For local business owners, especially those running membership-based models like martial arts studios or fitness centers, customer churn is one of the biggest challenges to growth. Losing customers not only impacts revenue but also disrupts community engagement and word-of-mouth referrals—both essential for small businesses.
Let’s break down how to calculate churn, examine data from membership-based businesses, and explore four actionable ways to improve retention.
Understanding customer churn rate
Churn rate measures the percentage of customers who cancel their memberships over a given period. To calculate it, use this formula:

Or simply churn rate = (canceled customers / total customers at start of period) × 100
For example, let's take a look a hypothetical example of membership data below:
- November 2024 churn rate: 3.77% (18 cancellations out of 506 total members)
- December 2024 churn rate: 5.88% (30 cancellations out of 510 total members)
- January 2025 churn rate: 2.93% (14 cancellations out of 478 total members)
A rising churn rate, as seen in December, is a red flag that requires immediate attention. If left unchecked, consistent churn leads to declining revenue and a weaker customer base. The drop in January’s churn rate is a good sign, but it’s important to understand what factors contributed to both increases and decreases in member retention.
January’s improvement could be attributed to the surge of New Year’s resolutions, with people prioritizing fitness and personal development. Martial arts studios often see an influx of students eager to build confidence, learn self-defense, or get back in shape after the holidays. Additionally, well-planned January promotions or referral programs may have played a role in keeping members engaged. However, the challenge is ensuring these new members stay committed beyond the initial enthusiasm of the new year.How churn impacts revenueBeyond lost memberships, churn affects recurring revenue. If each lost member represents a monthly payment of $100:
- November’s lost revenue: $1,800
- December’s lost revenue: $3,000
- January’s lost revenue: $1,400
While January shows improvement, the holiday season (December) saw a notable spike in cancellations, which could be linked to seasonal drop-offs or budget changes. Understanding these patterns helps businesses develop strategies to retain members during high-risk periods.
4 ways to reduce customer churn
While churn is inevitable, proactive strategies can significantly minimize its impact. Here are four key methods to improve retention:
1. Improve onboarding and first 90-day engagement
With over 2,000 locations, we know that the first three months are crucial for member retention. Let's imagine that this data shows that 160 members canceled within 0-3 months—this indicates a need for stronger onboarding processes. Consider:
- Personalized welcome emails with clear next steps
- Automated reminders to encourage participation
- Regular check-ins via email or SMS to build a relationship
2. Offer value-added incentives
Keeping members engaged means giving them reasons to stay beyond the basic service. Some effective approaches include:
- Loyalty discounts for long-term members
- Referral programs that reward retention
- Exclusive member-only workshops or events
3. Monitor usage patterns and identify at-risk members
If a member hasn’t attended a class in weeks, they are more likely to cancel. Utilize MyStudio’s insights to:
- Track attendance patterns
- Automate messages encouraging re-engagement
- Offer temporary discounts or free sessions to inactive members
4. Create community and social bonds
Local businesses thrive on community. Foster deeper engagement by:
- Hosting in-person or virtual community events
- Creating a private social media group for members
- Encouraging peer accountability through small group sessions
Final thoughts
Reducing churn isn’t about a single fix—it’s a combination of proactive engagement, personalized touchpoints, and creating value beyond just the core service. By improving onboarding, incentivizing loyalty, tracking at-risk members, and strengthening community bonds, business owners can significantly reduce churn and drive sustainable growth.
Want to see how MyStudio can help you combat churn? Speak with a specialist today to explore tailored strategies for improving retention and boosting long-term success.