Health Clubs Are Not a Shopping Mart


I read with great interest my friend John Agoglia's June article: “What's In Your Cart?” It was an edited summary of Fitness Business Pro's Purchasing Power Survey…a document I did not see firsthand. And I must say that the article alternatively amused me, confused me and left me with the persistent thought: “What were they thinking?”

In case you didn't read the article, John wrote about small clubs' shopping lists for 2005 and 2006. In summary, here's what he found out:

  • Cardio equipment: 56%

  • Strength equipment: 48%

  • Children's equipment: 37%

  • Aquatics equipment: 36%

  • Lockers: 30%

  • Free weights, pool accessories, yoga products, Pilates products, flooring, sports-specific equipment, locker room amenities and spa products: between 22% and 26%

  • Physical rehabilitation equipment, vitamins and supplements, facility supplies/maintenance, group exercise supplies, food and beverage equipment, and entertainment products/systems: between 13% and 17%

  • Pro shop items: 8%

Here's what interested me: out of 21 major purchase categories, only one…computer software (33%)…even remotely relates to investment in management expertise.

Now, granted, the original survey probably didn't include things like: investment in consulting services, sales systems, retention programs, mentoring, conference education, business analysis, membership surveys, demographics studies and data management. (By the way, if not, why not?)

Here's what amused me: that in 2005, in the 30th year of “modern fitness facilities,” owners are still placing emphasis on equipment and amenities. That's like saying that if you purchase a new refrigeration unit it will increase sales in your restaurant.

Here's what confused me: why are owners (especially small, independent owners — the most competitive segment of the fitness industry today) busy making sure they are just like everybody else? Geez, if that's the case, why don't they all just get together once a year, buy all the same stuff, divvy it up by facility and get huge volume discounts for being just exactly like their competitors?

My persistent thought is: “What are they (YOU) thinking?” ARE you thinking? Or are you just reacting? Why would you continue to build and re-build the identical model that no longer works like it used to (evidenced by our retention statistics) in a national marketplace that is seeing massive entry of new clubs every month? Why do you persist in offering same old-same old in an environment just crying out for difference? It just doesn't make sense…not unless you are purposely trying to drive people to either the low-priced end of the market or the high-priced specialized segment. And I don't think that's what you are trying to do — are you?

Let's approach this from some common perspectives:

  • It is well documented that people don't come to clubs for the equipment alone. (Granted, a tired, ill-equipped facility will not last long in today's setting, but we also know that equipment is just a means to an end — healthier people — and not the end itself.)

  • It has been said by many over the years that a dollar invested in training and education will repay itself three, four, five, 10 times over. (When's the last time a treadmill taught you anything you could use to increase your revenues?)

  • If equipment and amenities are so important, why has our national-attrition ratio (the percentage of members who leave clubs every year) hovered at 40 percent for the last decade-and-a-half? (Most people today don't cancel memberships because of lack of equipment or poor facilities; they quit because they don't get personal attention as a customer.)

  • In the “middle of the market” (read that as 75 percent of the fitness facilities in the country today), clubs unremarkably look pretty much like each other…and are equipped like each other…and offer just about the same classes as each other…and on and on and on. What's the difference? Apparently, just location. (Why don't you just advertise: “We're just like that other club around the corner. Our paint job's a little different, but otherwise, we're about the same as everybody else. It's just that we're a block closer to you. Come feel unspecial with us rather than with our competitors.”)

Fitness, which started out many years ago as an experiential business, has unquestionably become a commoditized business. Joseph Pine and James Gilmore wrote a must-read book titled, The Experience Economy (Harvard Business School Press, Boston, MA 1999). One of their sub-chapters read “You Are What You Charge For.” In it, they said: “If a fitness center were truly in the transformation business…it wouldn't charge (solely) via membership fees or by the amount of time the members spend on machines. Rather, it would charge for meeting the health and well-being aspirations of its members. If the aspirations weren't met within a fixed period of time, the fitness center…would be paid less, on some sliding scale commensurate with the progress achieved.”

They went on to describe the “echelons of customer value:”

If you charge for stuff (for our purposes think of equipment and classes), then you are in the commodity business. (I assert that 90 percent+ of all health clubs charge for stuff, thus we are a commoditized industry.)

If you charge for the activities you execute, then you are in the service business. (I believe that maybe 5 percent of all clubs today are in the service business.)

If you charge for the time customers spend with you, then you are in the experience business. (I can count on one hand the number of clubs that I can say are in the experience business.)

If you charge for the demonstrated outcome the customer achieves, then and only then are you in the transformation business. (A couple hundred personal trainers nationally may qualify as transformers.)

In a future column, I will illustrate four universal elements that make up how businesses create customer value. They have nothing to do with “shopping lists.” And I will tell you why I think fitness facility operators don't place a high value on education and training.

Michael Scott Scudder, a 30-year veteran of the fitness industry, is a personal business trainer who offers private workshops, phone and online conferencing on pertinent fitness business matters. Questions and comments are welcomed by Michael at 505-690-5974 or [email protected].

Author's Note: A personal thank you to all of this column's readers who sent condolences to Phyllis and me following the death of our daughter, Susan. Your thoughts were much appreciated.

Michael Scott Scudder is a 30-year veteran of the fitness industry. He is a personal business trainer operating Fitness Focus, a consulting company that offers private workshops on pertinent fitness business matters. Questions and comments are welcomed by Michael at 505-690-5974 or [email protected].

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