With seven clubs in New Jersey, WOW! Work Out World has established a formidable presence in the Northeast. Its 13 licensed clubs in the United States and three in Japan have expanded the company's brand even further. Stephen P. Roma, CEO of WOW! Work Out World, discusses how he and his wife, Mary, turned one club into a franchise and how they keep members coming back for more.
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Ci: What is a WOW!?
WOW! Work Out World is positioned as an upscale neighborhood fun fitness center that features more than 25,000 pounds of free weights, more than 60 pieces of selectorized equipment, an endless variety of cardiovascular equipment, multiple group fitness studios, spinning, body pump, basketball, bouldering, circuit boxing, child care, personal training, regular fitness testing and monitoring, juice bar, pro shop, chiropractic, racquetball and the Internet at workoutworld.com.
Ci: What makes WOW! different?
All members have access to all our New Jersey facilities. Within the first 30 days of membership new members receive the 4-3-2-1 success program; a free fitness evaluation; four free personal training sessions; four exercise success reports as well as e-mail coaching. There is also a 100 percent money-back guarantee.
Ci: How did you get started with WOW! Work Out World?
Well, my background is in the area of finance and technology. After I was fortunate enough to sell my computer leasing business for the second time, I joined my wife, Mary, on a full-time basis to help her grow WOW! into a small chain of family-owned and operated health clubs.
In 1993, Mary opened the first WOW! (then called Lifestyle Fitness Center) in Tinton Falls, NJ. I retired from the computer leasing industry in April of 1996 to begin working full time in the family business. In August 1996, we opened our second WOW! in Brick, NJ. During the next few years, we opened another five WOW! clubs in New Jersey.
WOW! is part of the community and each of our WOW!s employ approximately 75 full-time and part-time employees. We are open seven days a week, 365 days a year, Monday through Friday from 5:00 a.m. to 11:00 p.m. and on Saturdays and Sundays from 7:00 a.m. to 5:00 p.m.
Ci: Explain your club's licensing program.
We have 13 licensed clubs in the northeast United States and three licensed clubs in Japan. Our licensing program started with a new club that was being built in West Hartford, CT. That club was using the same architect we were using. Before we knew it, we had licensed our first club.
For a small, family-owned chain the nuturing of the WOW! logo has provided us good visibility. Our growth to 16 licensed WOW!s has indirectly been accomplished by doing a lot of fun, cool and eclectic marketing, coupled by a steady program of issuing press releases and writing articles for trade journals. Invariably, someone will read about us and the phone will ring. Up to this point, our licensing success has been the result of some good, old-fashion luck. Our focus has always been on the growth and operation of our owned clubs. We recently hired Pat Necerato to take charge of our licensing initiative and to launch an active campaign during 2003 to license WOW! to the world.
Ci: How important are licensing revenues to your clubs' operating performance?
At this point, the licensing revenue is not a significant contributor to our bottom line. We use a portion of the revenue from our licensing to host our annual holiday party and other employee events throughout the year. Up to this point we have simply banked the majority of our licensing revenues and earmarked them for the development of a media kit, which is being designed. This year we are going to actively advertise and market our WOW! licensing program. I can certainly envision that over the next five years the licensing program has the potential to contribute as much as 25 percent to our bottom line.
Ci: I noticed that you offer full-service chiropractic and weight loss at your clubs. What is the arrangement with regard to staff, renting space, insurance, etc.?
We are smart enough to know what we know and what we don't know. We want to do everything we can to enhance members' experience every time they walk through our doors. To that end, we know how to enroll members, maintain clean and operating clubs, create a fun exercise environment and do oodles of personal training. Beyond that, we have taken the approach to outsource specific services to folks that are experts in their field, our WOW! partners. We generate a lot of foot traffic that allows us to charge rent that is commensurate with that foot traffic. Doctors, physical therapists, juice bar operators, massage therapists and supplement concessionaires are all operated on an outsourced basis. We want our partners to be successful, we want them to make lots of money, but most important, we want them to provide an incredible experience each and every time they interact with our members.
Ci: What kind of impact do these services have on your membership and revenues?
For us it is always about the member experience and the member perception. We believe that there are certain instances where a partner can provide a service to our member better than we can. We are happy to collect rent knowing that our member is receiving the best service or product from our WOW! partner.
Ci: What profit centers do you see as growing in the future? Why?
