Fitness Industry KPIs are a way for these businesses to track their performance. 2020 has been a turbulent year for the fitness industry but it’s clear that the businesses that understand their numbers are the ones more likely to survive, recoil and prosper. Revenue and profit are both vital numbers, as in any business but there are some key metrics that make sense for any gym or fitness studio to track.
Key Fitness Industry KPIs
The important numbers for a gym, like any business, are around:
- Gaining customers
- Keeping them
- Earning more from them.
So here are some fitness industry KPIs that will measure these and help you keep your business healthy.
5 Fitness Industry KPIs to Understand your Business
To better manage your fitness business, you need to understand where your revenue comes from. For example, if you set up some of these important metrics you can then set a budget that represents your expectations of a healthy business. At the end of the month, you can compare that budget to the actual outcome and see any variations. Good metrics will give you actionable answers:
- If you don’t know what a new customer costs you, you don’t know if your marketing is effective.
- Not knowing how many members you are losing you could be missing out on easy revenue. You need this information before you can ask the Why questions.
- And we all know that one of the hardest tasks in any business is to get a new customer in the door. So once you have them there, you want to keep them as long as possible and maximise the revenue you earn from them.
We’ve compiled some key Fitness Industry KPIs that you can track each month. These will set the foundations for you to better understand where you should focus.
#1: Revenue per Member
This is one of the simplest fitness industry KPIs to calculate. Without doubt it is also one of the most useful.
Divide your income for the month by the number of members you have.
That will tell you how much, on average, your customers are paying you. Track that over time and see how you can increase it. For example:
- Can you sell more premium memberships?
- Are there additional, optional classes or services you can sell to your existing members?
These are people who already know and trust you. You know who they are and how to reach them. There is an opportunity to give them more of what they want and need, while improving your business bottom line.
Here is an example how you can display this metric month-on-month.
#2: Cost per New Member
To calculate this fitness industry KPI, simply:
Add up all your sales and marketing costs each month and divide by the number of new members you gained.
Depending on the type of marketing you do, it may make sense to use quarterly or annual averages for this. For example, if most of your effort goes into one or two big exhibitions each year, the new customers may not come in all in the month of the exhibition. On the other hand, if you rely solely on Google AdWords, there is more likely to be a direct relationship between the timing of costs and the signing up of new members.
#3: Marketing Cost Recovery
Once you know the average monthly revenue you earn from each member and the cost of acquiring you members, divide the cost by the revenue to get the number of months to recovery.
For example, if you earn $100/month and the cost of a new member is $700, your recovery time is 7 months.
In the past, this is the reason many gyms focussed on annual membership or locked in contracts as it ensured the member would pay for at least that long. However, consumer demand is leading the best businesses to offer monthly memberships that aren’t locked in. That is a risk but it’s also a driver to make sure you do genuinely keep your customers satisfied and coming back.
#4: Churn or Retention Rate
The metrics to track your customer stay is a matter of personal preference.
- Churn is the number of members lost as a percentage of total members;
- Retention Rate is the percentage kept.
If there is a preference in your area for one, then it makes sense to use the same as the other gyms so that it is easy to compare. To gather the data to calculate this common fitness industry KPI you will need to:
- Keep track of the number of customers who cancel or do not renew their subscription each month.
- Compare it to your total customer numbers.
- Monitor this over time.
- As you put in place strategies to keep more members, you’ll be able to measure their success. You’ll know whether they are working or not.
If you have a friendly relationship with similar businesses in your area, share and compare these fitness industry KPIs so that you can all strive to improve.
#5: Revenue per Square Metre (or Foot)
In the short to medium term at least, one limitation on your growth will be the area of your premises. But are you using that space to your best advantage?
To calculate this KPI, simply divide your monthly revenue by the total space you have available.
If you have the ability to relate your revenue to particular spaces, for example a group class area, that will help you determine which activities are the most valuable. And that, in turn, will help you in the right allocation of space within your premises.
Using Calxa to track Fitness Industry KPIs
You can get started tracking these fitness industry KPIs in a spreadsheet. Of course, we are biased, and recommend you use Calxa to do this. The advantage will be in the automatic calculation of these KPIs each month based on your accounting system data. So here is how to do this:
- Keep track of the non-financial data. You may be using a membership app that will give you these numbers.
- In Calxa, create a Metric for:
- New Members
- Lost Members
- Active Members
- Floor Area
- Now it is simple to create KPI formulas with the earlier suggested calculations.
In Calxa, you can compare these Fitness Industry KPIs to one another using a chart or simply list them some of your other financial reports.
Include charts showing the trends in each of these KPIs with your monthly management reports and you will soon start to see where your business is trending up or down. If you can compare them to other similar-sized businesses, you’ll know where you’re doing well or badly. Either way, they should prompt action that improves your business and helps you prosper and grow.
KPIs are a great way to manage your business. Have a look at some of our articles like 7 Important Business KPIs for Cash Management, 5 Signs You Might Be Trading Insolvent or Top 3 Business Key Performance Indicators.