Typology of Customer Retention Schemes in the Private Sports Sector During COVID-19: Analyzing the Behavior of Martial Arts Instructors Using Latent Class Analysis

Abstract

The COVID-19 pandemic brought new challenges in all aspects of life. It largely brought the sports sector to a halt: major events were postponed or canceled, while gyms and training centers were closed due to repeated lockdowns and social distancing rules and regulations. In the private sports sector, some instructors adopted technological means of maintaining contact with their students in an attempt to retain customers and maintain a high volume of cash flow. Our work focuses on the martial arts (MA) sector in Israel during two crucial periods in 2020: The first lockdown of March through June, when all sports activities were banned, and the period following it, when trainers were allowed to commence training under some regulations. Using data collected from 199 MA instructors, we test for their level and means of engagement with trainees during the lockdown, and the impact these had on customer retention in the period that followed. Using latent class analysis, we establish an empirically based typology of retention schemes (low contact, high contact, and maverick), and test whether these influenced the financial performance of MA studios. Our findings show that the financial damage and the return rate of trainees do not vary between the three types. We offer some insights into the uniqueness of the MA field, and how this may explain these counter-intuitive results.