24 Hour Fitness Pre-identifies At-Risk Members to Run Targeted Retention Programs

Client

24 Hour Fitness

Challenge

From one club in 1983 to more than 3 million members in over 360 clubs in 16 states and four countries in Asia, 24 Hour Fitness is expert at changing members' lives through health and fitness. Retaining members can be difficult, however, so 24 Hour Fitness partnered with Loyalty Matrix to aggressively build an industry-leading retention program using our data-driven approach. The goal was to analyze their existing marketing data to find the most critical member targets, to produce campaign execution plans, and to optimize marketing efforts to build a successful, company-wide retention program.

Analysis

The process began with an analysis of existing member data using MatrixOptimizer® (“MO”), our on-demand marketing analytics platform. MO enabled us to analyze behavior by a rich set of member attributes, resulting in a model that determined four key drivers of lifetime value (LTV), including member tenure and referral and family add-ons.

Based on client recommendation, we approached maximizing these value drivers by starting with optimizing member tenure. As such, the next step was to segment the member base by their likelihood of defection. For this, we leveraged MO’s At-Risk segmentation tools using random forest, a machine-learning technique that methodically searched for defection predictors, which could have been anything from member age to the time at which members went to the gym. Once the model was built, each member was assigned an at-risk ranking of 1 – 10. The modeling process also informed us of the key factors predicting defection, including engagement (club use), tenure, fees, and membership type.

Action

Using MO, 24 Hour Fitness now identifies and selects at-risk members, and reaches them with communications designed specifically to build engagement and ultimately, retention. At the same time, the at-risk communications incorporate offers to increase revenue from the other major lifetime value sources as well (add-ons, upgrades, and additional products.)

Results

The at-risk model has enabled 24 Hour Fitness to deploy retention campaigns that are delivering 2-5x returns. The model is being leveraged in companywide campaigns giving a unique competitive advantage. In addition, the many insights generated in this process have guided the design of a comprehensive engagement program to increase the retention of all members, and not just those at immediate risk. MO enabled 24 Hour Fitness to continually test retention ideas, learn from pilot results, and improve retention marketing to grow the loyalty and profitability of existing members.

Measurement and Further Optimization

As 24 Hour Fitness proceeded to test targeted retention campaigns, the campaign data was fed back into MO to measure the results and to provide feedback for improving continuously. MO analyzed the response rates, retention impact, and incremental product purchases to choose the optimal program offers and formats for each segment. The combination of multiple pilot campaigns and comprehensive analysis of their results by MO showed what worked and what didn’t, illuminating the facts behind choices that were heretofore unknown.