Gym Memberships And Lock-In – Getting Suckered, or Maximizing Retainment

A current spike of gym-going activity got me thinking about howexpensive each visit really has been: If one calculated the totalfees that my wife and I have paid for our dual-membership, anddivided that by the actual number of visits, I suspect the numberwould be somewhat scary, and certainly nothing like what weoriginal envisioned.

We’ve been dutifully paying a monthly fee to the local GoodLife FitnessClub for about six years now. We do this to maintain oursuper-A+++++ memberships, despite the fact that during this periodwe’ve gone intervals of over a year without having usedour membership once (the lead-up and follow-up of having a child,and then another, really isn’t conducive to that sort ofthing). Yet amazingly we keep on paying.

And we’re not alone. Of the people I know with gymmemberships, all tend towards occasional spurts of highly-visiblegym activity (e.g. just before summer), followed by extendedperiods of non-usage. Eventually something spurs them into actionagain (e.g. a particular milestone in their life — likerolling over a decade marker — or some other unavoidable sign likean expanding midsection) and again they frequent the gym for amonth or so, and then it slides again. Repeat.

I don’t have the numbers, but I suspect that the entire fitnessindustry relies upon this behaviour — They know that at any timeonly a very small percentage of their active membership roster willtake advantage of the facilities, so they can grossly oversell thefacilities. For instance a gym might have facilities for 600 usersa day, but they can easily maintain a paying membership of tens ofthousands without any need for additional equipment or space.

So how do they get us It’s simple.

  • Sign-up/Initiative Fees – When we signed up wehad the option of paying a marginal sign-up fee with a high monthlyfee, or a larger sign-up fee (something like $400) with a vastlyreduced monthly fee. Of course we paid the larger initiation fee,as the difference between the two was made up in something like sixmonths of membership payments. Who could choose otherwise Itsimply made good financial sense.

    Now that we’ve made that “investment”, however, we have amotivation to maintain our membership lest we have to pay it again.Taking advantage of human idealism, they know that most willthink something along the lines of “Well next month I’ll be able togo a lot more…so I’ll just keep paying it lest I have to pay $400just for cancelling it prematurely”. It is a brillianttactic to avoid cancellations.

    Many fitness clubs don’t have the draw to earn such a large upfrontpayment, so instead their sign-up/initiation fee is moretheoretical: They’re always having giveaways and scratch-cardcontests where you save 95% off the initiation fee. The purpose isthe same, however, given that users will convince themselves not tocancel given the “value” of the waived $500 fee (that they “won”,just like 99.9% of the other members) they have in theircurrent membership.

  • The Psychological Challenge of Cancelling- These sorts of memberships never give you a simplewebsite to go to, or an automated phone-number to call. Insteadit’s usually something along the lines of “Come on in and fill outthe membership cancellation form”. Not only is that a bit of ahassle, but psychologically one has to present oneself to basicallyadmit defeat: “Here I am. I’m lazy, and I just can’t cut it or makethe commitment like a responsible person. Where’s that cancellationform?”
  • The Frailty of Human Motivation – Gyms knowthat a lot of people are idealists about human motivation, thinkingthat the easy part (e.g. getting a gym membership, or buying abunch of cans of paint, or setting a New Year’s resolution) makesit more likely that they’ll do the hard part (for instance actuallygoing to the gym regularly, spending a weekend painting, or layingoff ice-cream like they promised themselves). Once they’ve beensnared into the gym membership trick, people delude themselves intobelieving that having a gym membership makes it more likely thatthey’ll actually follow-through by going to the gym regularly,despite all historical precedent. It’s a powerful force in keepingpeople paying a toll to feel that they’ve partly accomplished thattask.

In there, somewhere, is a lesson. Whether it’s a lesson on howto take advantage of people, or a lesson in saving yourself money,is up to the reader.

If you’re in the process of considering a gym membership,for instance, check if your local facilities have day-rates(remarkably few do because they know it would undermine theiroperation), and if you find a good one then commit yourself topaying the day rates instead of a membership for the first severalmonths. While a quick calculation will convince you that day ratesare uneconomical compared to a membership, you’ll probably be infor an eye-opener several months down the line when you look backat how often you really went.

If you provide a regular service to customers, take advantage ofthe gym-technique and publish a “sign-up” fee but then waive it foryour “special” customers (e.g. all of them). Presuming the serviceis actually of value, I’m sure the retention rate will beincredibly high.