Authored by Dr. Cassim Ladha
From a gym manager’s perspective, two key performance indicators (KPIs) that are core to understanding the story of customer satisfaction are attendance and engagement. While intertwined, these KPIs should be considered separately, as well. There is more than one way to define each one, but for the purpose of this case study it’s important to point out how attendance and engagement are tied to expectations:
- Attendance reflects customer expectations before they visit
- Engagement indicates whether those expectations were met
Consider a customer who visits a climbing gym expecting to have a great experience (perhaps based on a friend’s recommendation or a social media post). If their expectations for that experience are not met, they are less likely to return. However, if expectations are met or exceeded, they may fall in love with climbing and one day become a member.
Digging into these two KPIs can reveal important business insights for gym operators. For example, a beginner climber may have no first-hand knowledge of what to expect, whereas an experienced climber will likely have clearer expectations.
As a gym owner or manager, it’s important to consider how you tailor your approach at the front desk and in marketing efforts accordingly. Can your staff distinguish between a first-timer and a seasoned climber? Is your outreach segmented appropriately? Are memberships, offers and rewards optimized for different customer segments? Do personalized offers outperform blanket ones?
This article explores these questions using real-world data and provides a glimpse into how much revenue you could be missing out on, if your operations aren’t set up to answer those questions effectively.
The Backstory
At Griptonite, we are obsessed with data. Our mission is to help climbing gyms harness data to maximize their business potential. While we are best known for our route database and competition software, our true strength lies in helping operators understand gym communities.
Some time ago we made a hypothesis about what happens if you try to take a more data-driven approach to a climbing gym business, and recently one of our customers agreed to let us find out. The collaboration was simple: We would fully commit our expertise to supercharging their business on the basis that we could communicate generalized learnings in a case study (here!).
For some additional context, the gym business operates a bouldering-focused facility in a medium-sized, university city with three other options for climbing in it (one roped gym and two bouldering gyms). Within a two-hour drive are four other climbing gyms (that are also our clients), but visitors from these locations would be considered “tourists” in this study. Our dataset for gym entry spans a 12-month period to help mitigate seasonality and school-term factors. Customer entry data was extracted directly from the gym’s front desk software (FDS). All customer-ability and interaction data were derived from our platform, and analysis was done in house by our team of data scientists. The use of our Griptonite software at the gym was relatively robust (47%), meaning we have prior knowledge of customer-ability and behavior data for just under half of the gym’s entrants.
The rest of this article is structured as a series of three big questions we sought to answer and finishes with a discussion and actionable takeaways for climbing gym operators.
Question #1: What is the relationship between climbing ability and gym memberships?
To help with answering this question and others, entries into the gym were categorized by the following payment types: day/guest passes, annual memberships, monthly memberships and punch cards. For each entry, we were able to cross reference a Griptonite ability category (beginner, intermediate, elite, etc.) assigned at the time of check-in. These categories are based on a climber’s hardest three climbs in the last 90 days.
Figure 2 (below) shows the main payment types broken down by ability category. For each payment method, there is a clear difference in adoption at the case study gym across the various ability categories. Our key takeaways are:
- Punch cards are more popular among climbers with some climbing experience (novice or intermediate level) than those new to climbing (beginners)
- Beginner and novice climbers rarely buy into an annual membership but are more likely to convert to a monthly membership than other climbers
- Intermediate climbers and above are more likely to consider all options and choose which payment method suits their own personal circumstances
Question #2: How many visits does it typically take before customers buy into a membership or punch card?
We asked ourselves if a climber’s ability, age or gender impacts how long it takes for a climber to invest in the cost savings afforded by a membership or punch card at the case study gym. Additionally, we checked if there is a particular day of the month (e.g. after a typical payday) when a customer is more likely to make a purchase, to see if there would be an opportunity for a well-timed nudge.
The figure below (Figure 3) shows each of our analyses into the time it took for a climber to convert from a day pass to either a membership or a punch card (broken down by their ability, gender and age).
Our key takeaways from this analysis are that:
- Ability, gender and age do not appear to play a role in a customer’s decision to convert from a day pass into a membership. This finding could suggest that climbers are already familiar with the concept of a membership and punch card before visiting a gym
- The decision to buy an annual membership takes slightly longer than it does a monthly one, but not much longer
- Annual memberships are most popular among higher-ability climbers who are likely more confident in what they are purchasing
- Memberships are bought equally throughout the month (not just after a payday). This finding leads us to believe the monthly fee does not represent a highly considered purchase, compared to an annual one
- There is no opportune moment in a month that prompts a climber to purchase a membership or punch card, and so a “nudge-after-first-seen” approach can be used
- Monthly memberships are most popular among beginner and novice climbers, indicating this gym does a good job of meeting new customer expectations in a way that encourages them to quickly commit to a longer-term engagement
Question #3: Do customers make use of their membership or punch card (and what happens when they don’t)?
