Forget GPS – use NPS to
navigate your business to success
To ensure your fitness business stays on course for success, you need to ascertain how likely your members are to refer other people to you. By using a simple metric you can do just that, says Michael Jordan.
As I see it, there are many similarities between operating a fitness club and operating a cruise ship. So much so, in fact, that the gym I own is called Voyage Fitness.
Like a cruise ship, a fitness facility comprises a vessel, facilities, crew and passengers. Your mission is to provide your paying passengers with an enjoyable and memorable experience while you navigate them on their journey. In our case, the journey is to health and fitness.
Like the cruise ship industry, fitness is much more competitive than it was five, 10 or 20 years ago. There are now many competing vessels in the ocean, offering very similar journeys for potential passengers. If passengers are even slightly dissatisfied with their experience on board, at the end of their commitment they can very easily jump aboard another vessel. And in the worst case scenarios, when a fitness vessel sails off course completely and fails to deliver what the passengers want, they may jump ship, never to be seen again.
The key to success, then, is providing exceptional customer experiences.
Why customer loyalty is so important
Customer loyalty affects every way you can grow as a business.
- Retention. If you can increase the length of stay of your member by one month, what would it add to your bottom line? At my club in Queensland, with 1,000 members at roughly $60 a month, one extra month would add $60,000 to my bottom line.
- Sales. The number one method of generating sales, according to the 2010 and 2011 ANZFIS survey, is referrals. To increase referrals you need loyal and satisfied ‘passengers’.
- Secondary spend. This is much higher for those who have a high attendance rate at your club. Your software reports should highlight the fact that your most regular attendees purchase more personal training, group training, supplements and merchandise than your less frequent attendees.
- Reduced expenses. If you retain a higher percentage of members, you reduce the amount you need to invest in new member acquisition.
What creates customer loyalty?
What makes a member stay and actively recommend their family and friends to your business? It’s more than just customer service – it’s the entire customer experience. That’s why, when evaluating how we can improve our customer loyalty, we need to evaluate each element of the customer experience.
To use the cruise ship industry analogy as an example, below are four elements that make up the customer’s experience on a cruise ship. Customer loyalty is determined by how well a cruise ship delivers or over delivers across these four areas in relation to the passengers expectations. Consider how each of these criteria applies to your own members’ experience.
The four elements of the customer experience
1. Tangible – What the passengers can touch and see
- Quality of the ship. Is it 3-star or 5-star?
- Quality of rooms from interior design, to cleanliness and comfort of beds
- Quality, freshness and variety of food and wine
- Quality and variety of equipment and facilities on board, from the pool, to the bar and the day spa
- Quality of staff uniforms and staff appearance
- Quality of signage, brochures and marketing.
2. Intangible – How the cruise ship experience makes them feel
- Welcome aboard, greeting and smile
- The manners, attitude and communication skills of the staff on board – passenger-to-staff interactions
- Use of passenger’s name
- The music and atmosphere at different times of day
- The feelings of joy created from parties, relaxation, views, activities and events on board
- The parting goodbye.
3. Informative – Providing the right information to improve the journey
- Marketing information is consistent with the experience
- Marketing (e.g. website) provides location of pick up, contact details and overview of itinerary and what the cruise has to offer
- In room, welcoming booklet, provides enough information for passengers to be left to their own devices
- Clear communication on safety rules and regulations
- Staff knowledge to help answer any passenger questions and improve the experience, e.g., a staff member knowing which bar on board to recommend to a passenger based on knowing their likes and dislikes.
4. Affiliation – How passengers affiliate themselves with the cruise ship
- The demographic the cruise ship attracts – young, old, single, married, families, extroverts, introverts
- Do passengers feel that they fit in with the demographic? Young singles, for example, would be unlikely to have an optimal experience on a cruise targeting retirees.
- Do passengers positively associate themselves with the brand identity? Cool, luxurious, adventurous?
- The methods of encouraging like-minded passengers to interact on board to create stronger affiliation by forming friendships with one another, e.g., team activities and competitions targeting different groups or segmenting areas of ship for different groups; one area for families, one area for singles, one area for the elderly
- Passenger loyalty programs.
As you can see, these four elements of customer experience can be applied to any ‘experience’ industry, including fitness.
