Imagine you were a fitness industry novice who decided to buy a money-losing club with only 500 members. Through research and help from industry consultants, you turned around the club and made a fortune as you reached 20,000 members.
The January 2006 Inc. magazine cover story, “How Mike Schwartz Breaks the Rules to Make His Business Great,” detailed the turnaround of a Delaware Harley Davidson dealership that earned $1.8 million in sales when Mike Schwartz purchased it. Today, the dealership makes $38 million. The fitness industry can learn a number of powerful lessons from Schwartz's story.
When Schwartz took over the Harley dealership, it was stuck in the past. While Harley buyers of the past were hard-core bikers, Schwartz saw that today's Harley buyers were more likely to be middle-aged with an above-average income. Schwartz's dealership didn't appeal to these new buyers because his employees dressed like traditional rather than modern Harley bikers. Unless customers looked like them, employees gave customers the cold shoulder. Heaven forbid a customer came in driving a Honda motorcycle.
It's only natural to be drawn to people like you. That's why too many of your employees may focus attention only on your fit membership (who would be there regardless of the attention your staff gives them) and may ignore the individuals who walk through your doors (and desperately want your help) from the lucrative unfit market.
To appeal to a wider clientele, Schwartz changed his staff, required everyone to wear uniforms and provided ongoing training in every department. Training covered customer service, sales and answering the phones (something the original owner never would have dreamed of doing).
One of the first things Schwartz realized was that he wasn't just selling motorcycles; he was also selling the experience of owning a Harley motorcycle. Schwartz made dramatic changes in the physical facilities of the dealership (which he eventually moved to a new building down the road). To make coming to his location a memorable experience (just as coming to a club should be), he created a new, exciting environment using lighting, colors and sound.
He also offered educational materials. Think about the opportunities that exist for a club to educate its members. Pre-programmed television shows on monitors throughout the club, articles, books, bulletin boards and posters can add to the education and experience of fitness. Schwartz did all of this and even put a small museum in his store.
Schwartz also sold clothing at his facility, aggressively using the Harley brand in his business — a lesson many clubs should learn from. Too few clubs put effort into a logo or branding to create a marketing image. Most fitness facilities no longer offer their own club-branded clothing citing that logo-ed shirts, hats and shorts often “walk away.” Mike's Famous Harley Davidson also had this problem, yet Schwartz didn't let that deter him from providing this additional customer experience and marketing opportunity.
In addition to clothing, Schwartz sold food at his facility. Many club owners rely on using vending machines for food offerings because they feel a juice bar would make little money, but a juice bar adds to the social experience of a club while a vending machine does not.
Just as Schwartz discovered he was selling much more than motorcycles, club owners must realize they are selling much more than fitness. Clubs sell energy, fun, friendliness, an opportunity to meet and interact with others — and a way to change people's lives for the better. All of this means creating positive emotions. Customers who come into Schwartz's dealership feel that when they buy a Harley, they are going to have more fun and excitement in their lives. Do people who come into your facility feel that they are going to have more fun and excitement when they join your club?
A lot of health clubs are experiencing reduced sales and profits — even losses — but are clinging to what worked in the past, just as the previous owners of the Harley dealership did. One of the hardest lessons learned by companies is that markets constantly change. Many legendary companies have lost dramatic market share to other businesses that better saw who the market was and what they wanted. Schwartz was an outsider whose vision wasn't clouded by the past. We, too, need to make sure that our vision of the past doesn't distort and limit our future in the constantly changing health club business.
Bruce Carter is the president of Optimal Fitness Design Systems International, a club design firm that has created about $420 million worth of clubs in 45 states and 26 countries.