I recently sat down and had a conversation with a vice president at a Midwestern fitness facility company and he stressed the need to give people more than just fitness. He spoke of clubs-within-a-club, adding more recreational activities, and putting the fun back in fitness. In other words, providing a full experience for members.
This, he contended, would not only give his company a leg up on traditional fitness providers in this competitive landscape; it would also draw nontraditional members into the club and keep members longer (just a note, he cited a high 50 percent attrition rate).
“Experience” is one of the hottest buzzwords in the business market today — and it will be in the future, according to a futurist I heard speak in Florida not too long ago. This speaker, who writes for American Demographics (another Primedia Business publication), brought up another reason for providing customers with a full experience rather than a traditional “2-D” business relationship — by giving customers more for their money (even if you charge them more) you keep them happy. By turning your product or service from a commodity into a valuable experience, you are enhancing your product, company and the entire industry. Let's admit it, there is a rash of fitness becoming a commodity going on these days.
Not sure it is worth the extra effort or expense? Let's look at the often-cited example used by him (and many others — they must be doing something right), Starbucks Coffee. In this example he showed how coffee progresses through a business cycle from commodity to experience and the pricing associated with it. In his example (or some derivation of it, I wasn't taking notes) he showed coffee beans being sold for about $1. In the progression, the ground beans are sold for $2.49. Then as a brewed cup, a fraction of those beans may cost anywhere from $1 to $3. Now that same cup o' joe at Starbucks, complete with Wi-Fi, jazz music, newspapers and more, will set you back double that — even if you order it to go.
Unfortunately, too often the public sees fitness facilities as commodities. Worse than that is that professionals often treat it like a commodity too, resorting to price cuts and service cuts to help keep memberships at a too low $19 or $29 a month. In fact, I recently passed a club in New York City that was offering a one-year membership for $199 and no inititation fee. It's tough to offer service and preserve a healthy profit margin at those prices in one of the world's most expensive cities.
While the volume that commodity pricing may bring in can add value to a company's bottom line for a short term, (I'd like to see the retention rates at these clubs) a look at Club Industry's Top 100 shows a number of clubs that are successful by offering a true experience for members and charging for it, which in the end may help them survive for the long-term and bring the industry's image with them.
But I'm not just preaching empty words. Keep an eye on Club Industry's Web site and your e-mail in-boxes this fall as we help bring you the total experience in news, analysis and ideas to help you do your business better.