Re-think your loyalty program

In today's highly competitive fitness market, entrepreneurs are trying to find the most profitable way to accelerate the growth of their business. Recently, in the fitness sector, you can notice a lot of different types of loyalty programs. Not everyone, however, realizes that a poorly designed program costs significantly more and provides much less than you might think.

Investments in strengthening customer loyalty are developing dynamically around the world. In United States alone, the number of memberships in loyalty programs increased at a rate of nearly 27% between 2012-2014. According to Incentive Marketplace Estimate Research Study from July 2016, companies spend billions of dollars annually to prepare non-cash incentives for customers to develop loyalty in them. Even more, and potentially higher costs, are hidden in the programs themselves, which become a silent profit destroyer. So, the question arises: do investments in loyalty, considering often high costs and uncertainty of returning the contribution, are profitable? It depends. In my opinion, the time has come for companies to rethink the concept of loyalty and maximize the value of the most loyal customers.

According to a report drawn up by Accenture, the first step to maximizing the value of loyalty is to identify each investment in the name of loyalty, based on its ability to increase profits. Then, use a zero budget to isolate and close initiatives or items in loyalty programs that eat the capital. After eliminating the less valuable elements, fitness centers can use their regain funds to re-plan the remaining loyalty campaigns. I would recommend checking in detail the data from Perfect Gym management software to analyze: how many people benefit from your current program, are those the ones that really should be praised, do you earn incremental extra sales of it, do you have extra leads from those customers, what are the costs of running the program and gifts etc.

According to many experts, loyalty programs do not generate significant sales growth, but they work great as a customer engagement generator. And this is important because members who are fully involved in a gym’s life often recommend such a place to other people. Putting it differently, instead of focusing on initiatives aimed at directly increasing an average spend per loyal customers, companies can put more emphasis on the use of a goodwill and word-of-mouth generated by most loyal members. This would mean recalibrating the investment by concentrating on a customer behaviour with highly satisfying experience and using customers’ acquaintance in order to acquire new members. Whisper marketing is an increasingly important indicator of true loyalty. These types of promotional activities open up new opportunities for companies that treat their best clients according to their expectations.

Soon, the largest group of recipients of fit services will be people from the millennium generation. Simply check basic statistics about your current active members in Perfect Gym management system. Unfortunately, this specific group does not like when entrepreneurs try to induce loyalty with methods that are successful with older generations. That is why it is important to understand the concept of loyalty that millennials have, and then use the matching language and offer experience to their system of values ​​and behaviours. Between all investments regarding strengthening of loyalty, you should pay attention to what millennial like and what they dislike, and what types of promotions and benefits they prefer.