Metrics That Matter for Fitness Businesses

Most gym and studio owners put their focus on one indicator of their gym’s success: the number of members. While it’s certainly important to know your membership numbers, many other metrics are equally important when monitoring the success of your gym or studio. Staying on top of these benchmarks can also help you address minor issues before they become major problems.

Every single metric has a corresponding financial impact, either good or bad. By knowing the important metrics and monitoring them regularly, you’ll be able to make the right decisions as they come up, which will improve the health of your business.

In this guide, we’ll go over the top eight operational metrics gym owners should measure and what member acquisition metrics to track. Then we’ll give you specific, actionable advice for improving these important metrics in your gym. At the end, we’ve included a handy checklist for you to use to track your progress!

We know this is a challenging time for gym owners, and some of these metrics — like attendance and cancellations — are not where you’d like them to be for reasons outside of your control. Use this resource to take the pulse of your business now, and revisit these calculations when you’re able to operate as normal.

The Measure of Success

Most small business owners have a handle on the basics of financial management, including a budget, bookkeeping, cash flow projections, and profit and loss statements. If you need help getting your bookkeeping and budget in order, the U.S. Small Business Administration’s website, sba.gov, is full of excellent resources.

Once you’re working with a budget and keeping track of your cash flow, revenue, and expenses, it’s time to get a more detailed and nuanced picture of your gym’s financial health. Your business also has operational metrics that help explain your cash flow or profit.

Operational metrics give you a more granular picture of your gym or studio’s overall financial health. If you understand and use your operational metrics, you can spot issues before they begin to impact your revenue. For instance, if you notice a drop in prospective members, you will be aware of a potential issue before it shows up on your cash flow or profit and loss report. To combat the drop in prospects, you could look for new ways of advertising or ramp up your referral program.

If you don’t know how to monitor your operational metrics, you won’t be able to make adjustments before this issue starts to impact your revenue. Your operational metrics give you the ability to make well-informed, day-to-day decisions and stay on track with your bigger financial goals!

Operational Metrics

1. Total Members

We know, you’re already tracking this! This is the most basic number to track to find out if things are going well or if they need a bit of work.

2. New Signups

Another fundamental number that gives you immediate feedback on your marketing and management efforts.

3. Gross and Net Customer Gains

Weekly and monthly, it’s important to look at your gross and net customer gains. Understanding the number of gained and lost customers provides a good indication of the overall experience your members are getting.

Equations:

• Gross member gains = total number new members
• Net member gains = total number new members – lost members (for a specific period)

4. Average Revenue per Member (ARM)

ARM is the average value each client brings to your gym each month and it’s the best growth strategy at your disposal. Knowing your ARM provides a data-driven benchmark to fuel educated decisions and can help you identify ways to increase profitability. It’s important to note that calculating ARM isn’t based solely on the amount brought in from recurring membership. It is total gross revenue — anything that your members do that earns your gym money (like retail sales, personal training, nutrition challenges, and workshops).

Equation:

• ARM = Monthly Gross Revenue / Total Members

5. Average Lifetime Value per Member

This metric will help you make marketing (and other) decisions. It provides a foundation for month-to-month comparisons.

Equation:

• Average Lifetime Value per Member = ARM x Average Retention Time (in months)

6. Member Churn

You need to know the rate at which you’re losing members, and this metric will give you a foundation for month-to-month comparisons.

Equation:

• Member Churn = Number of Members Lost in a Month / Number of Members in the Same Month

7. Annualized Churn

This is a great one to look at as your business matures. Compare this number year over year.

Equation:

• Annualized Churn = Member Churn x 12

8. Attendance

Once you’ve scheduled your classes — and your gym is fully open and able to operate at capacity — it’s critical these classes are well-attended. A low attendance rate is worrisome and can be a sign of many different problems. Knowing you have an issue will allow you to address it.

Equation:

• Attendance = (Actual athletes in attendance / target capacity) x 100

Member Acquisition Metrics

1. New Prospects

You’ll know that your marketing efforts are paying off if you see a steady increase in new prospects.

2. Lead Source

Tracking the source of your leads allows you to intelligently build your marketing efforts. When you monitor these sources, you can see which marketing channels work the best. Then you can reallocate resources to put more effort into the productive channels.

3. Lead Conversion Rate

If you want to dive deeper, you can examine the conversion rate of your leads. Marketing efforts bring new prospects in the door, but do those prospects buy memberships? To understand where you should put your time and efforts, look at the conversion rate.

Equation:

• Lead Conversion Rate = (Number of new members / Number of new leads) x 100

I Know My Metrics — Now What?

Once you take the time to calculate your metrics, you’ll have a better sense of the strengths and weaknesses of your business and where to focus your time and money. The most common issues gym and studio owners struggle with are improving their ARM, fighting churn, and converting leads. Focusing on these three metrics will have a big impact on the profitability of your gym and don’t require spending a bunch of money on advertising!

How to Improve Your Average Revenue Per Member (ARM)

Having hundreds of members doesn’t necessarily mean a gym is financially successful. For example, a 300-member gym with a monthly ARM of $150 grosses $45,000 a month. That sounds amazing until you consider the operational costs. Now consider a 150-member gym with a monthly ARM of $250. This gym has a gross revenue of $37,500 a month. It likely costs less to run a smaller gym, so the second gym is actually taking in more profit.

Ideas to Improve ARM:

1. Retail Items
2. Workshops
3. Personal Training
4. Boot Camps
5. Body Comp Assessments
6. Nutrition Plans

How to Improve Retention and Avoid Churn

Improving communication with members is key. Here are some ways to take the pulse of your membership and open up lines of communication:

1. Conduct a survey.
2. Goal-setting sessions.
3. Use multiple methods of communication.
4. Share success stories.

How to Convert More Leads

Improving your conversion rate involves better communication with leads. Here are some steps to improve your conversion rate:

1. Reach out immediately.
2. Check in the day of the appointment.
3. Ask questions and listen.
4. Focus on value.

Gym Success Checklist

Use this checklist to ensure you have your finger on the pulse of every aspect of your business.

Operational Metrics:

• Total members
• New signups
• Gross net and net customer gains
• Average revenue per member (ARM)
• Average lifetime value per member
• Member churn
• Annualized churn
• Attendance

Member Acquisition Metrics:

• New prospects
• Lead source
• Lead conversion rate

How Zen Planner Can Help Your Business Succeed

Zen Planner has been the expert solution for gym and studio owners since 2006. Our comprehensive gym management solution provides the vital business tools you need to take your gym or studio to the next level. With integrated payment processing, advanced workout tracking, self-service features, automations, in-depth reporting, and much more, you have everything you need to grow your business and community.