Is Too Much Data Killing Your Health Club?

Don’t let the allure of big data stop you from using the right data. Here’s how you can find actionable data that turns leads into sales.

You have data. Lots of it. That’s a good thing. It means you have your CRM software in place that’s collecting reams of information that can help you devise sales and marketing strategies to grow membership and increase retention rates.

The problem is that many health clubs, like other businesses, have become too focused on simply collecting and storing data. Information overload can weigh down even the most nimble of operations, even if you have a workable analytics framework. There are just too many numbers, too much statistical noise to sort through.

According to research by the Harvard Business Review, today’s companies rely on an average of six times as many performance metrics as they did in 1955. “Back then, CEOs committed to four to seven performance imperatives,” writes Yves Morieux in HBR. “Today they commit to 25 to 40. And many of those requirements appear to be in conflict….”

Business analysts have a name for this data deluge: the “complexity trap.” And it’s starting to become a serious—sometimes even fatal—problem for companies of all sizes.

Understanding When You’re in a Complexity Trap

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Business analysts have a name for this data deluge: the 'complexity trap.'

The Pareto principle, also known as the “80/20” rule, states that “80% of outcomes can be attributed to 20% of all causes for a given event.” While the 80/20 rule can be widely applied, it gets to a fundamental principle about data. If you’re not identifying and following the correct key performance indicators (KPIs), you’re missing the forest for the trees.

“Data saturation is everywhere,” says Sara Spivey, CMO of Bazaarvoice, a digital marketing company. “Now, the marketer is sitting on top of a mound of data and trying to sift through it to mine for ‘ahas,’ which becomes untenable. The better approach is to start with the business objectives and the key questions you want to answer—and then go seek out the right data. Unfortunately, the process at many companies is the reverse of what it should be.”

In a recent IHRSA webinar, “Key Performance Indicators Every Club Operator Should Monitor,” Gregg Manns, senior vice president of Industry Insights, Inc., says that it’s important to track the right numbers before it’s too late to change the behaviors that got you there.

“The key performance indicators oftentimes will give you a heads up before things go haywire,” says Manns. “If you’re monitoring that info, you’re going to see things start to move outside the norm before it’s too late and you can adjust accordingly.”

It’s essential that you understand where you stand in relation to your historical performance metrics, but you also need to measure against industry-wide benchmarks, Manns says. “If you’re constantly looking at yourself in that silo of how your club’s performing, you may be missing out on a lot of potential profits without knowing what the industry is doing.”

First, establish your target goals. This is especially important for those club operators who don’t come from a traditional business background.

“The first step to identify the most relevant measures of performance for your club is to determine your overall vision or strategy as a company,” Manns says. “Most people haven’t necessarily become a club operator just to make money—a lot of the time they got into the business to improve the lives of members. So those key performance indicators might be a little different than those who are more focused on maximizing their financial success.”

Industry expert John Atwood, managing partner of Atwood Consulting Group, says that health clubs would be wise to watch four KPIs in particular when breaking down the data:

  1. Net growth of memberships: “I like to call this your ‘No. 1 key metric,’” Atwood says. “Many operators are fooled when they look only at new member acquisitions, but don’t realize that there may be a ‘member leak’ trickling out the back door.”
  2. The cost of acquiring new memberships: “The goal is to keep the cost of acquisition to no more than the equivalent of two months’ worth of member dues,” he says.
  3. Ratio of payroll to revenues: “Clubs that exceed 45% should regard this as a red flag and adjust accordingly, unless they’re in the startup phase.”
  4. Non-dues revenues as percentage of overall revenues: According to Atwood, “Depending on the kind of club you have, the IHRSA benchmark figure you should shoot for could be as low as 18% or as high as nearly 40%. That said, we believe most clubs should strive for a non-dues revenue percentage of not less than 30%.”

The problem with today’s data overload is that when you’re grappling with these numbers, they may not tell you the whole story about what’s happening in the sales funnel. It’s not just about tracking the outcomes. You need to understand how you got there. It’s just as important to track the behaviors and activities of your sales team.

Being Proactive in a Busy Marketplace

Technology may be the reason you find yourself stuck in a complexity trap, but it can also be the solution. It starts by organizing the data in a way that tells you the real story behind the results.

“Sales just don’t happen,” says Dana Milkie, president and CEO of InTouch Technology. “As an organization, you have to be clear about what’s happening upstream. You need to understand the KPIs that produce the outcomes you’re looking for. It's one thing to get the right data. It's another thing to make sure that that data is aligned not only with the results, but also the activity and behavior that drives those results.”

This is the philosophy behind InTouch’s innovative SmartGoals system. By utilizing machine learning and other advanced data collecting techniques, SmartGoals helps you collect leads and follow them through the sales funnel, so you can recognize what’s working and where you need to pay attention.

InTouch’s “macro to micro” ability to analyze your data brings you the KPI data you need to make your specific benchmarks. This form of predictive analytics is important when devising sales strategies from the leads you generate. You can track not only your sales funnel, but your onboarding and engagement data to make sure you’re hitting all your targets.

SmartGoals is just one tool that’s part of InTouch’s Drive platform. The InSights dashboards provide real-time reporting on your most valuable metrics, so you can increase conversion rates quickly without having to mine reams of data that take up manpower and valuable sales time.

Another feature of InTouch’s system that’s valuable to club owners is its ease of use. Even those uncomfortable with technology find its interface and intuitive controls are simple to operate. This brings clarity to your business strategy and helps you avoid the complexity trap.

To learn more about InTouch Technology’s products, visit InTouch’s website or email them at sales@intouchtechnology.com.

Jim Schmaltz

Jim Schmaltz is a contributor to IHRSA.org