Net Promoter Score (NPS)® as a suitable metric for Gyms, Health & Leisure industry
By: Pauric Lonergan
Ask any manager of Gyms or health clubs what their top challenges are and chances are that retaining and growing membership will feature at the top of the list. With increasing competition, managers are constantly looking for ways to differentiate to retain and attract members and with prices, classes and equipment becoming similar across providers, it’s not surprising that most are looking to differentiate on Service and Value. Because Gyms and Health clubs provide a personal experience, people are likely to ask a friend or colleague about their experience with a particular club as part of their research before joining and existing members will also share their experiences. For this reason Net Promoter Score (NPS) as a metric of satisfaction and loyalty is particularly suited to this industry.
What is Net promoter Score (NPS) ®
Net Promoter Score (NPS)® is a loyalty metric used to measure an organization’s performance through the eyes of its customers. Research shows that companies that achieve long-term profitable growth have NPS two times higher than the average company. NPS is based on the fundamental concept that every company’s customers can be divided into three categories:
- Promoters – loyal customers, who keep buying from a company and encourage their friends to do the same.
- Passives – satisfied customers, unenthusiastic and can be easily wooed by the competition.
- Detractors – unhappy customers, trapped in a bad relationship.
How it works
NPS is based on a direct question: How likely is it that you would recommend our company/product/service to a friend or colleague? The scoring for this question is usually based on a 0 to 10 scale.
- Promoters respond with a score of 9 or 10
- Passives respond with a score of 7 or 8
- Detractors respond with a score of between 0 and 6
NPS can be as low as -100 (all customers are detractors) or as high as +100 (all customers are promoters).
How it’s calculated
NPS is calculated by subtracting the percentage of customers who are detractors from the percentage of customers who are promoters.
Example: Let’s assume that you’ve received 100 responses in your survey:
- 10 responses were from detractors
- 20 responses were from passives
- 70 responses were from promoters
Based on the responses above you will come up with the percentages of each group individually, 10%, 20%, and 70%. You will now have to subtract the score of detractors, i.e., 10% from promoters, i.e., 70%. This will result in 60%. As a Net Promoter Score is always represented in integers, your NPS will be 60.
An NPS that is positive double digits e.g. +30 is considered reasonably good with room for improvement, and an NPS of +50 is very good. Leaders like Apple Computer will have an NPS in the +70 range.
Why NPS matters
A positive NPS means that you have more people recommending your GYM or Health Club organically than people discouraging others from your company, while a negative score means the opposite.
Research on NPS in health and leisure business presents an NPS score of 25% . This score presents a great opportunity for proactive businesses to increase their NPS. Proactive organizations will be able to improve existing retention as well as acquire new members from competitors over time.
For any Metric to add value, it needs to accompanied with some additional commentary regarding the reasons for a high or low score, especially for a low score, you need to know why so that you can take action to fix the things that matter. The reasons given by the respondents in research for being detractors are all basic operational errors that when handled correctly will easily result in a rise in NPS. Detractor’s main reasons for providing a negative score are as follows;
Staff were not interested in helping the customer.
- Staff were not being friendly and did not talk to the customer, making them feel unwelcome.
- Customer did not achieve their desired results.
- There was a lack of basic cleanliness and working equipment.
- Gyms, Health and Leisure Clubs membership retention and growth requires members to receive value and have a positive experience with all aspects of their membership.
- People are likely to ask an existing member “Would they recommend their club?” as part of their research and existing members are likely to share their experiences openly.
- Social media channels have become a very active channel for members to communicate their experiences.
- Net Promoter Score (NPS) ® as a satisfaction and loyalty metric is particularly suited to Gyms and Health Clubs.
- NPS feedback adds most value with additional comments explain the reasons for high and low scores, enabling you to take appropriate improvement actions.
About the Author
Pauric Lonergan is a Customer Success Manager at CustomerLink, a Technology and Services company that helps organizations measure and improve member satisfaction. He can be contacted at firstname.lastname@example.org. www.thecustomerlink.com