Top Business Metrics for Gym Owners to Track for Long-Term Success

Tracking key performance indicators (KPIs) is the most reliable way to measure success. These metrics provide valuable insights into every aspect of your operations, from customer satisfaction to revenue. They also help you pinpoint areas of improvement quickly.

Discover the most critical business metrics for gyms and learn how to use this data to achieve long-term success.

Membership Metrics: The Heartbeat of Your Gym

Members are the cornerstone of any fitness business. After all, without paying customers, your gym wouldn’t survive for long. However, simply counting the number of members isn’t enough. You must use membership metrics to analyze their behavior and understand their relationship with your gym.

Membership Growth Rate

Membership growth rate tracks how quickly your gym brings in new customers over a specific period. You can calculate it with this formula:

Member Growth Rate = [(New Members - Lost Members) / Total Members] x 100

Here’s an example to illustrate: 100 new members join your gym in March, but 18 existing ones cancel their subscriptions. If your gym has a total of 1,000 members, your member growth rate for March would be: [(100-18) / 1,000] x 100 = 8.2%

Once you’ve established a baseline, there are many ways to boost your membership growth rate. Some gyms offer incentives for new clients, such as free trial members or a complimentary personal training session. Referral programs can also attract new members while rewarding existing clients for spreading the word about your business.

Creating a new marketing strategy is another effective way to attract potential customers. Research your target audience to learn about their interests, preferences, and fitness challenges. Use your findings to develop tailored marketing campaigns. For example, partnering with a local fitness influencer could appeal to Gen Z clients, while educational blog posts may interest people who want to learn about nutrition and industry trends.

Membership Retention Rate

The membership retention rate is one of the best KPIs for fitness gyms. It’s the percentage of customers who remain active members of your gym over a given timeframe. Here’s the formula:

Membership Retention Rate = [(Number of members at the end of the period - Number of new members gained) / Number of members at the start of the period] x 100

Let’s use the numbers from the previous scenario as an example: [(1,082 - 100) / 1,000] x 100 = 98.2%

Tracking retention can provide insights into how effectively you’re engaging members. A high retention rate suggests that customers feel satisfied and invested in your gym, while a low one may indicate that your business isn’t meeting customer expectations.

Building a strong community is key to building member retention. Host regular social events, such as fitness competitions, nutrition workshops, and hiking excursions. These fun gatherings encourage members to make friends and support each other’s fitness journeys. Offering on-demand fitness classes is another great way to keep clients engaged, especially when their schedules get hectic.

Average Membership Duration

Average membership duration tracks how long customers stay with your gym. The average membership length for fitness businesses is 4.7 years.

Here’s the simplest way to track this key metric:

Average membership duration = Total length of all memberships / number of members

Suppose a new gym has 50 clients who have held memberships for a total of 79 years. The average membership duration would be (79 / 50) = 1.58 years.

New members tend to quit in the first few months. By focusing your retention efforts on these flight risks, you can significantly increase your average membership duration. For instance, beginner-friendly fitness classes and discounted personal training sessions can help new members develop consistent routines.

Financial Metrics: Ensuring Liquidity and Stability

Earning a profit is a top priority for every gym owner. These KPIs will help you track and improve your business’s financial health.

Revenue per Member (RPM)

Revenue per member measures the average amount generated per customer.

RPM = Total revenue / number of members

For example, if your gym earns $20,000 in June and has 500 members, your RPM would be (20,000 / 500) = $40.

This metric helps you evaluate if you’re monetizing your member base effectively and uncover opportunities for maximizing revenue. If local competitors have a significantly higher RPM, it could indicate that you’re underpricing your services. You could also increase RPM by diversifying your offerings, such as adding monthly acupuncture sessions or selling merchandise.

Member Lifetime Value (LTV)

Member lifetime value is the average amount a customer spends throughout their entire relationship with your gym. It provides insights into the long-term value of your members.