Once a customer has bought a membership or punch card, the amount they use it is called utilization. This analysis was designed to understand if there is a relationship between utilization and climbing ability or pass type. If a customer doesn’t renew their gym pass, often it’s because they no longer feel engaged by the experience at the gym. In some cases, a user does not cancel per se but rather there is a pause until the renewal date (usually coinciding with their next visit, when they remember to make use of their membership or punch card). In this analysis, we began by considering each payment type individually from the perspective of utilization, in particular, and incorporated research from past Griptonite studies as well:
A) Day Passes
For a user who pays to access a gym using a day pass and doesn’t return, we use the term churned. In a previous study conducted by our team, we identified that ~66% of climbing gym customers, in general, do not return a second time (shown in Figure 4 below).
Since we have plenty of features in the Griptonite platform that are designed to smooth out the onboarding process, we were also keen to understand if there was a difference in churn between customers who used Griptonite and those who did not (i.e., organic customers). We found that customers who used Griptonite were 30% less likely to churn than those who did not (shown in Figure 5 below in blue, and also in more depth in this article). In addition, we profiled the churned Griptonite users and found there are, again, roughly equal numbers in terms of a climber’s ability, gender and age, suggesting churn is an issue to solve across all customer segments. This finding doesn’t mean the same solution will work for all customers, though. Climbers of different abilities, for instance, may have different reasons to churn.
B) Memberships (Annual or Monthly)
Once a membership has been purchased, if a customer fails to make use of it, they are unlikely to renew it. Recent reports indicate that in the fitness industry about 50% of memberships are cancelled within the first six months. Understanding that climbing is very much a skill and technique-based sport, we were curious to understand if there is a category of climbing gym users at the case study gym who are least likely to cancel a membership, as well as the threshold of utilization where cancelling becomes more probable.
To begin with, we established a relationship between climbing ability and monthly utilization (shown in Figure 6 above). As one might expect, climbers of higher abilities tend to visit more often. But we wanted to dig a little deeper; specifically, we wanted to understand what utilization looks like just before a member cancels a membership. Figure 7 (below) shows all the members at the case study gym who cancelled or renewed their membership and the visitation level just prior to cancellation. It became clear that if the utilization drops below three visits per month, then the probability of cancelation is 61%. This statistic is a stark reminder of the importance of an engaged community; if climbers feel engaged at the gym and are motivated to return, then they are less likely to cancel their membership. Finally, we were curious to understand how these figures changed when comparing customers at the gym who used Griptonite to those who didn’t. On average, we found that customers using Griptonite visited 5% more often each month, which in turn led to a decrease in the probability of them cancelling their membership.
In Figure 7 above, it’s clear that the group of members visiting more often (more than three times per month) have a higher probability of renewal (shown in green). However, what’s not clear is when they will renew, and any gap or pause could represent a loss in revenue for the gym. Our data from the case study indicated that a staggering 19% of high-utilization customers at the gym renewed late—by up to three weeks! To put this figure into perspective, if a gym has 500 members and charges $70 per month for a membership, the gym could have $1,070 hanging in the balance each month (totaling $12,840 per year!). One strategy that can help solve this issue is having a front desk software (FDS) that’s set up to handle the chasing of missed payments efficiently.
C) Punch Cards
In our case study gym, there were no special circumstances around the punch card option; it was not designed for a specific type of customer or strategically priced to direct a customer to another membership, for instance. We therefore started by trying to understand who opted for this form of entry, why they did so, and if there were opportunities to redesign the offering.
To begin with, we first looked at how often a punch card was used, and whether users made full use of the pass. The data plotted in Figure 8 shows that 60% of punch card users made full use of all 10 visits on the card, while 30% of users applied the card seven or fewer times (which is in line with other industry data we’ve seen). In monetary terms, our research suggests the average punch card customer pays an additional 28% over the day pass rate, based on this case study.
On average, the punch card users applied 8 of the 10 available visits on their card. In our case study gym, the 10-punch pass is priced at nine times the day pass rate (i.e., buy 9 get one free). Considering these two figures together, it became clear that there was room to discount the punch card price by ~20% and the gym could still be breaking even, compared to the day pass alternative.
Final Takeaways for Climbing Gym Operators
Let’s bring this analysis back to the two KPIs we mentioned at the start: retention and engagement. As mentioned above, these KPIs are connected to a customer’s expectations and experience:
- High expectations of a gym that are not met can lead to churn
- When expectations and experiences align, customers are more likely to visit the gym again (and convert to a membership to save money)
- If engagement dwindles over time, there can be retention issues (and customers may not renew their membership)
In our research, we saw that climbing ability can play a major factor in the purchase and visitation behaviors of customers, highlighting its importance when designing pricing structures, new member onboarding systems, and existing membership perks.
When it comes to strategies that help keep customers engaged, routesetting for each ability level at a gym is of course a must, but we’ve seen how hosting regular events with inclusive formats can also help improve engagement.
