Consider metrics to be separate measurement systems all built into the same business model. You can’t solely measure your success by class attendance, and you can’t solely justify the need for a business loan based off on one bad week of sales. You need hard data and the right metrics to track to find out just how your business is performing.
CrossFit gyms have their seasons, their ups and downs, but there’s something you can do about it. You can plan ahead, track accordingly, and stay calm with forecasting and data history. This is how you need to measure your CrossFit gym’s success so you can keep your business alive and prevent panicking.
Metrics are sometimes called KPIs, which stands for key performance indicator. Basically, you want one metric or measurement of your business to not just provide you with insight, but provide you with critical insight that’s important for your business growth and projection.
These are some metrics in each field that you should keep your eye on, and why they’re important. Tracking data and progress in your business isn’t the sexy part of it, but for growth and continued success, it’s definitely necessary.
Gross profit is what a company or business makes after associated costs with running the business. You reduce costs from revenue, and that’s how you get to gross profit. The reason this is important is because it tells you what you stand to gain from your business on average.
Most businesses have plans for growth, whether it’s solely income-based or it means opening up a second location, becoming one of the best places to work (paying employees more), or what have you. Without knowing your gross profit, it’s hard to predict where your business will end up, and how you’re going to get there.
Your gross profit helps you understand your variable costs. That is, costs that you can mostly predict, but can’t 100% nail down. You know what your rent is going to be because it’s structured in a contract. It will be no more and no less. You know what your annual PushPress subscription cost will be, because it’s structured. Your electricity costs will change, your water costs will change, and so on and so forth. Gross income helps you find the average and reduce risk while helping with financial planning.
Net income is when you take your sales, and minus the cost of the goods, or in this case service, that you sold. This includes administrative costs, anything that’s required to operate your gym, and even taxes.
Net profit, sometimes referred to as net income, can get pretty complex and in-depth. Essentially, anything that your business has to spend in order to operate is deducted from the total amount of revenue (sales) that you made, and that’s how you reach your net profit.
This is money that you don’t have to use for taxes, paying your employees, or running your gym. At the end of the day, this is the fruit of your labor as a business owner and entrepreneur.
Member Lifetime Value
One way that we can predict how much your gross sales are going to be is with member lifetime value. This is commonly referred to as lifetime customer value outside of gym culture. This is the total worth that one single customer will bring to your business over the lifetime of their membership.
Depending on your industry, a typical customer lifetime will be different. Some industries will rate per 20-year period, sometimes a lifetime value is just a 10-year period. It’s up to you to decide how it’s measured.
Because customer retention is difficult in the fitness industry, and few people stay consistent for five or even ten straight years, it may be worth it to sit down and find out what you consider to be the ultimate lifetime member value.
Member Acquisition Metrics
Leads are those who are interested in what you’re selling. It’s your target market. However, not every single lead will become a conversion, which we’ll talk about in a minute. A lead is the ideal candidate for your service or product, and because everyone is different, small aspects of their buyer persona might not qualify them to convert. It’s just how it is.
A conversion is when a qualified lead actually converts to the status of customer or client. They were a lead, then they pulled the trigger, so to speak, and became a paying customer. These are the people you want to work to acquire. When you have any marketing efforts, there’s always a broad audience size you’re able to hit. In digital marketing efforts where you can find out how many potential leads viewed your site or offer, you can then find out how many of them became conversions.
Retention ratings refer to how long a member stays as a member, which affects financial forecasting. This will also tell you when your best seasonal times are, and how many customers stay for the long haul versus those who fall-off after the first month or two. Retention ratings are important.
Member Behavior Metrics
Average Length of Membership
Members will fall off and come back later. It happens. There are methods for reacquiring members who’ve quit in the past. However, in order to have proper financial projections and understand your busy and low seasons, you need to know how long they stay as a member on average. This helps you understand the lifetime patterns of a customer, and possibly what their expected value is going to be. Everyone is different of course, but this is a good projection too. You can also use this data to try and find out why they’re only a member for so long, and possibly fix it.
Time Spent in Gym
The more time spent in the gym, the better. Well, up to a certain point. You wouldn’t want your members spending an unhealthy amount of time in the gym, otherwise they’re going to get burnt out and stop going, but you do want them to be there for a healthy amount of time.
