As one season ends and a new season begins with team placement and evaluations, gym owners and managers are in the process of calculating the business success of the year. To plan and prepare for the next season, it is important to know your business retention rate. Retention is the percentage of repeat customers during a set period. In recent years, retention has been receiving more focus in business, as a means to set a foundation for growth. It is important for all star gym owners to know and calculate your business retention rate to determine your success and growth.
How to Calculate Your Retention Rate
Customer retention rate is different from attrition rate; retention focuses on your percentage of loyal customers whereas attrition focuses on the percentage of customers lost during a set period. Retention rates need to focus on the number of customers at the end of the period, new customers and the number of customers at the start of the period. Once you have gathered the information the retention rate can be easily calculated:
Customers at End – New Customers Acquired / Customers at the Start X100 = Retention Rate
CE – NC / CS X 100 = Retention Rate
What is a Healthy Retention Rate?
Everyone would prefer 100 % retention rate, but that is highly unlikely for most businesses. Retention rates depend on the type of business, but most experts will give an 80-85% retention rate as healthy for a stable business to operate. In the Cheer Industry, the retention rate of 80 – 85% sounds relatively high and good for business, but in a small gym of 100 athletes that would be the attrition of 15-20 athletes. Within this number of athletes lost, include those who age out of the sport as well as attrition for various reasons. Depending on how strong the business profit margin and marketing, loosing this number of athletes could be detrimental to small gym. Retention rates are a checkpoint, a measure of your customer service and satisfaction with your business.
Like many other businesses, cheer gyms acquire new athletes throughout the season. “You need to look at all factors that affect your business, obviously the number of athletes in your program and class enrollment will affect your bottom line, knowing your retention rate will give you the information needed to plan for this season as well as future years,” advice given by Nestor DeLa Pena, owner of The Allstar Cheer Consultants. “Many businesses are not prepared for the loss of athletes and revenue, calculating your retention rate along with customer surveys are two ways to improve your customer service and address issues before the starting a new season” DeLa Pena continues, “having a retention plan is just as important as a marketing plan.”
- It is 5-7% more expensive to recruit athletes/customers than to keep current
- Selling to customers who you already have a relationship with is more effective. You don’t have to attract, educate, and convert them from scratch
- Increasing customer retention by 5 percent could lead to an increase in profits of 25 to 95%
- Loyal customers are worth up to 10 times as much as their first purchase
- Upselling to existing customers is usually more lucrative than whatever sale you would make on a new client. The probability of selling to an existing customer is 60-70% the probability of selling to a new prospect is 5-20 %
- 82% of consumers in the United States said they stopped doing business with a company due to a poor customer experience
- 66% of consumers who switched brands did so because of poor service
Much time and effort is spent on marketing to new athletes without focusing on retaining your current athletes and families. You may be getting attention and turning visitors into paying customers, but are you able to keep them around month after month? Or are they leaving after one experience? Many factors need to be examined once retention rates are calculated. “Marketing is one factor in the numbers game” states DeLa Pena, “Developing and staying true to your brand will lead to consistent customer service which will assist in retaining your athletes and families.”