As for a business’s bottom line, understanding whether and how climbing ability comes into play across the following focus areas can be a difference maker:
Churn
Our data analysis for the case study gym indicated the lowest hanging fruit was related to churn. A deeper look revealed that churn was roughly equal across all climbing abilities; in other words, the gym can’t just focus on one type of user. Since churn is somewhat related to expectations not being met when visiting the gym, and since different ability climbers have different expectations, a multi-faceted approach is likely needed to fix the issue.
Over the last 12 months, we have seen many climbing gyms introduce new experiences designed to engage new customers (beginners) during their first visit. The experience could be an easy-to-follow circuit, for instance, that if completed earns the climber a discount on their second visit (the Griptonite platform has a feature that facilitates this promotion).
Then, if the customer brings a newcomer on their second visit, they could get a discount on their third visit (or free entry). This strategy can be applied to more advanced climbers too, who may travel to check out a gym but live close enough to come back with a friend. By the fourth visit, the price could return to normal (but their friend can still bring another friend, and so on…). From our purchasing behavior analysis, after this third visit may be a perfect time to pitch a punch card or membership option.
When it comes to day pass prices, the analysis gets a bit trickier. For new customers a more costly day pass can be a big turn off, but for more experienced climbers a higher day pass rate can incentivize the purchasing of a membership and help drive their commitment to frequenting the gym. One observation from our research is that many climbing gyms charge for rental shoes and chalk, which is one area where they could help support beginning climbers. By offering new customers free equipment rentals, they can make it a smoother entry into the gym for beginning climbers, without much risk of higher-ability visitors to the gym making use of the promotion, since they will likely already have their own shoes and chalk.
Memberships
When looking at the number of visits before purchasing a membership or punch card, the age, gender and ability of a climber had no significant impact in our case study. This finding leads us to believe that there was no problem at the gym in communicating the benefits that a membership or punch card can bring. However, when we look at who bought and made use of their membership or punch card, climbing ability was a factor for both. In analyzing this result further, there may be opportunities for improvements to be made in the following areas:
Declining Engagement
The data from the case study suggests that if a member drops below three visits per month, then they have a 60% chance of canceling their membership. We understand visitation frequency is a function of climbing ability; higher-ability members tend to visit more regularly than lower-ability climbers. So, when designing regular events, consider structuring them as a series that not only rewards completion but also incentivizes a climber to improve their ability. In our Griptonite software, it’s possible to set up a timely notification that encourages users approaching a certain threshold to visit the gym and get over that hump, perhaps in seeing a leaderboard shift, a project completed by a friend, or a new route set at the gym.
Late Renewals
While not an easy issue to solve, late renewals can cost a gym dearly. As expected, a climber’s ability, age or gender in the case study had no impact on whether they missed a payment. So, some ways to address late renewals could be making improvements to how an FDS is configured or implementing a generic incentivization structure that rewards on-time renewals.
Punch Cards
At our case study gym, we found a missed opportunity in how punch cards were designed; they were not as effective as they could be at driving regular visitation and subsequent memberships. We understand ability has some impact on the adoption of punch cards; purchasers of punch cards tend to be higher-ability climbers that do not buy memberships. We also understand that higher-ability climbers likely have more climbing experiences and higher expectations surrounding the facilities where they climb and train. It’s therefore not a big assumption that if a customer is willing to commit to a punch card, then their expectations have already been met to some degree and they intend to return (at least 10 times). Although we did not analyze travel data, it was known that in close proximity to the case study gym are several alternative climbing options. A regular climber of a higher ability may have a gym pass to one of these gyms, but not all. It’s also a possibility that higher-ability climbers would have more than one membership or punch card to the climbing gyms in their town within their commuting radius.
As a gym owner, it’s important to understand the commitment that a membership represents. It’s your customer telling you—with hard-earned cash—that they are committed for the duration of the membership to come regularly. A punch card could be considered somewhat of a halfway point. The customer is committing to come often but not in any short period of time. In a city with multiple gym operators in close proximity, there can be some natural competition. Could the punch card be used to build confidence in the facility before transferring memberships? If so, our data suggests that discounting it would have no large impact on revenue. Alternatively, could the whole concept of punch cards be modernized? Climbing has always involved some travel, and a flexible travel pass that works for all stakeholders could be a win-win solution in some communities. Initiatives such as a pass exchange and Colorado’s Climb Pass provide interesting case studies to consider, in this respect.
When it comes to decreasing churn and increasing retention, one thing’s for certain: We’re only scratching the surface so far, and taking a data-driven approach can help. Visit the Griptonite website to learn more about how our platform can boost attendance and engagement at your gym, or reach out here if you’d like to discuss collaborating on a future project.
This story was paid for by the sponsor and does not necessarily represent the views of the Climbing Business Journal editorial team.
