Longevity has a way of creating objectivity. If you're around something for an extended period of time, you learn how it functions and what will happen to it in the course of events. I guess that's a way of saying that after three decades in this business, I've begun to see some things that impartially lead me to believe other things. In other words, I'm bold enough (or dumb enough) to say what I think is going to happen. I've been studying this industry for the past five years. What I've seen leads me to think that thousands of health club owners and managers hold six misconceptions that are likely to annihilate their businesses within two years:
They still believe in the “build it, they will come” theory of business.
They practice as though their primary business is a rental agreement (as in members are renting space and equipment use).
They think that programming is for the bigger clubs.
They trust that low pricing is a short-term fad.
They suppose that retention is not really as big of an issue as everybody thinks it is.
They believe that the fitness membership marketplace is expanding.
Let's address these theories one at a time:
The theory that if you build it, they will come: It's as dead a horse as can possibly be. The people in this industry living this theory are the big-boxers, the mid-price specialists and the value-pricers mostly in the hundred or so communities in the United States that comprise about one-third of our population. Independents cannot compete at this level and shouldn't try.
The theory that members rent space and equipment: That is the message perpetrated by most health clubs today. It's known as “selling memberships.” Most club entrepreneurs think that people actually want to buy memberships. They don't. It's not the membership that's attractive; it's the hope of changing their lives that drives consumers. Facility owners need to grasp that one, quick.
The theory that programming is for bigger clubs: A lot of you think that you can get away with offering members a brief introduction to equipment and a cursory fitness assessment and then send them on their way, trusting that they will have enough self-motivation to keep themselves in the game. They won't. The average member is a low-level three on the self-motivation scale and will stop exercising in your club within 90 days, according to exercise adherence expert Dr. Jim Annesi. The over-40 market, which now comprises nearly one of every two members, wants different and better education, progression, experience and entertainment. If you don't provide it, they're gone. Get smart.
The theory that low-pricing is a short-term fad: Wrong. Take a look at American consumers. With the exception of the elite, high-end population (served by the elite, high-end clubs), fitness buyers are now relating lower price with ultimate value. A recent survey published in this magazine showed that for nearly one-third of the people surveyed, price was the dominant factor in considering a membership purchase. It's time to wake up, folks.
The theory that retention is not really a big issue: Wrong again. Advertising brings in far less walk-in traffic today, sales closing numbers are still under 50 percent, the average pure cost of a new member is more than $100, most clubs have fewer members than they had three years ago, and attrition still hovers at 40 percent or more annually. If you really get that last sentence, you realize that one of the few ways to keep your business in the black is to concentrate on holding on to current members.
The theory that the fitness membership marketplace is expanding: No, it isn't. It has been almost stagnant for three years. We're stuck on 41 million U.S. members, but the facility marketplace continues to grow, expanding during the same period by more than 30 percent. That means that there are 8,000 more competitors vying for the same market share. Not a healthy scenario for increased business.
Of course, I've been trying to tell you this for a while. Now that the public numbers support it, it doesn't mean that anybody's going to listen. Except maybe your competitor.
Michael Scott Scudder owns and operates MSS FitBiz Connection, an online-based club consulting and training service. Scudder can be reached at 505-690-5974 or mss@michaelscottscudder.com.