4 Reasons You Should Pay Attention to the Customer Lifetime Value of Your Gym

Understanding Customer Lifetime Value of Your Fitness Clients

Customer Lifetime Value (CLV) is the total revenue a business can expect from a single customer over his/her entire relationship with your business, minus associated expenses. 

To measure CLV, follow the equation: 

Lifetime value = average value of sale x number of transactions x retention time period 

Customer lifetime value = lifetime value x profit margin 

For example if an adult membership costs $200 monthly, and the average customer remains for 7.4 months, your CLV is $1,480. 

Why does Customer Lifetime Value matter? 

Understanding the importance of Customer Lifetime Value (CLV) can give your fitness business a powerful boost. 

It is an effective way to determine your long-term profitability, which makes this metric integral to the success of your business. Here are four reasons customer lifetime value matters for your fitness business. 

1. Helps target your ideal client 

Data from IHRSA's Global Report suggests that customers aged 16-24 tend to stay with their gym for an average of 16.7 months, whereas clients over 55 remain with their gym for an average of 24 months. 

So, incorporating CLV into your marketing strategy ensures you are targeting and engaging clients who are likely to stick around and continue investing in your gym. 

2. Directly affects revenue 

CLV metric is an important indicator of your business's overall health and success since CLV provides an estimate of the future revenue that can be expected from a single customer. Additionally, analyzing CLV helps you measure each year's return on investment (ROI) to better understand potential future success. 

3. Boosts loyalty and retention 

It helps you identify which clients need more attention to remain loyal and reminds you that you must constantly provide exceptional service and incentives for customers to keep coming back. 

Therefore, having happy customers is instrumental in generating more sales and gaining long-term customer loyalty that can create a high lifetime value for the business. 

4. Reduces customer acquisition costs 

Many businesses falsely believe they should allocate more money to acquiring new customers rather than focusing on keeping their current customers loyal. 

However, studies show that even a small increase in customer retention rate can result in an increase of 25-95% in revenue generation. 

Investing resources into improving the customer experience through loyalty programs and fostering the relationship with them will benefit your business growth significantly more than continually searching for new clients.