Are health clubs selling value or selling failure? While every business has the right to make a profit, whether or not the fitness business model will achieve long-term success remains to be seen.
Our industry is going through some exciting yet scary changes. No one really likes change, but change is the only thing in life that is constant. Today's marketplace has five to 10 times more competition than just a few years ago. We're seeing the emergence of more large club chains, some of which have already gone public or are planning to shortly as well as a proliferation of small 1,000-square-foot storefronts. The latest trend is the no-frills, no-service, low-priced clubs.
The cheap, no-frills clubs have, at the very least, sent a message to all the other clubs in the market: what you were giving your members previously wasn't really service that had any real value. So, they left to go to the cheaper choice. After all, aren't all treadmills and weights the same? If you think that you were giving them real service or value, think again. The customers did their talking with their feet (and their money).
This environment will force clubs to show how they are different, not better (most consumers don't believe you when you say better, because every business claims they are). You must find your niche, articulate your difference and then you'll own that position in your market. Your difference can't be based solely on size as the larger chains can move into town tomorrow and take that niche from you. It hopefully won't be based on low prices because too many low price competitors are already out there, and tomorrow that also can change. It must be based on value, which includes the continuing value after the sale. The real sale begins after you get your members' money. You need to make raving fans out of all your members, so they in turn will refer their friends. To achieve that, you must answer the question we all ask every time we make a purchase of anything, “What's in it for me?”
The big question for the industry is will this last? Most of the no-frills clubs have oversold their memberships with the same hope that much of this industry had 30 and 40 years ago — let's keep the price so low that no one quits, but let's also hope no one shows up. They are usually selling failure, along with many of the existing clubs that charge a lot more for their health club memberships. Just look at your retention numbers and how challenging it is today to increase your sales. I thought by this point, we'd all try to deliver better quality and service and actually show we care about our customers. Since the time of the “spa war” days, most of the growth in this industry has come from regular non-exercisers looking for help and guidance — not just access to a piece of equipment. Our future growth will also come largely from non-exercisers. Just look at the problem of childhood obesity, which has more than tripled over the last two decades.
Achieving growth in your business will require you to sell value, not failure. I am convinced that most Americans are looking for an excuse not to exercise. When we give them crowded clubs, no service and no results, we fulfill their excuse. In the International Health, Racquet and Sportsclub Association's Health Benefits of Exercise Report, John McCarthy, executive director, states that “the health benefits of regular exercise are the health club industry's most under-leveraged asset, and they represent the industry's number one opportunity to turn members into missionaries for regular exercise. No other industry has anything even remotely like this. It is an unpaid and unearned asset. And yet all too often this research is taken for granted. Few clubs communicate this information to their members, prospective members, the local media, health educators, etc., even though any other industry would love to get for one day what this industry gets almost every day.”
As an industry, we have an opportunity to affect everyone's life in a positive way. You need to position your club as a vital health resource for your entire community. Consumers spend more money today than ever before, but they tend to only spend it where they see value. People are willing to pay higher rates only when they understand your difference and appreciate the value. To successfully sell value rather than price, you need to have a proven system of sales, service and retention that can positively affect your long-term growth.
Ed Tock is a partner in Sales Makers, a marketing and sales training consulting firm that specializes in on-site seminars and performance and profitability programs by delivering staff training, proven systems and marketing programs. They have worked with more than 983 clubs worldwide including 192 pre sales since 1981. Tock has spoken at more than 60 Club Industry shows and IHRSA conventions. Sales Makers is a winner of IHRSA Associate Member of the Year. Tock can be reached at 800-428-3334 or at [email protected].