Goodlife Fitness

7010 Words29 Pages
1.0

INTRODUCTION

1.1

Company Background

In Canada, the fitness market was growing at approximately 6 percent a year due to some reasons like demographic changes, marketing programs and preference of individuals. GoodLife Fitness Clubs was founded by David Patchell-Evans in 1979 as a sole proprietorship. Philosophies of the company were to provide health, fitness and self-esteem so that people feel better about themselves. GoodLife has become Canada’s largest health club chains, with 40 clubs in Ontario and Quebec by May 2000 with over 70,000 members. Head office of GoodLife was located in London, Ontario with the role of providing leadership and support for the franchisees and company-owned clubs. From the beginning, the
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Top management of GoodLife was not happy with this figure as they are losing 40 percent of its customers annually. With an increase of 1 percent customer retention rate, the company will earn $35,000 of gross revenue. There are several problems and intermediate causes that lead to the low customer retention rate issue and the cause-and-effect relationship was shown in diagram 1. The major problems are low customer satisfaction, low brand equity and personal factors. Customer satisfaction in GoodLife is low mainly due to little or no personal relationship and equipment or facilities problems. GoodLife received dozens of verbal and written complaints or concerns every week dealt with equipments and staff problems. In addition, we have identified some intermediate causes that would lead to no personal relationship problem. For instance, shortage of database marketing and branding exercise might directly or indirectly induce this problem. Also, branding exercise was seen as an important factor that contributes to low brand equity as a good brand equity consists of both brand awareness and brand meaning elements. Overall, we think that no personal relationship was the central problem that would directly or indirectly lead to the issue of low customer retention rate. We must focus on this problem if we want to increase customer retention rate in GoodLife.

Low customer retention
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