business owner. The problems is… not all marketing activities are equal. Some areas you spend money bring in the majority of your inquiries and others do not even result in a phone call.
Imagine if you could weed out those areas where you waste your money and re-invest it into areas where your prospective members are located? The result is: more, better-qualified leads and all other things being equal -> more paying customers for your business!
So what marketing metrics should you be tracking to make the most of your marketing dollar?
1. Leads generated by channel (per month)
This should be a no-brainer. Every inquiry to your business should be tagged with a lead source. Did they come in through a web enquiry, a flyer, Facebook page, referral or did they see your signage from the street? Over time, this information gives you great insight into the marketing activities that generate an enquiry.
2. Cost per lead (per month)
Take all of your marketing expenses and divide them into the number of enquiries your business has received. For example, if you ran a letterbox drop that cost $500 and received 10 enquiries, your cost per lead would be $50. Together with your Leads generated by channel metric, you should be able to tweak your activities over time to lower the cost per lead for your business.
If you see a trend showing an increasing cost per lead over time, it may be time to do one of these things:
- increase your prices,
- seek alternative, inexpensive marketing channels or
- review your collateral for that marketing channel (for example – have we been updating our website with great copy or do our flyers have a strong, time-based call to action).
3. Customer lifetime value
Unlike a business selling one-off purchases, your fitness business relies on repeat payments over time. Understanding this key metric is essential in determining the viability of your business. For instance, if you are spending $100 per lead and your customer’s lifetime value is $75, you obviously need to review your marketing costs, retention strategies or price points
If you are in the planning stages of your business, it is best to use the formula below. If you have been trading for a while and use some form of gym software, you will be able to extract a report by membership type.
(Average Value of a Sale) X (Number of Repeat Transactions) X (Average Retention Time in Months or Years for a Typical Customer)
As you become more familiar with this metric, you can refine it further by removing the costs associated with a member to calculate a lifetime customer profit value.
Okay got it – what should I do next?
Each of these 3 metrics should be reviewed together to determine the effectiveness of your marketing activities. Obviously there are other things you can and should track, but if you are not tracking these 3 over time, you are missing out on some very important business intelligence. Remember the goal is to provide a great service that leads to you getting more members!
If you have software that can provide this information, make these reports a must read on your monthly meetings. If you are not at the stage where you need management software for your gym, these metrics can be tracked in a spreadsheet relatively easily in the short team.
What marketing metrics do you track?
Further reading to grow your fitness business
Clubworx is easy-to-use, online member management software that will streamline the collection of critical data you need to start tracking the marketing metrics that will help grow your fitness business.