For the fitness industry specifically, this can create big problems. A study conducted by Mintel showed that, though fitness centers have been finding ways to add alternative revenue streams, membership fees still account for 80% of overall revenue. As much as losing an existing member can hurt profits, retaining members is the most cost-effective way to increase profit.

“In financial services, for example, a 5% increase in customer retention produces more than a 25% increase in profit,” according to Frederick Reichheld, a Bain & Company fellow, author, and creator of the Net Promoter System. “Why? Return customers tend to buy more from a company over time.”

In an article published in the Harvard Business Review, Reichheld stated that, in some industries, reducing customer defections by as little as 5% per year can double profits.

“In general, the longer a customer stays with a company, the more that customer is worth,” Reichheld said. “Long-term customers buy more, take less of a company’s time, are less sensitive to price, and bring in new customers.”

The real question now is — how can you retain your fitness members? But that is another topic for another time. Stay on the lookout for our next blog where we’ll share tips on how to grow your profits by increasing your membership retention.