Ignore These 16 Fitness Studio Metrics and You Might Regret It

Monday, June 13, 2022
Run Your Fitness Business

Key performance indicators for fitness studios are where those who will succeed long-term and those who won’t are decided. Tracking the right fitness studio metrics is critical to your ability to grow your fitness business. 

Why? When you don’t know how your fitness studio is performing, you can’t focus time, attention and resources on the places in your business that could have the biggest upside impact. And ignoring KPIs puts you at risk of problem areas going unresolved, leaving you scratching your head wondering why you’re not hitting your membership and revenue goals. 

In this blog post we’ll review the most important fitness studio metrics and give you tips on how to maximize performance in these business-critical areas. Afterall, you can’t improve what you’re not measuring and in the fitness industry, ignorance does not equal bliss. 

What is Member Retention Rate?

Fitness industry retention rate is the percentage of customers who remain after a set amount of time. 

Why is it important?

Your fitness studio’s retention rate is one of the most important fitness studio metrics to track because it tells you what your customers’ satisfaction level is with your services. It’s way more costly to acquire new customers than it is to keep the ones that you have. This number can tell you if you need to focus on improving customer service, the quality of the fitness experience you provide or survey your members to find out why they stick around and why they leave. 

How is it calculated?

Typically a fitness club’s retention rate is measured on a monthly and an annual basis. You can also drill down to measure the retention rate for different customer segments, for example 5-class pass holders versus 10-class pass holders, or pass holders versus monthly unlimited membership patrons.

What is Member Lifetime Value (LTV)?

Member lifetime value is the average amount spent by your customers during the entire time they patronize your business. 

Why is it important?

The primary reason to know what your fitness studio’s MLV is is to determine how much to invest in marketing to new members and to be able to project revenue over time. 

How is it calculated?

To calculate MLV you first need to find out the average length of time a customer sticks with your business. Is it 3 months, 6 months, a year? In the fitness industry it’s common for half or more of your customer base to turn over each year. The MLV is closely tied to another key fitness industry KPI, retention rate. The more loyal your customers are, the higher their MLV, and thus the more your business can invest in marketing. 

What is Attributed Revenue?

Attributed Revenue is revenue from your pass sales that we assign to a specific class. The goal is to give you a revenue figure for each individual class - that helps you answer questions like...

  • Which classes are most profitable?
  • Which days of the week (or time of day!) are most profitable?

Why is it important?

Attributed revenue tells fitness business owners how much actual money was paid per class or workout session. By knowing the attributed revenue by class, time of day, day of week, a gym owner can see where expenses might need to be reduced, or where schedule changes or instructor changes need to be made. 

How is it calculated?

The way Punchpass calculates a 'per visit' amount for each visit on a pass is to take the total cost of the pass divided by the number of visits allowed by the pass. If the pass expires and the customer has not used all of the punches, out software recalculates to take into account the actual total number of classes attended in relation to how much the customer paid for the pass. That per class figure is attached to a specific class, all revenue for the class is totaled and that is the “attributed revenue” by class. 

 For unlimited memberships the same type of calculation is applied, however, it’s best to wait to see how many visits your customer makes per month, then you can divide the total monthly dues by the amount to find out the per class revenue to attach to each class attended. 

What is Gross Profit Margin?

Gross profit margin is a measure of how efficiently your fitness business delivers it’s services. It’s generally used to determine whether a fitness studio is doing a good job of keeping expenses low, while generating solid income from sales of passes, memberships and retail goods.. This is not to be confused with net profit margin, which is the percentage of net income generated from a company's revenue – the amount of money you have left in the bank after all your bills are paid. 

Why is it important?

Gross profit margin is the percentage of sales revenue that a company is able to convert into gross profit. Companies use gross profit margin to determine how efficiently they generate gross profit from sales of products or services.

How is it calculated?

Gross profit margin is the gross profit divided by total revenue, multiplied by 100, to generate a percentage of income retained as profit after accounting for the cost of goods.

What is Net Profit?

Net profit is the actual hard cash in your bank account after all expenses have been paid. Typically fitness businesses will measure this on a monthly, quarterly and annual basis and compare year-over-year results as well as specific months, such as January of this year compared to January of last year. 

Why is it important?

This KPI is the one that tells you whether your fitness business is making it or breaking it. It’s the true “bottom line.” Net profit (or loss) is going to tell you whether you’ve hit your income goals or whether you need to examine one or more of the other fitness industry KPI’s to make changes.

How is it calculated?

To calculate net income, take the gross income — the total amount of money earned — then subtract expenses, such as taxes, payroll, lease, utilities, cleaning supplies, retail, refunds, marketing and interest payments on debt. 

What is Cash Flow Ratio?

The operating cash flow ratio is a measure of how readily current liabilities are covered by the cash flows generated from a company's operations.

Why is it important?

Knowing your fitness business’s cash flow ratio tells you how likely it is that you will have enough cash on hand to cover unexpected expenses or to invest in marketing or other opportunities each month. It also gives you a picture of the overall health of your business. If you are cash-strapped every month, you’re at increased risk for a sudden downturn or unforeseen event to catastrophically impact your business operations. 

How is it calculated?

The operating cash flow ratio is calculated by dividing operating cash flow by current liabilities. Operating cash flow is the cash generated by a company's normal business operations.

What is Average Membership Length?

This fitness studio metric is another tell-tale sign of your business’s ability to retain customers. You may sell monthly memberships, but do you know the average number of months your customers keep their memberships before canceling? 

Why is it important?

This key performance metric tells you if your best customers, those willing to commit and invest in a monthly membership, value your services and are using your studio enough to want to keep coming back. 

How is it calculated?

