You opened a gym because you want to change lives, not crunch numbers. But knowing your business metrics is a critical part of running a healthy gym. If you don’t monitor your metrics, you may not discover a problem until it’s too late.
To help you understand what metrics to pay attention to (and how to calculate them), we created this short guide. We also built an Excel worksheet that helps you calculate these numbers yourself; click here to download your free copy.
If you're feeling a bit overwhelmed, take a look at the "Big 3" Dashboard we provided at the end of the article. These are the metrics you need to pay attention to first if you're short on time.
Revenue is the total amount of money earned by your gym during a specific period. You can examine revenue daily, weekly, monthly, quarterly, or yearly. Beyond just noticing this total, it’s helpful to use it to compare business performance from one period to the next. Doing so will help you spot trends and project future revenue.
Your expenses consist of all bills and charges your gym incurs for a specific period. This total includes the cost of overhead, supplies, cost of retail sold, equipment, and labor.
Like with your revenue, having a good grasp of your expenses allows you to spot trends and make corrections or make predictions about future financial performance.
Net Profit (NP = R-E)
Your net profit is the difference between your revenue and expenses.
Gross Margins (GM = R–E/ R)
Your gross margin tells you what percent of income your gym retains per period. To calculate, take your net income and divide by your revenue. Higher margins are clearly better, and you can adjust your margins by reducing or increasing expenses.
An easy example of a way to increase your gross margin is by spending less on advertising, which in turn lowers your cost to acquire new members. When you are able to reduce an expense like that, you retain more of your revenue.
Member Acquisition Metrics
Gross New Members
Your Gross New Member number is the total of all new members for a specific period.
Unfortunately, with new members gains comes natural attrition. Your Member Lost number is the total of all lost members for a specific period.
Net New Members (NNM = Gross New Members – Members Lost)
Your Net New Member number is the difference between all your members gained and your members lost for a specific period.
Member Churn Rate (C = members lost per period/members at beginning of period X 100)
To calculate your member churn rate, select a specific period and divide your number of lost members, during the period, by the number of members at the start of the period. Then multiply by 100 for your percent that represents your member churn.
Each business is different, but you could expect a healthy churn rate to be in the 1-2% range per monthly. If your churn rate is regularly higher than that, you should start asking questions to pin point the reason. High churn rates generally indicate an unhealthy business.
Cost of Acquisition (CAC = total marketing costs / # new members in that period)
It’s important to know how much you spend to bring in a new gym member. To calculate your cost of acquisition, select a specific period and divide the total costs associated with member acquisition by the total new members in that period.
Lead Conversion Rate (LCR = gross new members / number of leads X 100)
It’s also important to know if your leads are converting at a good rate. If they aren’t, you can make changes to your sales process or marketing to improve your conversion rate.
To calculate your lead conversion rate, you need to define the period you want to examine, and then divide gross number of new members by the number of leads for the period. Then you multiply that number by 100 to find your percent.
New Member Referral Rate (RR = # members from referrals / total # of members X 100)
With a good referral program in place, you should receive a plenty of new members from referrals. To check to see how your gym is doing with referrals, you can look at your referral rate.
Start by selecting the period you will examine, then divide the number of new members gained from referrals by the total number of members you had for that period. Multiply your number by 100 to convert it to a percent, and you have your referral rate. A healthy referral rate averages around 25%.
Member Behavior Metrics
Attendance Per Member (A = actual students in class / class capacity) x 100)
Looking at attendance is also an important step in managing your gym. You can look at attendance from the standpoint of individual members and their average attendance or as a ratio of class attendance per capacity. (Big 3 Dashboard)
For attendance compared to capacity, you need to divide the members in attendance by the available spots in the class. Then multiply that number by 100 for the percentage.
If you examine attendance per person, per week, remember that you want a rate of two or more visits per week.
Member Lifetime (MLT= 1 / Member Churn)
How long do your members typically stay with your gym? Your member lifetime metric will give you retention insight.
Divide your member churn rate into the number 1, and you’ll have your average member lifetime. If you haven’t calculated your member churn rate, you’ll need to do that first.
Average Revenue Per Member (ARPM = total revenue / total number of members)
Looking at revenue per member tells you how much each member is worth to you from a financial perspective. Once you know, it’s good to compare that number with the amount each member is costing you to bring in, or your CAC (Customer Acquisition Cost).
To find your average revenue per member, take your total revenue for a specific period and divide that by the total number of members you had in the period.
Lifetime Value Per Member (LTV = cost of membership X member lifetime)
Looking at the lifetime value of your members is a fun way to project the growth of your gym and revenue.
You will first need to calculate you member lifetime to figure out your lifetime value. Once you have your average member lifetime, you just multiply that with the cost of your average gym membership. The number you come up with is your average member lifetime value.
Facility Utilization and Capacity (U = members served/ max capacity) x 100
Your ability to use your space to its capacity will impact your revenue and long-term success. One way to examine that is to look at your max capacity against actual members served. Of course, you’ll need to define the period you want to use for your calculation, whether it’s per day, per week or per month.
If you need help setting your max capacity, IHRSA has a great article you can refer to for assistance.
Your "Big 3" Dasboard
Short on time? Pay attention to these three metrics first. Clicking on any metric will bring you to the definition above:
1. Net Profit: How much money are you making or losing each month? Keep an eye on this above all else.
2. Net New Members: If you're losing more members than you gain each month, you're headed for troubled waters.
3. Attendance Per Member: If members aren't visiting your gym, something isn't right.
Whether you're a new gym owner or industry veteran, having a firm grasp of your business metrics will be the key to your success. If these metrics are unfamiliar, don’t let them deter you. These terms and formulas are simply helpful tools to paint a picture of your business. And after all, the more you know, the more you’ll grow.
Download This Free Worksheet To Assess Your Gym's Health
As useful as all the numbers above are, we thought it would be even easier if you had a worksheet where you could plug in some basic numbers and see which areas of your gym need improvement. So we built one. To download your copy (no email required), just click below.