Examine each of the four elements in relation to the experience your club provides. As with passengers on a cruise ship, your members’ loyalty will depend on your ability to deliver or exceed the experience expected for the cost of getting onboard.
How to determine if you are on course
With so many members within a club, it may seem difficult to simply and accurately gauge the effectiveness of the experience you deliver.
Fortunately, some clever minds at the Harvard Business School created the Net Promoter Score (NPS), a metric specifically designed to help big companies measure the customer experience and its effect on customer loyalty.
So intelligent is this metric that it not only measures your customer’s experience to date, it also accurately predicts the future direction of your business, i.e. whether you are heading for revenue growth or decline.
This makes it the ultimate navigation tool for your business. If your fitness vessel is off course and heading for a decline in revenue in the future, you can pull into dock, make repairs to the experience and get back on course to growing your business. It is for this reason that some of the leading companies, such as Apple, Virgin, Carnival Cruise, Shell, and American Express, use NPS to navigate their business.
How does NPS work?
Put simply, the NPS reveals how likely a person is to refer other people to a business by asking ‘On a scale of 0 to 10 how likely are you to refer a family member or friend to XYZ business?’
- If a person responds with a 0-6 they are a detractor
- If a person responds with a 7-8 they are passive
- If a person responds with a 9-10 they are a promoter
- Equation is ‘% of promoters – % of detractors = NPS Score’. So, if 1,000 people were surveyed and 400 responded, of whom 200 were promoters, 100 detractors, and 100 passive, the equation would be:
50% (promoters) – 25% (detractors) = NPS Score of 25.
Your Net Promoter Score is relative to future revenue growth or decline, because if you have significantly more promoters than detractors, the majority of your members will be staying longer at your club, spending more at your club, referring more friends to your club and reducing customer acquisition costs for your club. If your club has more detractors than promoters, the opposite applies.
What is a good NPS score in the fitness industry?
Based on data collected by Creative Fitness Marketing from surveys of over 40 fitness facilities in Australia and New Zealand, the following rankings were determined:
+60 – Excellent
40-60 – Above average
20-40 – Average
0-20 – Below average
Below 0 – Very poor.
Additional questions to ask members
In order to determine your NPS, you must conduct a survey with members. In addition to Question 1 detailed above (‘On a scale of 0 to 10 how likely are you to refer a family member or friend to XYZ business?’) you should also ask the following questions.
A) If members respond with a 9-10, the survey asks ‘What would you tell your family members or friends?’
B) If members respond with a 7-8, the survey asks ‘What would the club need to do to improve the score to a 9-10?’
C) If members respond with a 0-6, the survey asks ‘Why did you give that score?’.
Question 3. Would you like to be contacted about your feedback?
Then, thank them for their feedback, and if offering an incentive to encourage completion of the survey, advise how they can claim the offer.
How to conduct the NPS survey with your members
Although you may choose to conduct your NPS survey via email, phone, paper or sms, the highest response rates are more likely to be via online methods such as Survey Monkey. This software creates a survey that is sent to members and automatically records the responses in a central database. The club then uses this data to compile a report which provides:
- The NPS score
- Report and graph on the most common responses from each member group: promoters, passive, detractors
- Spreadsheet of each individual member’s score and feedback
- Spreadsheet of which members would like to be contacted.
The final step: staying on course for changing course
Once you understand the experience you offer your members and have received your NPS score and report, it’s time to navigate your business back on course.
For excellent NPS scores: Expand on the areas of the member experience that promoters mentioned the most and stay on course.
For average NPS scores: Expand on the areas in which you are performing well, and take action on those that passive and detractor respondents suggest you improve.
For below average NPS scores: Carefully analyse why detractors and passive respondents gave the score they did, and work on improving the experience in all necessary areas to get your business back on course.
Once on course, continue to navigate your business using NPS every three to six months to ensure you continue the voyage to long term success.
Michael Jordan, BA Bus
The owner of a successful Queensland-based club, Michael is also the marketing director for six Voyage Fitness clubs and the Australasian business development manager for Creative Fitness Marketing. He is an international speaker and has consulted with over 200 fitness facilities in Australia, New Zealand, the UK, US and Canada. For more information on NPS email Michael.Jordan@cfm.net