Personal training is the cornerstone of our retention initiative. Each new member that joins WOW! receives a fitness assessment and four free personal training appointments enhanced by a variety of collateral material. Each interaction with our trainer is an opportunity for us to sell personal training sessions. We emphasize the education aspect of our trainers so much that their NASM education (or equivalent) is how the session rate is determined as well as the trainer's portion of that rate. We know we are headed in the right direction simply by seeing the increase in our personal training revenue month over month.
Second is our logo wear sales. The WOW! logo is great and our tag line of “Fun Fitness” puts a smile on everyone's face. This, coupled with our eclectic and somewhat fun and goofy architecture, means it is only natural that we take advantage of everything that we have working for us. Up till now we have not made a real effort to launch our logo wear program. We are in the process of redesigning the physical components of the pro-shop in each of our clubs, in the final stages of designing a complete WOW! active wear line and will also have our Internet shopping cart up and running soon.
Starting the second quarter of this year, we will be selling supplements that are wellness-driven and prescribed based upon a non-invasive accredited test. We envision this to be a structured sale that will be an add-on sale for our personal training staff.
Ci: WOW! always seems to be doing something innovative on the marketing and promotional front. Why so much emphasis there?
We are big believers in branding and being first in the mind of the consumer. We always try to link our marketing and advertising to something that will be fun and memorable and that is relevant to the time of year. The WOW! logo is highly visible, energized and exudes a fun feeling. The dynamics of the WOW! logo drive all the fun we have in promoting it. Some of the recent fun marketing that we have done include minting WOW! coins and having our staff drive a fleet of cool and colorful automobiles.
Ci: What percentage of your overall budget is used for marketing?
Our marketing and advertising budget represents 3.67 percent of revenues and 4.53 percent of expenses.
Ci: What have been some of your most successful campaigns? How about campaigns that didn't quite pan out?
Last summer we handed out more than 20,000 pairs of 3-D fireworks glasses on the 4th of July. This one event generated several hundred tours. In January on three successive weekends we put out more than 1,000 mini-billboards at big traffic intersections surrounding our seven clubs. This resulted in the best January we have had in our entire 10-year history.
Our not-so-successful campaign was a health fair on an exceptionally warm October weekend. We worked hard on this only to have a disappointing showing. We've realized that we could make almost anything work when we had one club, but with seven clubs we need to concentrate our efforts on marketing campaigns that can be leveraged, reproduced and that are based on a system of execution. We always have a list of fun marketing ideas, however, within the world of WOW! the difference between a good marketing idea and great marketing idea is in our ability to execute it across all seven clubs.
Ci: What are some of the biggest changes you've seen in the industry in the past five years?
First, the rebirth of group fitness especially as it pertains to classes created by Body Training Systems. This is not a plug for BTS but rather for the group fitness system that they deliver. The system and structure of the classes allow us to deliver a consistent member experience across all our locations. The system drives our group fitness success.
Second, functional training has been a great tool for our personal training staff. We use functional training as a key component of our “4321 Success Program,” which is our new member indoctrination protocol. Functional training is a great way to introduce all ages, genders and activity levels to the benefits of exercise and personal training.
Third is the Internet. Where would we be without the ability to e-mail our members? We inform our members if they have not used the club in seven days. We e-mail them our monthly newsletter. We e-mail them four gifts during their birthday month. We have a new member e-mail sequence, which is a series of e-mails that coach the new member through their first 30 days at WOW! And, we're not shy about e-mailing when someone owes us money. Technology has allowed us to engage our member with WOW! and the more we can engage the member the more we believe that member will stay with us.
CI: What do you see leading the charge for the next year or two?
A healthier America must become priority one. Some form of tax credit or tax deduction for health club membership costs would certainly be a catalyst in this direction. I think the time will come when we see the generic, one size fits all health club evolve into several specific segments. We already see a proliferation of women-only centers.
I think legislation will be passed that will level the playing field between “for profit — tax paying” and “not for profit — tax exempt” health club operators. For fair competition to exist and thrive, we all need to be pay our fair share of taxes.
CI: What do you, as a business owner, see as the most important aspect to keeping the industry thriving?
We must keep people exercising. It is not enough to enroll them. We have to keep them engaged in an exercise program that is fun and beneficial. At WOW! we cannot do enough in programming and member retention. These go hand in hand. If we want a healthier America and want to affect member attrition, we must develop programming to address these issues. Our industry has no problem finding and enrolling members, but we put our new members in a position to fail and become an ex-member statistic. We do this because many of us thought our job was done once we enrolled the new member. Actually, that's when our job just begins.