TRP are in the process of conducting the largest ever controlled study in the leisure industry to help find the answer to this question. We are very pleased to present some of our initial findings and look forward to sharing more of this research with you in the near future.
Get it right and it helps retention – Get it wrong and you could make the situation a lot worse.
The results show that although some types of emails have a positive effect, many types of emails had no effect or even showed a negative impact on retention. This included communication to longer standing customers who have not had any previous digital contact (i.e. email/SMS) and blanket emailing of customers who recently attended the club. Operators are urged to take care when emailing and never believe that there is no cost to emailing.
The study showed there was significant promise in taking a more sophisticated and targeted approach to emailing. Emailing customers early in their customer journey so that they become accustomed to digital communications appears to be vital. Additionally, TRP were able to identify target customers based on a number of factors, including their ‘risk of dropout’ and attendance pattern. The study confirmed that motivational emails to customers in certain key groups produced some very positive results, with the most successful email type reducing the risk of quitting by 52% against the control group.
The early signs are very clear – operators should not be wasting time and resource sending emails that are not having a positive effect, and that in some cases are having a negative effect. More controlled studies are needed to extend our understanding of what makes the most effective emails.
In the meantime, TRP encourage all operators to only send emails that they can show make a difference when compared with control groups not receiving emails. (There are off the shelf products to assist you with this. Click here for more information). TRP will continue to experiment to find out more about the most effective emails.
FYI – TRP have just opened a future study into the effects SMS communication has on retention please sign up here if you would like to take part.
The Summary of the Study
First the Thank Yous
Our research would not have been possible without the co-operation of all the organisations and clubs who helped TRP in this quest and we would like to thank all those who took part and helped us start to really understand this area. We also want to extend our thanks to XN Leisure and Spa and Leisure Jobs who invited their customers to take part in the study.
Research not Marketing Hype – read this, it’s important!
Effective research is always a long process of testing various hypotheses, building on previous findings and progressively expanding our knowledge base. This article represents a summary of the first stage of this process as it explores some preliminary findings. TRP are not claiming to have all the answers at this early stage, but instead look forward to being able to expand this knowledge with further research in the coming months.
The Study Methodology
TRP integrate live with leisure operators’ existing databases and apply a unique and sophisticated algorithm to identify customers that are more likely to stop attending and/or cancel their membership. TRP are then able to automatically email these ‘high risk’ customers at key points in their customer journey, or following key events, e.g. periods of non attendance. By recording this process, TRP can then examine if this has any effect on their chance of cancelling and the likelihood of attending the club in the following time period.
In order to accurately determine the retention impact of an intervention, it must always be compared with a control group who do not receive the intervention. TRP first split the database at each participating site into a test group and control group. The control group is randomly selected from existing and new customers and as a result matches the test group on all key attributes (i.e. age, gender, membership type, duration of membership and other demographics) so the only difference between the groups is whether or not they receive email. For example, for every customer who was sent a 7 day email after not attending for 7 days, there was a matched customer who also did not attend for 7 days who was not sent the email.
Using TRP Interact DIGITAL (TRP’s intelligent emailing and SMS tool), TRP sent a range of emails based on various triggers; some basic triggers e.g. if customers had not attended for certain periods (7, 14 and 21 day emails), other emails were more sophisticated e.g. taking into account the ‘risk’ of cancelling of customers. The emails encouraged the customer to attend again and offered some motivational tips. There were no financial or benefit in kind incentives offered.
Overall, for this initial part of the research, TRP formed a group containing 110,894 customers with relevant criteria and during the initial trial, 14,632 received at least one email.
What did TRP find?
The emails’ effectiveness was measured by:
- Reduction in risk of cancelling in the month following receipt of the message versus the control group. Rate of return – the increase in the number of customers that return to the club within 7 days of the message being sent versus the control group.
- This preliminary study of the effectiveness of sending emails has produced mixed results. This is an interesting finding in itself as research into other interventions such as conversing with customers always delivers strong, robust, positive findings.
The Best Type of Email
As noted above, many configurations of ‘intelligent’ email logic were used during the study. In this summary article, TRP will share the logic used in the email which was the most successful. Using TRP algorithms for ‘risk of dropout’, the following logic was configured in the software (TRP Interact DIGITAL):
- Customers who are new – joined less than 3 months ago
- Customers who are at a high risk of quitting
- Customers who have had no attendance for 7 consecutive days, but less that 14 days.
The software (TRP Interact DIGITAL) then automatically sent motivational emails to customers who matched the criteria above.
Figure 1 below shows the survival rates of customers who received these emails compared to the control group. The difference between the groups equates to customers receiving this type of email being 52% less likely to cancel in the month after receiving the email compared to the control group.
Figure 1. Retention of customers who received the 7 day email compared with the control group who did not receive the email.
Please note that all other emails had smaller, no or negative effects.
TRP also compared the rate of return to the club, (i.e. how did the email impact visit frequency) in the seven days after an email was sent and compared this to the return rate of the control group. This allowed TRP to assess if the emails had beneficial effects in the short term by increasing the likelihood of a customer returning.
Figure 2 below shows the increase in the return rate of customers who received an email compared to their control groups. The effect ranges from just -15% to 7% improvement depending on the email that was sent and when the customer joined. Here again we see mixed results with some emails making very little difference at all, and some having a large negative impact.
Figure 2. Improvement on return rate for customers receiving the range A-J type of emails being tested when compared with the control group.
Initial conclusions
The initial findings from our research highlight some key points:
- There is definitely potential to improve customers’ retention and visit patterns with the right email being sent to the right customer at the right time.
- The logic which identifies what message to send to which customers needs to be sophisticated, time since last visit alone is an over simplified method for identifying who to send emails to and, if in doubt, controlled experiments must be conducted to ensure that the message is not having a negative impact.
- Comparable research – When comparing the results of this email study to previous TRP studies on ‘face-to-face’ interaction, it is clear that emails are much less effective. In all TRP research into ‘face-to-face’ interaction the results have always been robust have and always shown a substantial effect. This email study produced much smaller and more varied findings, concluding that the use of email to tackle the industry’s retention problem has a long way to go to catch up with the impact of face-to-face service on retention.
Future Research
This is a preliminary study and more studies are required, with a longer follow-up period, to either confirm or refute the findings. TRP will also be conducting studies using different, more personalised content to the messages. Finally, we will also examine what impact SMS have, when used standalone or in combination with email. It is possible that SMS text messages are more effective than email, or that a combination of SMS text/email and interactions have the greatest impact on retention. Our future studies aim to answer these questions and other important industry questions related to membership retention.
TRP have just opened a future study into the effects SMS communication on retention. Please sign up here if you would like to take part.
