Nothing has changed. For the better part of five decades, the commercial fitness industry hasn't really changed—although it hasn't really needed to. What we have been doing has worked pretty well. We really only care about two things:
1. Monthly membership dues. How do we get more members? How do we keep more members?
2. Revenue per member, per month. How do we sell more stuff to our members?
We’re Working Hard on the Wrong Things
We need to change our focus. We need to move beyond what we have been doing. Millions of dollars and thousands of days have been spent trying to improve the same three things: get more members, keep more members and sell more stuff to our members. Yet little has changed. We need to stop spending so much time and effort on marginally improving the legacy business model, and we need to find ways to create bigger wins and a bigger lift.
We’re Listening to the Wrong People
Dozens of consultants and industry experts were talking about small group training 10 years ago and social media five years ago. They are now talking about technology and what the future looks like. I believe almost all of them are wrong. It’s nearly impossible to have a breadth of knowledge that allows you to be an expert on everything for a number of decades. We need to start letting some new voices enter the equation and question everything we assume to be true, especially as it relates to technology. Too many people are making everything confusing when it doesn’t have to be. They’re pulling every buzzword and cliché out of Silicon Valley and assigning it to our future. They are painting an unrealistic picture of the future, and it’s creating a bunch of noise, fear and confusion.
Stop trying to wrap your head around artificial intelligence, augmented reality, virtual reality, facial recognition and all the other technologies that are often spoken about. That stuff will come, sure, but not any time soon. Before any of those technologies enter our industry in an impactful way, they need to become prevalent across a number of other markets. If they seem confusing, they are. They are largely just theoretical at this point. As these future technologies become clearer, we can pay more attention to them. Until then, it’s literally a waste of everyone’s time. We should be focusing on what we can do right now, what is actionable today.
Play Your Game
Gym owners and operators are some of the best entrepreneurs I’ve ever come across in any vertical. A lot of the folks who are still running the industry today have been around from the beginning or are closely connected to those who were. We can’t forget how far we’ve come. In the early days of the industry, there was genuine creation. You took an idea, a concept, a belief, and with blood sweat and tears, you turned it into a multi-billion dollar industry. That was hard. This technology thing isn’t hard. Just give the people what they want. Don’t listen to all the noise. Don’t let yourself get confused with all the technology that you don’t really understand. Just take a deep breath, talk to people that you think are smart and make informed decisions that are in the best interest of your members and your team. Same as you’ve always done.
We Need to Change What We Offer
Everyone knows what we’re selling, and the same amount of people are buying. A decade ago, the industry started offering memberships at prices that were about 50 percent less than previous prices, and the market expanded a bit. Aside from growth that occurred due to that pricing dynamic, the volume of usage across our industry hasn’t changed much at all. Yet during the same period of time, dozens of markets, services and products have emerged that we are better positioned to distribute.
We need to stop doing what we’ve always done and think about what we can do differently. We need to stop seeing trends as fads that will fade away. We need to accept that things are changing, and we, too, need to change what we provide.
- When we know our trainers are training people at their homes and in parks, we need to stop pretending it’s not happening, and we need to own it and enable it to happen more but under our control.
- When we know our members are consuming streaming content at their homes, we need to stop pretending they’re not, and we need to own it and enable it to happen more but under our control.
- When we know our members are also going to boutique studios, we need to stop pretending they’re not, and we need to own it and enable it to happen more but under our control.
- When we know our members are engaging and communicating through a new channel (mobile), we need to stop pretending they’re not, and we need to own it and enable it to happen more but under our control.
- When we know our members are buying nutrition and other health-related products, we need to stop pretending they’re not, and we need to own it and enable it to happen more but under our control.
We Need to Sell More Things
As an industry, we sell six things and only six things. No matter the type of facility, the price point, the location, we’ve only ever sold a maximum of six things:
- Personal training
- Small group training
- Group X
- Ancillary services
We simply need to leverage technology to scale these things and deliver them in different ways. Doing that will unlock immediate value and will have a compounding effect on our ability to clarify usage and success. Ultimately, it will increase our ability to tap into much larger audiences that are dying to work with us, specifically healthcare relative to payer subsidies and physician referrals.
The Time Is Now
We live in a country where about 18 percent of our entire GDP is spent on healthcare costs. About 79 percent of that is spent on what are theoretically preventable chronic conditions, the total projected cost of which is estimated at approximately $47 trillion over the next decade. You read that correctly. We’re going to spend $47 trillion on expenses that are self-inflicted.
The commercial fitness industry has the best opportunity to take the biggest chunk out of that $47 trillion. We simply have to change the way we operate our businesses. Physicians perform radical or invasive procedures or they prescribe medicine. Aside from that, they literally send people to their death, recommending healthy lifestyle behavioral changes and a coach, but there’s no one for them to hand folks off to. We need to stop letting things pass us by. We need to be smarter about how we monetize. We need to leverage all that technology has to offer. We need to rise to the occasion. Technology is the lever we’ve been waiting for. It is what will enable us to scale beyond our stagnant penetration. Technologies that we already have, not those that are still on the fringe. Technology makes us much better now and positions us for something completely transcendent within five to 10 years.
If we adapt, if we embrace technology, then the future is exponentially brighter than most of us could ever possibly imagine.
For decades, the commercial fitness industry’s offering was thought of as a discretionary expense. Now it is essential. Health and wellness is now one of the most important drivers of human behavior.
The future is now.
Brett Maloley is a tech entrepreneur, executive and angel investor with a specific interest and expertise in health and wellness, healthcare, platforms and marketplaces. He is the founder and CEO of Ladder, a digital marketplace that matches health and wellness professionals with people who want to experience all of the benefits of customized fitness on their own terms—affordable, convenient and rewarding. Prior to founding Ladder, Maloley had two successful exits in the health and wellness industry, one a fitness equipment distribution startup and the other a publicly traded nutritional supplement distribution platform. Maloley lives in Austin, Texas, with his wife Nicole and their French bulldog, Penelope. Additionally, he serves as an advisor to Assurely, which is a blockchain-driven nex-gen insurance platform focusing on emerging marketplaces, and 64 Pixels, which is the world’s largest network of Google Chrome extensions.