LTV = Average revenue per user x Average membership duration

If the average revenue per user is $30 per month, and the average membership duration is 18 months, then: $30 x $18 = $540

Upselling and cross-selling can boost LTV while improving the overall member experience. Encourage clients to buy additional products or services, such as VIP memberships or massage packages.

Monthly Recurring Revenue (MRR)

As a gym owner, you know cash flows can fluctuate from one month to the next. Calculating monthly revenues helps you estimate income and build a budget.

MRR = Monthly memberships + monthly subscriptions

Look for opportunities to increase MRR, such as offering annual memberships at a discount or bundling services for a more reliable income stream.

Operational Metrics: Maximizing Asset Efficiency

Keep your gym running smoothly by tracking operational metrics. These KPIs will help you boost efficiency and get the most out of your resources.

Class Attendance Rate

Class attendance rate is the percentage of spots filled in your fitness classes.

Class attendance rate = (Number of attendees / Number of openings) x 100

This metric helps you gain deeper insights into your members’ habits and preferences. By analyzing it, you can identify the most popular classes and eliminate or revamp underperforming ones. For instance, if your Zumba classes are consistently half-empty, you might consider replacing them with classes that better fit your customers’ interests.

Equipment Usage Rate

The equipment usage rate is the percentage of time members actively use each piece of equipment. You can measure it with this formula:

Equipment usage rate = (Total time equipment is used / total time the gym is open) x 100

This fitness KPI allows you to make strategic decisions about your equipment investments and scale your business effectively. Focus on maintaining and replacing equipment with high utilization rates, like ellipticals and treadmills. By contrast, you might swap out rarely-used equipment — like a vibration plate gathering dust — with more in-demand machines like reformers.

Customer Satisfaction Metrics

Successful gyms don’t just help customers get in shape; they also maintain high satisfaction with the overall fitness experience. Happy customers are more likely to stay and promote your business through word-of-mouth. These metrics will help you measure your audience’s satisfaction levels.

Net Promoter Score (NPS)

Net Promoter Score is one of the simplest ways to gauge your members’ loyalty and satisfaction. You can calculate this metric by asking customers a single question: “On a scale of 1 to 10, how likely are you to recommend this gym to a friend?”

Based on their responses, sort customers into three categories:

• 9-10: Promoters
• 7-8: Passives
• 0-6: Detractors

NPS = Percentage of promoters - percentage of detractors

If your NPS is low, take the time to investigate and fix the underlying causes of dissatisfaction. For instance, members might be unhappy with your pricing, hours, or class offerings.

Customer Acquisition Cost (CAC)

Customer acquisition cost reveals how much you spend to gain a new customer. This metric will help you determine if your marketing and sales efforts are worth the investment.

CAC = Sales and marketing expenses / number of new customers

For instance, if you spend $5,000 on pay-per-click ads and gain 100 customers, the CAC = ($5,000 / 100) = $50.

Gyms can use many strategies to decrease CAC. Consider budget-friendly marketing channels, such as social media or sponsoring a community Little League team. These tactics will help you raise brand awareness and attract new customers without spending a fortune on pricy advertisements.

Boosting your conversion rate — the percentage of leads who buy your products or services — is another way to reduce CAC. According to the Fitness Business Association, gyms should aim for a conversion rate of at least 60%. To achieve this goal, focus on methods that consistently generate quality leads. These tactics could include referral programs or providing complimentary nutrition counseling.

Conclusion: Making Data-Driven Decisions for Success

Don’t rely on gut feelings to evaluate your gym’s performance. Get the facts by monitoring key metrics. Customer acquisition cost, membership retention rate, and other KPIs will help you celebrate milestones and identify areas for improvement.

This data also empowers you to make informed decisions. For instance, you might refer to the class attendance rate when designing your course schedule. That way, you can offer in-demand classes at peak times and replace or revise unpopular ones.

Looking for new ways to boost customer retention and satisfaction? Fitness On Demand offers a customizable mobile app and over 1,500 virtual classes to keep members engaged. Schedule a demo to learn more about how we can help you track and improve KPIs in the fitness industry.