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Retry questionGym Membership Drop
Case Interview Practice >
Exhibit Analysis
After your framework discussion, McKinsey’s analytics team pulled plan-level membership data for Q1 and Q2 (see exhibit below). The CEO has asked you to interpret these numbers and explain the primary drivers of the MRR decline.
Case Exhibit
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Sample answer from an expert consultant
The revenue drop is driven almost entirely by churn in the Premium tier:
Key Insight 1:
- Premium members declined by 5,000 (from 20,000 → 15,000), a 25% drop.
- At $45/month, that’s a $225,000/month revenue loss, or $675,000 over the quarter.
Key Insight 2:
- Basic declined slightly (2,000 members), but the low price point ($25) makes the impact much smaller.
- Family tier remained nearly flat.
Conclusion:
The core issue is not overall membership decline, but the loss of high-value Premium members, which significantly impacted monthly recurring revenue (MRR).
15-2