To calculate average membership length, for a 12-month period, make a chart that shows for each month in the year the:

  • Starting number of members. Calculate by adding the previous month's final membership to the number of new sales in the current month and subtracting the number of members who cancel.
  • Total canceled memberships for the last 12 months

Next, total the beginning number of monthly memberships and divide by 12 to calculate the average beginning monthly membership.

Finally, total the number of canceled memberships divided by the average beginning monthly membership to get your attrition rate.

What is Membership Usage?

This fitness studio metric tells you how many classes or workout sessions your members are attending. 

Why is it important?

Membership usage can tell you how engaged your customers are with your fitness business. It can be an indicator of whether or not you are doing a good job of motivating and inspiring your customers to get their workouts in. It can also indicate a strong or weak community, and ultimately is an indicator of whether or not your customers will see results, which impacts retention and future revenue. 

How is it calculated?

You can easily run an attendance report to find out how many classes or training sessions your monthly members attend each month. 

What is Attendance in a Given Time?

Tracking attendance by week or month is a metric used by many fitness studios to gauge the health and popularity of their services. 

Why is it important?

Looking at attendance during a specific week and comparing it to a week in the past quarter or the same week one year prior can tell you if your fitness classes are growing or shrinking. It can also be an indicator of seasonal fluctuations. 

How is it calculated?

Attendance in a given time is the total number of student visits per specified date range. 

What is Attendance per Instructor?

The key performance metric of attendance per instructor is how many students per class and/or per a specific time period (day, week or month) each instructor on your staff attracted.

Why is it important?

This fitness business metric tells you how much your community appreciates and values each instructor. It may also be an indicator of the instructor’s friendliness, professionalism and skill level. This fitness studio metric is closely tied to attributed revenue and will tell you which instructors are meeting your business’s minimum required revenue per class goals. 

How is it calculated?

Attendance per instructor is calculated by looking at the number of students per class that this instructor taught, and by adding each class’s attendance total to get a per day or per week figure. 

What are Leads?

For a fitness studio, leads are new customers who are coming to their first class or day at the gym. If they are a strong lead they have the potential to become paying customers. 

Why is it important?

Knowing how many new students, or leads, your fitness business is bringing in each month will tell you if you are growing your business or not. As we mentioned previously, the fitness industry has a fairly high attrition rate. According to the International Health, Racquet and Sportsclub Association's 2015 industry statistics, the average rate of member retention for IHRSA clubs was 72.4 percent.

How is it calculated?

If your fitness studio sells an introductory pass for a class, or month of classes, you can run a sales report to find out how many new purchases for first-time customers your business has had.

What is Conversion Rate?

A fitness studio’s conversion rate may be the most important KPI of all. This is because just a slight increase in conversion rate can exponentially increase total revenue. Conversion rate is the percentage of new students/leads who become paying customers.

Why is it important?

Your fitness business’s conversion rate tells you how well your doing with sales, whether or not new prospects valued their first experience enough to come back for more, and how your business stacks up against the competition. 

How is it calculated?

Conversion rate is calculated by taking the total number of new paying customers – pass holders and members over a specific period of time and dividing it by the total number of new students during that same time. Often it’s the total number of pass and membership sales divided by the total number of intro offers and drop in sales. The rate is expressed as a percentage. 

What is Cost Per Acquisition(CPA)?

This KPI is the amount of money a fitness studio spends to bring in a new, paying customer.  

Why is it important?

This fitness studio metric tells you how much it currently costs to grow your business. CPA also shows you how valuable your current customers are, and can be an indicator of whether or not you are generating enough buzz and word-of-mouth referrals. 

How is it calculated?

CPA is calculated by taking the total amount of marketing spend for a given period of time divided by the total number of new customers acquired during that same time. 

What is Marketing ROI?

Marketing return on investment or ROI tells a fitness business if their marketing spend is worth it – i.e. bringing in enough new business to both cover the cost of the marketing and help the business achieve it’s long term revenue goals.

Why is it important?

Marketing ROI indicates how effective your marketing strategy and spend is and whether your fitness business needs to re-evaluate where and how it spends money on marketing. 

How is it calculated?

Marketing ROI is calculated by dividing total marketing spend during a specific time period by the total number of new customers and then multiplying the number of new customers by their LTV (lifetime value). Last, take the If a $100 marketing campaign generates $1,000 in projected new revenue, your marketing ROI was 900%.

What is Revenue per Square Foot?

This KPI is the amount of money your fitness studio brings in in relation to the size of your space – assuming that the more space your provide, the more expensive the footprint of your business. 

Why is it important?

As a gym owner you want to make the most of every inch of your space to maximize revenue. Your lease was likely calculated based on how many square feet are included in our studio, so you want your revenue to appropriately reflect the size and layout of your studio. A well-thought out studio will maximize classroom or other workout (read: revenue generating) spaces and minimize non-revenue generating spaces like lobbies and locker rooms. This has to be balanced with the overall customer experience, of course. If you know you can charge substantially more for monthly memberships and passes because you provide lux amenities, that’s important to factor into space planning. 

How is it calculated?

Take total net revenue for a specific time period, typically per month, and divide by the total number of square feet. 

What is Customer Satisfaction?

This one is a no brainer. Customer satisfaction is how happy your customers are with your goods and services. 

Why is it important? 

Maintaining a high level of customer satisfaction will boost several other fitness studio KPIs like leads, referral rate, retention rate and, ultimately, revenue growth. 

How is it calculated? 

This fitness studio metric is qualitative. Most fitness businesses measure customer satisfaction through surveys with scales of 1-10 and star ratings. You can also measure the number of positive reviews your business receives over a given period of time compared to negative complaints.

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