I've been asked by many people how to leverage past experiences in an economic market such as the one we face. Rather than just share my ideas, I called industry experts to find out what they are doing, and I got their advice for club operators.
Many of the people I spoke with offered similar suggestions — renegotiate deals related to advertising, suppliers, vendors and landlords (extending your lease for a cheaper rate) and increase ancillary sales. However, they each had unique suggestions, too.
Alex Alimanestianu, CEO of Town Sports International (TSI), New York, says that his company is slowing its new club growth, which makes now a good time for TSI to get its house in order by focusing on operational excellence and improving the member experience. By doing so, the company will be poised to accelerate again when the economy turns around. The key is the quality, breadth and depth of management in the clubs. He says club operators should focus on training and development because it's a great time to be hiring talent where needed.
Alimanestianu also suggests optimizing club operating hours and your club's staffing model. In addition to that, he suggests implementing utility savings programs, such as TSI's installation of automated and centralized systems to reduce waste.
Because month-to-month membership demand has grown, TSI is re-pricing to be more competitive, something he says other club operators might consider.
Tim Miller, CEO of Crunch, New York, says that his club company remains committed to constantly looking at ways to elevate the member experience. In these times, when the consumer has many choices and each company is fighting for the same member dollar, it is more important than ever to stand out in the crowd and deliver a fun, alternative and innovative workout for members. Crunch, known for its cutting-edge programming, recently added new types of classes as a way to retain members.
Miller and his management team also took a new look at the business in the current economic climate and developed offers that not only help their members but also their bottom line. They recently introduced 30-minute personal training sessions since many members don't have time to work with a trainer for an hour. These sessions are a win-win — they let the member get in a focused, no-nonsense workout at an affordable price. The 30-minute offer has helped the company keep existing members as personal training clients and introduce new members to this service at a more appealing price point.
Miller also says that Crunch has committed to give each of its membership advisors additional tools, training and support to be the best sales people in the industry.
Ben Midgley, president of Planet Fitness, Dover, NH, cautions against cutting marketing budgets because marketing equals sales. Instead, he says you should reassess the rates you pay for all your venues. You should review old marketing programs to see what worked best, what was the best headline, from where it pulled, what promotion you offered and your return on investment. Then, determine how to modify the best promotions to fit the current economic conditions.
Midgley also recommends examining your sales process to ensure you capitalize on a positive experience for the new prospect and to become more creative in how you get referrals from existing members. The sales process also involves follow up, so revisit all old leads with appropriate offers and follow-up techniques, he says.
Matthew Stevens, CEO at Western Athletic Clubs (WAC), San Francisco, says that operators should consolidate resources by reviewing facility usage. For multiple club operators, consolidate hours of club usage. If you have three facilities within the same region, determine how you can adjust operating hours (close earlier, open later, make weekend adjustments) but in exchange, give access to an upgraded product, Stevens says. WAC is closing its Bay Club Financial District facility on Saturdays to save operating costs, but members will have full access to the San Francisco Bay Club and the San Francisco Tennis Club. By doing this, Stevens projects a 1 percent decrease in operating expense from labor, utilities and benefits savings.
Ray Wilson, founder of the former Family Fitness Centers and other fitness companies, recalled how he expanded his Family Fitness Centers during the 1980s recession when many clubs in California were closing.
“I told my partners that we would just have to work smarter and harder to survive,” Wilson says. “I also told them that very soon we would benefit, as there would be less competition.”
Clubs did start closing, and many of Wilson's clubs benefited by absorbing members from former competitors.
Wilson says that the health club business is more or less recession proof because when the public is not getting ahead economically, they turn inward and take better care of their health. And what other social entertainment can you get for the small cost per visit to a fitness center?
Eric Levine, CEO of California Wow (in Thailand and Vietnam), says that he has done several things to improve sales revenue. He says it's important to focus on the members you have since new member sales more than likely are down. He suggests offering special add-on prices for family and friends. His clubs are offering two-for-one pricing. Members can bring a nonmember friend to work out with for free. The company also offers lower prices for personal training in the mornings and afternoons.
Levine also is focusing on group exercise, adding “rock star” events, which are simply group exercise instructors offering one-day marathon parties. To participate in these parties, members must bring a friend.
“The name of the game today is to co-promote with your neighbors and barter whatever you can,” Levine says. In that vein, he suggests that club operators partner with the local newspaper or a popular magazine to offer readers a 10-visit card whereby they can visit your clubs for 10 days free.
“You should be able to get that for free as the magazine or paper benefits greatly,” Levine says.
Club owners also can partner with their local sports store to offer passes to their clubs for everyone who purchases something at the store. In return, the club owners get names and numbers of every person who purchased something at the sports store — great leads, he says.
Levine also offers some cost-cutting ideas. Rather than giving towels to members, he suggests adding a small monthly fee on EFT for towels. He also suggests cutting back on air conditioning in the summer and turning off the air conditioning one hour before closing. Club operators also must rethink purchasing anything they offer members that is not absolutely necessary, i.e. bottled water, apples, towels, magazines, etc.Continue on Page 2
Don Harbich, CEO, Steve Nash Sports Clubs of Canada, says that club owners must have a solid foundation for stimulating internal referral business. Club owners must emphasize promoting from your most loyal and active customers, perhaps through a loyalty program where members receive discounted dues, merchandise, cash or even trips for recommending new members. By doing so, you can maintain a steady revenue flow, even if your daily guest traffic has been affected. Plus, members who work out with partners or friends usually stay longer, which means you improve member retention by turning their family, friends and work associates into members.
Your daily sales and production requirements can be easily tracked for maximum efficiency using software programs, Harbich adds. These programs can help you efficiently track your sales team duties from leads, calls, appointments, shows, sales, referrals, corporate sales, etc. Efficient reporting helps you properly manage your sales and fitness team to maximize production.
Maximize your marketing, Harbich says, by extending the period of your promotions to stretch your marketing dollars. Instead of changing promotions every month, extend them for two to three months. Include mini incentives along the way so the promotions have legs for the extended periods.
Irina Razumova, president of Planet Fitness, a 35-plus club chain in Russia (not affiliated with U.S.-based Planet Fitness), says that today's economic situation is not new for her club company.
“We faced such a situation in 1998,” Razumova says, “and even earlier when we were in the process of building our first club in 1990, during the beginning of the ‘Perestroika’ (the reinvention of the social and economic structure of Russia in the 1980s). We had to operate under the condition of an absolute market economic collapse.”
Many companies use crisis as a legitimate reason for inside restructuring, Razumova adds. For Planet Fitness, this period, like all previous periods of crisis, is an opportunity for new business development, a reason for executive system perfection and for finding new methods of workouts and programming for current and potential clients.
In the past, clients who wanted to participate in separate programs, such as Pilates, boxing or swimming, had to purchase a full membership package. Now, Planet Fitness clients may pay for just the programs in which they want to participate, Razumova says.
I am sure many of you have fantastic ideas to share with the industry, so please feel free to e-mail me at firstname.lastname@example.org, and I will be happy to pass along the ideas.
Just remember one thing: In times like these, great leaders lead — they don't follow.
Mark Mastrov, founder of 24 Hour Fitness, is now an investor in various business opportunities. You can reach him at email@example.com.