Two thousand members isn't anything to sneeze at, particularly when the club they belong to has been open for less than two years. However, at the 25,000-square-foot, upscale Capital Fitness club in Raleigh, N.C., that number just didn't cut it for the owners. So, they determined they must expand their market to make a real go at the business.
Rick Quinn, who was brought in as general manager to help the owners increase their membership numbers, has had plenty of experience doing that for clubs in the Northeast. He's applied many of his methods from that part of the country to the club in Raleigh. And it seems to be working. In the past two months the club has added 634 members.
When Quinn came to Capital Fitness, the demographics were 61 percent male and 39 percent female. However, that uneven split wasn't as big of a concern to him as the fact that the club attracted people older than 40 with an annual income of greater than $80,000. That demographic might seem ideal to some club owners, but for this area of the country, this demographic has a small universe. It didn't make sense to focus on such a narrow demographic when the club was surrounded by a market of 107,000 people and the nearest competitor was three to four miles away, Quinn says.
Capital Fitness isn't the only club reaching outside its traditional demographics. Gold's Gym Gurnee in Gurnee, IL is doing the same.
“What I'm starting to see is the clubs being built now are in the 50,000 to 80,000-square-foot range, and they are doing so to cover as much in the fitness arena as they can,” says Dick Glass, owner of Gold's Gym Gurnee. “I don't see it cost effective now to open a 20,000-square-foot facility.”
When a hospital-owned wellness center opened down the street from the franchised facility, some of the members left because the hospital facility had a pool and basketball court, says Glass. The club is now expanding its market by adding 51,000 square feet to its existing 20,000 square feet. The club is also adding new equipment and new programming to draw in women and families.
The obvious reasons for clubs to expand their markets are to increase their revenues and membership numbers.
“One reason we go after new markets is that we aren't retaining our current market,” says Bruce Carter, owner, Optimal Fitness Systems International, Ft. Lauderdale, FL. Clubs lose approximately half their members every year, he says. In a lot of markets where the original core group is tapped out, clubs are forced to broaden the market penetration to replace lost members and increase membership totals. Hence the popularity of multipurpose facilities that try to be everything to everyone.
A STEP AT A TIME
Once a club owner decides to expand, the next step is all about psychology, says Carter. The club owner must decide what market to go after and what that market wants.
“When I first arrived here, I looked at the existing scene,” Quinn says about coming to Capital Fitness. “What do we have now? What are they (members) enjoying? Where are they spending their money?”
While some claim that health clubs only seem to be reaching out to the fit-and-getting-fitter market (only about 15 percent of the population), more clubs are seeing the deconditioned market as the real goal, says Carter, especially as new clubs open in their market and each club's piece of the fit-and-getting-fitter pie decreases.
Both Glass and Quinn are looking to women and families to expand their membership. The two club owners are adding women-only workout areas and more children's programming as two ways to attract those markets.
“You need staffing to implement the programs and facilities, but programming tends to bring in the broader markets,” Carter says.
While programming is the most important element to pulling in new markets, changes to the facility, décor, staff and pricing also are important, says Carter. Club owners must determine how each of these areas fit with the newly desired market and their wants and needs. A club owner wanting to attract families may need to add room to the facility for children, children's programming, staff who have skills working with children, a more child-pleasing décor and pricing that is conducive to family memberships. On the other hand, a club looking to attract the senior market may want to add a pool to the facility, aquatic programming, staff who are knowledgeable about senior ailments, décor that is pleasing to seniors and pricing that is affordable for them.
To fit the new programming into a club, often the facility has to change. Once Glass determined what he wanted to do, he then thought about the needs of this new market: a second spin studio, cardio deck, childcare, aerobics studio — all required expansion of his facility. In fact, Glass is adding 600 square feet of fitness equipment for eight to 13 year olds.
“We want to attract more families,” says Glass. With the children's fitness equipment, the club can say that kids can come out and be productive rather than just sitting in front of the TV screen or a computer while their parents work out. The club also runs about 20 group exercise classes for eight to 13 year olds.
“We tried to show families that we've thought not only of you but of your family,” he says. The club also expanded the childcare area for younger kids.
Along with the changes to a facility often come changes to the décor. Health clubs were started by health club enthusiasts who didn't think about décor because they didn't need motivation to work out. However, today's deconditioned market does need motivation.
“Décor is becoming a critical component of trying to expand markets,” says Carter, because most people hate exercise. So if you can give them a beautiful environment, then they walk in and say, ‘This is beautiful. I think I could work out here.’”
So, to attract a new market, a club owner needs to understand how motivated these new members are to exercise and plan the décor accordingly.
Glass decided that for his expanded demographics he needed to soften his club's image.
“It really had more to do with our desire to show the market what a fitness club can be like and try to soften the image of Gold's,” says Glass. “It's a paradox for us. Gold's has such a strong market value for us, but the perception is that it is hard core. I need to soften the look. It will attract the women. Men will come regardless.”
Staff also may need to change with the expansion of member demographics. Capital Fitness rearranged staff to put employees in positions for which they were better suited and retrained the sales staff to be membership directors and “diagnose” clients' needs and wants. Quinn also ensured he had the best group exercise instructors, getting them out into the community to do fundraisers and holding classes on the lawn as two ways to attract outside demographics.
Quinn also shook up his pricing. He incorporated a fitness-only membership that allowed members to use the club, the equipment and the classes without paying an arm and a leg. In essence, it is an a la carte membership where people receive the basic membership and then can add on to it if they want amenities such as towel service.
Expanding demographics doesn't come without hazards. Some experts caution against broadening demographics too much because of the possibility of losing focus on the niche market.
“You could lose your current members if what you are trying to do will turn them off,” says Carter. “So it's a trade off. Do you turn off five people to get 10?”
Quinn agrees that that is a risk, but often it's one worth taking. “You may take a small loss for a larger gain in the future,” says Quinn.
Besides, he says, this business is all about evolution.
“In the business, to evolve, you have to understand that this whole thing is a process,” says Quinn. “You make sure your facility is the most beautiful, has the right equipment and programming. Clubs should be very rich looking these days. Then, once the physical plant is right, make sure the programming and service are right.”
With all those elements in place, a club's ability to keep its current members and attract a broader audience can be just a little easier.