Typically, thirty minutes or so is a clear and reasonable goal. If most of your members average this time, you’re doing something right. If members average seven to ten minutes, that’s not good. It’s barely enough time to get started, and they’re clearly not there for classes with that minimal time span.
Classes Attended (Weekly or Monthly)
You have 100 class signups. Not everyone is going to actually attend their classes. If you have a high percentage of attendance, such as 80%+, you’re probably in a good place. It’s when those numbers are low that you have to worry about it affecting revenue.
Most often, it has to do with the class timing. It’s worth it to contact your members and ask if they are okay, and if the time for the classes doesn’t work for them. That is, if there’s a reason to. This is why structuring your class schedule is so ridiculously important, and it absolutely depends on the type of area you open up your gym in.
Early Stage Usage
How much are your members actually using their membership when they first sign up? This is critical in finding out how your customers behave. Some people will impulse buy a gym membership, usually around January each year or sometimes around their birthday. Even the best gyms in the world will have some members with low early stage usage numbers.
That’s normal, it happens, but when that number gets higher you have to ask yourself some questions. Are your classes not engaging enough? Is the atmosphere somewhere that people don’t want to be? It comes down to a lot of factors, but you can’t know that anything is wrong unless you see those early stage usage numbers.
On the upside, a high early stage usage number means that people were excited about what your gym has to offer, and now that excitement is validated. They’re spending time in the gym because it actually follows through on the promises you laid out with how you presented it.
This can be acquired through surveys periodically through a customer’s time with your gym, or it can be a check-in survey sent to their email after they’ve been a gym member for a short amount of time. Either way, it’s an important metric to gather. When you determine customer satisfaction, you’re also finding out what does and doesn’t work about your current business model.
Are you over-charging for subscriptions? Are people leaving comments in their exit survey about a specific trainer? This insight is like having eyes around your gym when you can’t be there to monitor everything. You can quickly tell when a survey or customer satisfaction information is valid or not.
How to Make Sense of That Data
Turning data into action is difficult. It’s why data scientists are some of the highest-paid professions around the world. We have all this information, and we vastly underutilize it. Fortunately, you’re in charge of how you acquire data. You have two main options:
You can use a management platform like PushPress to help understand what data means and give you quick results. Find out monthly member value, set up appointment lists and prices, and streamline every business workflow of yours involving data. You can automate repetitive tasks, save time, and even automate payments. This helps you focus on the data and what it means.
There’s some data that are difficult to pinpoint, and it can be even harder to find out what you should do with it. This is all done for you, all at once.
Option two is to manually collect information, such as the different tiers of memberships that are active, class attendance, etc., and plug it into a worksheet. Then you have to figure out the correlations between all the data (and it’s very easy to mess it up). It’s not worth the time and stress to do it this way with an answer right at your fingertips.
Financial Planning Worksheet
Now it’s time to feed all that information into your finances and find out how they’re related. When fed into PushPress, you get financial tracking outputs to determine your gym’s financial performance, financial health, and other key financial metrics. However, software alone can’t take the wheel of your business.
Build your own worksheet by tracking your assets and your liabilities.
- Bank accounts and credit cards for the business
- Assets owned by the business
- Company vehicles owned by the business
- Building ownership (if you don’t rent)
- Purchased equipment
Everything comes with maintenance. If you own your business building, there’s physical maintenance, and then the cost of your annual tax. If you own company vehicles, you owe mechanical repairs and gas, and so on.
So assets also have liabilities, and there are standalone liabilities for your business as well.
- Bad debt like loans
- Auto loans for company vehicles
- Mortgage on building or rental costs
- Rental prices for gym equipment
Liabilities vary, but basically, your income and asset management need to greatly outweigh your liabilities. If they don’t, you have a cash flow problem, and businesses will go belly-up in these situations.
Your KPIs Matter
Your KPIs are how you know that your gym is running the way you want it to. Measure your KPIs based on your goals and what’s good for profit as well, so you know if your gym is effective and successful.
It’s criminally easy to focus on the wrong data, make wrong moves based on assumptions, and tank a perfectly functioning business. Do yourself a favor and stick to the performance indicators that will grow your business, and identify the ones that won’t.