Bryan O'Rourke, co-founder of Integerus, LLC, helps fitness and wellness organizations more effectively use innovative strategic, business and technology solutions. He has 25 years of experience consulting and serving in various for-profit and nonprofit executive capacities. O'Rourke holds an MBA from Southeastern Louisiana University and can be reached at Bryan@Integerus.com. Learn more at www.integerus.com and www.bryankorourke.com.

Competition among fitness facilities has increased dramatically, with 12,000 more clubs operating in the United States since 2002. Some experts project another 1,000 clubs opening in the next year alone. Increased operating costs and the public's resistance to higher dues make club operation economically challenging. With limited capital available for remodeling or equipment upgrades, how can club operators effectively compete while still making ends meet?

A good place to start is by assessing if a club is targeting its best market segments. Market segmentation is a strategy that relies on the notion that all consumers are not alike. A market segment is a distinct collection of people sharing one or more characteristics and thus having similar needs. Certain programs, services and promotions are more appealing to various groups based on a variety of factors, including age, income, gender and behavior. Retention and acquisition effectiveness can be enhanced by adopting segmentation strategies.

Here are steps you can take to implement a market segmentation approach for your club:

  1. Analyze your membership. What isn't measured can't be changed. You must analyze your membership database to identify variables like age, gender and home location. More importantly, you must assess which segments leave or join your club most often. It would be important to know, for example, if 40-49-year-old women living in a few neighborhoods 10 minutes from your club are your largest and fastest growing member segment. Proper analysis of data enables such insights. Sometimes, what a club owner thinks is not exactly what the facts reveal.
  2. Assess program use. You must know if your programs are aligned to the needs of particular segments by understanding actual program utilization. Ask your staff and members what services are most popular and make certain you measure this objectively. For example, if your group fitness programs are not being well attended, you need to find out why. Is it unappealing to members or are you missing an opportunity through poor execution?
  3. Analyze the competition. Using online tools, identify your competitors within a 15- to 20-minute drive time of your club and do your best to determine dues structures, programs and services offered. Assess their membership base and their market position. Who are their customers and how do they compare to yours? Compile the total number of memberships you believe are serviced in your area and calculate your market share. Identify what amenities you offer that others do not and consider your unique proposition for the membership base you service. Are your programs and dues structure addressing needs that are not met?
  4. Obtain demographic information. Surveys indicate that convenience is the No. 1 membership driver, so understanding your trade area is important. Demographic information is available for a relevantly low cost online. Household incomes, ages and other information reflect the makeup of the community you serve. Many online resources generate maps showing household concentrations by various categories, as well as daytime populations related to business generators. This will assist you in targeting promotional efforts. As a general rule and depending on your particular facility, focus on household incomes above $40,000 a year. Also, use polygonal or drive-time reports, not radial analysis, which does not accurately reflect the trade area you serve, due to boundaries created by roads or other barriers. Consider how your base of members relates to the demographic of your market. Do your members represent a very small portion of the majority of the households you draw from? Is your area growing?
  5. Prepare a segmentation plan. Now that you have evaluated information, you need to decide which segments are the best opportunities. What is the core makeup of your existing membership? What are you offering that competitors are not? Which segments does your facility appeal to most and why? What pricing have you adopted? What marketing is optimal for each segment? By answering these questions with data in hand, you can map a smart path to focus your resources on the best market segments and promote your business accordingly. Additionally, you can tweak programming intelligently to impact results. For example, if competitors do not offer quality group fitness programs, and you have a significant membership base that finds this programming appealing, prioritize the delivery of world-class group fitness as a strategic move and promote it.

Remember to measure the results of your decisions when using market segmentation. Track membership information and measure program performance to determine if you are in fact improving retention and driving acquisition. Constant evaluation of results generated by market segmentation efforts is essential for continued success.