Health Club Performance Metrics by the Numbers
When a member joins your health club or training studio, they are often told how to set goals and measure for results. However, too often, small business owners don’t really know what to track to gauge the health of the business. Unfortunately, without tracking the correct numbers, you may not make it to your business goal.
While for your fitness members, those numbers may be weight, speed, distance, or rep max, for business owners, it is a different set of numbers that make up their key performance indicators (KPI).
Like body fat or time to run a mile, a business’s KPIs are a measurable value that shows how effectively a company is achieving key business goals. Every organization and industry uses unique KPIs at multiple levels to evaluate their success at reaching targets. High-level KPIs may focus on the overall performance of the business, while low-level KPIs may focus on processes in departments such as sales, marketing, HR, support and more.
As with any industry, health and fitness businesses have a core set of KPIs that they can use to benchmark success. Below are several that you need to be tracking to make sure your gym is in financial shape.
Income By the Numbers
Revenue
Revenue is the total money earned by your business during a measured timeframe from daily to yearly (although you probably want to fall somewhere in between). Knowing this KPI is vital to understanding how much money is coming in as well as to uncover trends so you can plan for the future.
Expenses
Expenses range from general overhead to labor and are costs a gym or studio racks up over a period of time.
While overhead is a general catch-all that can include anything from advertising to water bills, depending on the size and offerings of your club or studio, you may have specific expenses that you need to be aware of.
As with revenue, having a good grasp of your specific expenses helps a club or studio owner understand trends and plan as well as make adjustments to help improve net profits.
Net Profit
Simply, net profit is the difference between your club or studio’s revenue and its expenses.
Gross Margins
Gross margin indicates what percent of income your gym or studio retains per period measured. Higher margins are clearly better, and by knowing your numbers, you can tweak your revenues and expenses to reach your margin goals.
Member Acquisition by the Numbers
Gross New Memberships
Your Gross New Membership count is the total of all new members over a specific period of time.
Member Attrition
Unfortunately, attrition of customers or members is a part of any business. Your Member Attrition number is the total of all lost members for a specific period of time regardless of reason.
Net New Memberships
The Net New Membership number is the difference between all your new memberships and your memberships lost to attrition for a specific period of time, which is usually measured in-line with the timeframe of Gross New Memberships and Member Attrition.
Cost of Member Acquisition
Knowing how much it costs to gain a new member is vital to knowing how efficient your marketing, advertising, and sales tactics are. This is calculated over a specific time period by dividing the total costs associated with member acquisition (i.e. marketing costs) by the total gross new members for that period.
Lead Conversion Rate
Your marketing team works hard to bring in leads. However, counting leads isn’t enough. It’s also important to know how well your sales team is converting those hard-earned leads. If they aren’t converting at a significant enough rate to hit your membership growth numbers, it is an indication that you may need to make changes to your sales process, sales team or marketing to improve your conversion rate. This may come down to training your sales staff, changing your marketing, or even looking at your club or studio as a whole.
While there are plenty of other fitness club KPIs that you can—and should– be tracking, having a firm handle on these is a great starting place to ensure the health of your gym. If you need some help getting a handle on your KPIs and ways to improve them, contact us today at [email protected] to learn how our experts can provide insights on boosting your business.
