Measuring Player Retention

TRANSCRIPT

Hello and welcome to episode number 26 of the Tennis Business Academy Podcast.

Today’s episode is going to be a short one. I know that every episode of the podcast is short, but this one will be even shorter, as I want to cover a simple but important concept.

I want to talk about player retention. Which is something that we all know is important.

We all understand that the goal is to keep players in the sport for life hopefully, and ideally playing at our club or coaching programme, for years or even decades, right?

The players that have been a member of the club for decades or the player that joined the coaching programme when they were four or five and stayed on until they moved away for Uni or work. Or even better once they became a teenager, they started helping out with coaching sessions and eventually became a coach themselves.

These are the success stories that we all want and work towards.

And if this type of longevity is important for us, it would stand to reason that we should be pretty rigorous with consistently measuring it, right?

Or in other words, if we want to be really good at keeping players engaged, we should want to know how good we are at keeping players engaged, right?

We should have an objective measure that tells us how good we are at keeping players, and even more importantly, that tells us whether we’re getting better or worse at keeping players engaged for the medium to long term.

But, and you probably knew this but was coming, from my experience, most of us don’t really keep a close eye on how many players are staying and how many are leaving.

Sure, we can all name someone who left the club or the programme in the last few months, for example, but it’s very rare that I come across a coach or a club who is able to tell me how many months or years their average player stays in the programme or at the club member.

So, let’s address this, because actually, it’s really simple to measure player retention.

And the goal when it comes to measuring player retention is to be able to find what is the number of months or terms or years, depending on the time period that you want to measure it in, we’ll say months to make it simple for now, you want to find out the number of months that the average player stays in your club or coaching programme.

This is called the average customer lifespan. That’s the metric that we want to find and measure consistently.

If you find out this metric you’ll know exactly how good you are at keeping players engaged.

Ok, so, how do we find it?

Well, in order to calculate average customer lifespan we first need to measure another very important metric: customer churn.

And here’s the dictionary definition of customer churn:

Customer churn represents the percentage of customers that stopped using your company’s product or service during a certain time frame.

So, customer churn is basically the opposite of customer retention.

As an example, if customer churn is 10%, then customer retention is 90%.

Or in other words, 10% of customers have left, which means that 90% of customers have stayed.

Pretty straightforward.

So, how do we calculate customer churn?

It’s very easy to calculate.

You just divide the number of players you lost in a particular time period, by the number of players you had at the beginning of that same time period.

So, let’s say that during a particular month, January for example, you lost 12 players.

12 players cancelled their club membership with you.

And at the start of January, on the first of January, you had 100 players signed-up as members to the club.

So, to calculate customer churn, you take the 12 players you lost and you divide that by the 100 players that you had at the start.

So, 12 divided by 100 is 0.12 which is the same as saying 12%.

Our churn rate for January is 12% (customer churn is always measured as a percentage by the way), which means that 88% of players stayed on, or in other words customer retention was 88% for that month.

Now, you can make the time period of the calculation whatever you want.

It could be a month like the example I’ve just given, but it could also be a quarter, a year, or a school term, as examples.

You need to decide what time period makes sense for you.

So, if you sell club memberships yearly, then it probably makes sense for you to measure customer churn yearly.

If you deliver your coaching programme alongside the school terms, then you should measure customer churn in school terms too.

In our coaching business we charge customers on a monthly direct debit, so we measure customer churn monthly as well.

Alright, so that’s customer churn and how to measure it.

You divide the number of players that left in a particular time period by the number of players that you had at the start of that same time period.

But remember, the goal is to get to average customer lifespan.

So, how do we get from churn to lifespan?

And the answer is actually very simple.

To calculate lifespan you just need to calculate 1 over customer churn.

So, in the example I gave earlier for that fictitious month of January our customer churn was 12%.

So that means that customer lifespan is 1 over 12%, which if you take your calculator out comes to 8.33.

Now, 8.33 what exactly?

Well, because we measured churn in a specific month, then lifespan will also be measured in months.

So, in this particular example the average customer lifespan is 8.33 months.

Meaning that the average player will stay at this club or coaching programme for around 8 months.

But if we had measured churn in years or school terms, for example, then the customer lifespan figure would also be in years or school terms.

Ok, now if you happen to be a bit skeptical that all we need to do is measure what percentage of customers leave in a single month and we’ll then immediately know what the average lifespan for a customer is, then let me tell you that you’re absolutely right to be skeptical!

One month, or in other words, one data point is not enough to get reliable data.

It could have been that during that month of January the weather was terrible. It snowed for the best part of two weeks.

And that made more people leave than normal.

And if that’s the case, then both the churn and the lifespan figures will be skewed. They’ll be painting a picture that is worse than reality.

So, how do we get to a reliable figure?

And the answer is that we need to measure churn and lifespan consistently at the same interval every time.

So, for us, in our coaching business, that means measuring it every month.

Because we know that every month that we add new data to the calculations the closer we get to the real figure.

For you it might mean a different time frame, but the idea is still the same.

Measure it consistently for a while and your churn and lifespan figures will get very close to reality.

Not only that but you’ll start spotting trends and being able to anticipate them.

A classical example of this would be the seasonal winter churn for an outdoor club.

If you measure churn for 2 or 3 winters in a row, by the 3rd or 4th year you’ll have a very good idea of what to expect in terms of how many people are likely to leave and how that will affect revenue for the business.

This means that you can then plan in advance for that reduction in revenue, whether that’s by planning to reduce expenditure, reduce the number of coaching sessions, or anything else that you think makes sense.

But the other thing that you can do, is launch initiatives to try and improve the figures.

So, if in the last few years you’ve been having 15% churn during winter, for example, well then maybe there are some initiatives that you want to run to try and bring that figure down to 10%, just as an example.

And the cool thing is that because you’re measuring churn consistently, you’ll know if these initiatives have worked or not, because either this year’s churn was lower than the previous years or it wasn’t.

Numbers don’t lie, and that’s kind of the point.

If we really want to keep players engaged for as long as possible with the sport, then the first step we should take should be to measure churn and lifespan.

Because if we know what those figures are for our clubs and coaching programmes then we can work to improve them.

But if we don’t know them, then we have no way of knowing if what we’re doing is helping to keep players engaged or not!

So, I encourage you to go out and start calculating customer churn and customer lifespan consistently for your club or coaching programme.

It’s very easy to do and it will give you valuable information that you can use to keep players around for longer.

Alright that’s it for today’s episode. As always I’ll be back next week with another instalment of the Tennis Business Academy podcast.

Until then and thanks for tuning in.