Obsessing over trends is a dangerous trap for health club operators, according to Will Phillips and Eddie Tock, owner and CEO, respectively, of REX Roundtables for Executives. Instead, they say that operators must focus on fulfilling their members' needs in an efficient and convenient manner. In the following interview, Phillips and Tock share insights from their Business Basics track at this year's Club Industry Show, to be held Oct. 4-6 at the Hilton Chicago.
Q: Which industry trends have caught your eye in the last year?
Phillips: One of the great strengths of the fitness industry is that it is not excessively slammed around by trends. The key trend is that no one has enough time. The corollary is that every consumer craves convenience and speed. The success of Amazon is built on its ability to deliver almost anything overnight. In large cities, it delivers within hours. As the consumer, this means I can relax at home as I pick and choose and compare what I wish to buy. And I spend no time in traffic or traveling. This demand for convenience is one of the factors that is leading retail industries to close stores, rethink strategies and even go out of business. People can work from home, order in meals from home and only go out to see their doctor and go to their health club. The number of online programs and apps to help you exercise at home is also burgeoning. Peloton may be a breakout business in terms of at-home exercise. Peloton has done more original thinking than any of their competitors. The company also has senior people from outside the club industry who have succeeded in the online retail world. Think Warby Parker eyeglasses. They haven't gotten everything perfect yet, but I believe they’re closer than anyone else in delivering quality at-home exercise. I encourage every club owner to dig deeply into the model they are using and talk to people using Peloton.
Q: How is this changing the way in which many health clubs are going to market?
Tock: Consumers are forcing the fitness industry to do what we always said we did but never did consistently for everyone—deliver results. This is why many have chosen a more personal, intimate setting like a boutique club. Results for members can be physical or emotional or simply feeling better. Years ago, clubs said they offered real service, but they really never did. Today’s consumer expects very good service, a happy staff and a very clean club. These are not differentiators; these are the starting point. Because there were fewer choices in every marketplace, clubs used to get away with being average. Today, they are on their way out of business if they are not striving to be great.
Q: Fiscally speaking, do club operators get too caught up with bottom lines? Are there other meaningful ways to measure progress in today’s club climate?
Tock: It’s more important to focus on key performance indicators that drive the bottom line, and most of them need to be customer-centric.
Phillips: Every business falls into the trap of overly focusing on profits. It is one of the guaranteed ways to harm your business and ultimately go out of business because you've lost sight of the fundamental dynamic that drives all business success. That is finding a consumer need and fulfilling it. The important metrics to focus on go levels deeper than profit, such as looking for the underlying root causes that drive profit. The single best metric to monitor is this: What do your customers truly have to say about you when they provide feedback in a convenient, safe and responsive environment? Most company feedback mechanisms do not sufficiently pay attention to those three words—safe, convenient and responsive—so the feedback is not as valuable.