We’re changing the way we calculate length of engagement—LEG.
LEG is important because we build our gyms on relationships. It’s not enough to know how many people quit this month; we want to know how long a client stays. This info is critical because we need them to stay long enough to change their lives. Measuring average monthly retention won’t tell us if we’re having the impact we want to have.
From a more pragmatic viewpoint, we also need to calculate the lifetime value of a client. We need to know if we have an equal exchange of value (what you deliver and what they pay). Further, we need to know what it costs for us to get new clients and what we can spend on little bonuses to keep them.
The old way was simple but time consuming. To calculate LEG, you’d add up the number of months each client had been at your gym and then divide by the number of clients. Mindbody used to make this really simple (their old retention report was really the original LEG calculation).
You’d see something like this:
- Milly Trowbridge—9 months
- Billy Shepherd—12 months
- Sally Davis—14 months
- Average: 11.67 months.
Simple, right? Of course, no other gym software calculates LEG this way (and even Mindbody has changed).
The problem? Many software platforms give the wrong LEG metric. And it’s usually too high.
So gym owners think they don’t have a problem with retention when they really do.
For example, it’s not uncommon for a gym owner to report that they have a LEG of over five years. But think about that: Old LEG calculations were significantly influenced by very long-term members, which didn’t give gym owners current info about how long newer members would be likely to stay. A 10-year member can really skew the data. And adding new members—which is great!—would actually pull down the current LEG score dramatically even if those new members go on to stay for a long time.
So we’re going to calculate LEG for Two-Brain clients.
Every month, Two-Brain gym owners log in to our app and report their core metrics. But from now on we’ll calculate your LEG based on your other numbers.
This will allow you to spend time figuring out your other numbers—and we’re working on some integrations with different software platforms to make it even faster!
For the nerds (like me), the new LEG calculation is this:
1 / churn
Churn = (lost clients this month) / (total clients last month)
We’ll be using a rolling six-month average to account for big spikes and dips.
To learn why LEG and retention are more important than marketing, click here.