Cloud Business Software

Just like your members need to measure sets and repetitions, BMI, body-fat, body-weight, macronutrients, caloric-intake and more, you as a business owner needs to measure the health of your business on a regular basis as well.

We've selected the top 5 valuable KPIs (Key Performance Indicators) of a typical fitness club business.

1. Cost Per Lead

CPL = Total Marketing Spend / Total Number of Leads

Cost Per Lead is the first formula in your marketing metrics series that will help you measure the effectiveness of your marketing campaign.

It gives you an insight on how much you are spending to acquire a lead. If for example you are getting PhP1,000/lead off of Facebook Advertising versus PhP5,000/lead off of your Print Ad Signages, then you may want to reconsider doing that Print Advertisement again in the future.

2. Lead Conversion Rate

LCR = Total New Members / Total Number of Leads

Lead conversion rate allows you to understand your gym's ability to turn leads into members.

Acquiring new members in your fitness club is a highly important activity which can be achieved by having a strong sales process which is a set of steps that your sales team makes in effort to move a prospect from an early-stage lead to a closed customer.

3. Member Retention Rate

MRR = ((E-N)/S) X 100

S = No. of customers at the start of a period
E = No. of customers at the end of a period
N = No. of new customers acquired

Member Retention Rate is basically the number of gym members you retain - this is a vital metric for long-term profitability.

Study shows that a typical MRR for the fitness studio industry is roughly around 70%. So what do you do to increase that number?

  • Create a community
  • Stay in touch
  • Encourage feedback and reviews
  • Set realistic goals and show progress
  • Personalize member's experience

4. Facility Utilization

Facility Utilization = (members served / max capacity) x 100

It is worth defining that a gym reaches Max Capacity when it has already registered the maximum amount of members while still being able to operate smoothly without compromising member satisfaction.

Facility Utilization is an important metric to see how well you are using your space to its capacity.

5. Profit Margin

PM = Net Profits (or Income) / Net Sales (or Revenue) 

Last but not the least is the Profit Margin. This is a measure of how effective your gym business generates profit out of those revenue you bring in. In other words, if it costs you more to generate that Revenue then you have a negative PM.

If you have a negative PM, you may want to ask the following:

  • Where are we spending most?
  • Which expense is out of control?
  • Which expense are necessary and which are not?
  • Are we charging enough for this and that?
  • Do we need to revise our pricing model?

Final Thoughts

Having a firm grasp of your business metrics is key to your business success. The more you know, the more you’ll grow.