Welcome to our 2009 town hall club industry meeting. I hope that you have started the New Year with a bang. In 2008, we had one roller coaster ride of a year. We started off great in the first quarter, then we were up and down through the second and third quarters, and unfortunately, we finished the year down in the fourth quarter, along with the rest of the world. We saw great companies and industry leaders like Life Time Fitness and Town Sports International have their market caps reduced by more than 80 percent, and we watched in amazement as Bally Total Fitness moved back into bankruptcy protection for the second time in 18 months. We also watched other industry leaders react in desperation with heavy layoffs, cutbacks and price drops. We pretty much hit the wall after a great six-year run as an industry.
Now, we have to ask ourselves, "What have we learned from all this, and how should we adjust to ensure success in 2009?" Well, as my friend Bob Brooks would say, "It's double chin strap time!" So here are five tried and true strategies that can be your game changers for 2009:
Member Service. While the fourth quarter may have been a bit slow from a revenue perspective for most of the industry, what we did see were increases in member workout traffic for many of our clubs. Why? To start with, people had more time on their hands. They weren't out shopping as much, that's for sure. They were probably a little stressed out from all the media's doom and gloom. Somehow, all the negativity related to the economy sparked an increase in club usage, which means that even in the toughest possible environment, people care about their health and level of fitness. So how do we capitalize on this?
The answer is simple. Keep your members loyal and happy by delivering this simple message to your staff: "Remember, our members are really not here for you; you are here for our members." Focus on increasing staff and member "touch points" throughout your club(s). Work on the little things like smiling, saying hello and goodbye, and offering assistance to each member with whom staff comes into contact. Get your team focused on improving the member experience with every opportunity.
We know it's all about retention, so let's focus on one area: saving a cancellation. You'll need some tools, such as free personal training sessions, lowering dues rates for less expensive options, allowing membership transfers to a friend or family member, and freezing dues. This doesn't happen with a memo or a conference call. It happens by you getting into the club and leading by example. Your team's actions and attitudes are the direct result of the "trickle down" effect from each of you.
Ancillary Revenue. You will need to focus on three key areas to improve your members' experience while maximizing revenue.
The first key is personal training. Members join clubs to get results, and the best way to help them achieve this result is through personal training. Offer free orientations for both new and current members. Get your trainers out on the floor talking with members and offering assistance. Offer a free group session on a specific topic, and offer a discount for anyone who buys a training package after the session. The more you can connect with the members, the greater your personal training revenue will grow. Evaluate key performance indicators and make the necessary adjustments to drive revenue. For example, how many orientations are converted to personal training packages, or how many sessions per day are you doing with training versus workout traffic? You should be north of 10 percent.
Nutrition is another key. Fitness and nutrition (including dietary supplements) have a powerful connection. If you don't have a nutrition component integrated into your platform, you should immediately look to implement a solution that can help you add additional revenue while providing your members with a powerful solution to achieving their goals. One of the newest and most powerful fully integrated solutions is www.dotFIT.com. You might also look at some weight-loss programs. Do the homework, and you're guaranteed to make the grade.
The last key is retail. Offering even a limited retail selection provides you with tremendous opportunity. If your club averages more than 1,000 workouts per day, you should strongly consider a retail solution. On the plus side, if you implement the nutrition piece listed above, the supplement component will be the primary piece of your retail business.
Marketing. By now, you have more than likely cut your marketing budget in a desperate attempt to shave expenses. If you indeed need to do more with less, then go back to some of the basic local marketing techniques that are a cornerstone of our industry. Grass roots marketing — such as lead box programs, flyer distribution, corporate programs, connecting to local schools, the chamber of commerce, community and charity events — can yield big results if you make it a primary focus. The only grass roots programs that don't work are the ones that no one focuses on with their time and energy. In today's market, we need to continually reinvent ourselves and look for opportunities to become a staple within our communities and drive our own traffic. Price drops are never the solution to low volume. Call all of your former members and make them an offer to come back that they cannot refuse. Look to barter and trade where you can. Focus on the area of influence in your club's market. You need to own those areas.
You should also consider cutting costs — but in the right places. Bid out your contracts, as a lot of good quality companies are willing to do more for less than before. Look at areas such as janitorial and supplies — from paper to cleaning goods. Dig into repair and maintenance, bank fees, processing fees, media and even rent. You may be surprised at how many landlords are willing to renegotiate a lease to keep a good tenant. Look at every line item and get aggressive.
Team Building. I don't believe in cutting back on key team members who connect with members and make our industry successful because the savings look good on paper or to hit a year-end target. We have learned over the years that our industry is built on human capital. We are in the business of connecting our team with our members and our communities, and helping people change their lives for the better. Now is the time to invest in our most important asset — our teams. We need to pump up the volume on training and development, morale building contests and events, and create a rallying cry around making a difference in the lives of our members. We need our teams to excel, even in today's economy. People perform best when they know that they matter. Make them matter.
As my good friend Bahram Akradi said to me recently, "I've never seen a market like this in my 27 years in this industry." We are working harder than we ever have, and we are getting the job done. This is what it is going to take — working harder than ever before. So let's get focused and fired up, because now more than ever is the time to step up.
Mark Mastrov, founder of 24 Hour Fitness, is now an investor in various business opportunities through his company, New Evolution Fitness Co. He can be reached by e-mailing [email protected].