Ten years ago, the Atlantic Coast Athletic Club in Charlottesville, VA had a “typical” club membership. The average member age hovered around 34 years old. Today, the average age at the club has risen to the low 50s. But, that's not the only thing that's risen. Membership numbers have increased from 3,000 members in 1997 to 11,000 in 2004. And, the club has moved from an 18,000-square-foot building to a new 64,000-square-foot facility.
Phil Wendel, owner of the club and two others in the Virginia-Maryland area, attributes the increase to a redefinition that the club underwent in 1998. A few years prior, average business with marginal returns had prompted Wendel to spend about two years researching how to make fitness a great business for his club instead of a marginal one. During that time, he visited more than 50 clubs across the country, attended trade shows to network with industry people, read a lot of research, talked to industry leaders and worked with IHRSA.
“All of that really helped,” says Wendel. “But if you'd have to say there was a moment in time that I said, ‘Aha, that's it,’ it occurred when I read that the interested market was 4 ½ times larger than clubs now reach. That's when I said, ‘I get it.’”
He became absorbed by the research done by American Sports Data that showed that the deconditioned represent 65 percent of the market. These deconditioned people often want to do something about their condition, but they don't feel welcome at the typical club. He figured that his club only needed to pull in one-eighth of that deconditioned market to make his business grow by 50 percent.
While industry consultants may recommend doing market research prior to a redefinition, Wendel didn't.
“I think America is ready to become more active,” says Wendel. “It was more a belief in the willingness of people to respond to a good idea, a good club. I thought, if I build this and it's good, they will come.”
That's when the redefinition of his club began in earnest. In general terms, to redefine means to reformulate or re-examine with a view to change. As far as health clubs go, to redefine means to re-evaluate everything from the club's location and building design to its demographics, equipment selection and setup, programming, the music played, rehabilitation or physical therapy options, childcare and even staffing.
At some point in its lifespan some clubs will require a redefinition, but other clubs can survive for 20 years without a redefinition, says Rick Caro, president, Management Vision. It just depends on the market and the pressure points of each club. Sometimes, the examination is triggered by external factors, such as the local demographics changing or a major competitor coming into the market. However, dropping sales numbers often are the biggest precursor for a redefinition.
“Generally, club owners don't try to redefine their club until they see sales are increasing but increasing at a decreasing rate,” says Charley Swayne, club consultant. “In other words, sales are still going up but not going up as much. Or they wait until their sales are declining.”
When a club owner redefines his or her club, the owner must investigate the competition to see what is already out there, who is already being served well and to determine who is not being served by any club. Then, the club owner must determine whether an opportunity exists to attract that market if the club redefines itself, says Caro.
“This is an industry that hasn't had much focus on market segmentation,” says Caro. “We've been willing to have some different physical plans and price points, but we're willing to accept anyone who is willing to sign a contract to pay a certain price as long as they are old enough and legal to sign such an agreement. So we have little history of true segmentation.”
However, segmentation is often the cornerstone of a good club redefinition, and knowledge of who that target market is and what they want is vital. If a club owner can't define his or her club's target audience properly, then everything after that is not defined, says Caro.
Clubs could learn a lesson from the segmentation efforts of the old WellBridge Club in Newton, MA, says Caro. More than 10 years ago, when the club was owned by Monsanto, the club decided to go after the older, deconditioned market. Everything about the club then followed from that. The club purchased equipment with smaller gradations of weights — one-pound increments instead of five-pound increments. The equipment fit people of different sizes and weights and with various health issues. Because many of the older people used assisting devices, such as canes, the club provided plenty of space between equipment. They also put in better lighting in the equipment area.
In the group exercise area, the club offered several small group exercise rooms because the members wanted to work out in small groups but they also wanted variety. The group exercise classes involved more stretching, flexibility and mind/body classes than found at the typical club at that time. Because many in this group had never exercised before, the club also offered introductory and beginner classes in group fitness as well as introductions to the fitness equipment area.
“All of those things could be packaged up ahead of time, and it allows the new joiner to think, ‘Gee, there's a lot of other people like me, and I'm glad they are holding our hand at first until we feel we can handle this,’” says Caro.
The water temperature in the pool had to be much warmer than standard in the industry, and water classes were different from other clubs, taking into account aging issues. In addition, the locker rooms included more private spaces for people with medical issues who feel they need more privacy to change.
The older group also wanted social space so the club ensured it provided plenty of space for a food and beverage area with couches, chairs and a fireplace. Because the older crowd liked to stay around and socialize after working out, the club also had to increase the number of parking spaces in the parking lot.
Even the music was different. Instead of loud Top 20 music, the club played music that was softer and classical. To be credible with this crowd, the club also put in a library with medically oriented books and tapes.
The final nod to their mature demographics involved staffing. The club hired a more educated fitness staff — many of them older and with master's degrees. Because most of the members would have some sort of medical issue, the staff had to be able to screen people and be able to work with the medical information they receive.
The definition of the WellBridge Club was thought out from top to bottom. The club owners understood the target audience and delivered what that audience needed. While new owners have changed the definition of the WellBridge Club, a segmentation to an older and deconditioned market still works at Wendel's club.
The Atlantic Coast Athletic Club set up Health Quest areas to train this population about exercise. It is a “high-touch” training center, Wendel says, where staff is on-hand helping members even to the point of setting the pins and seats on the selectorized equipment.
“We spend more time with these members assuming there is a learning curve with them,” says Wendel. That learning curve also requires a staff with degrees who can teach and coach. To go along with the more professional training of the staff, the club now requires staff to wear uniforms.
New members receive coupons for complimentary services that can include a 20-minute goal-setting session with a fitness specialist or a 30-minute health appraisal, a personal training session, a discounted treatment at the spa or a 30-minute nutrition consultation The club also offers a program called Take Control, which is a 10-week healthy lifestyle program that combines personal training and nutrition counseling.
While Wendel has gone to great lengths to cater to his chosen market, not every club will want to focus on this market. Each owner must determine what market works best for his or her club.
“The smartest way to redefine a club is to pick out something that the club does far better than the competition,” says Swayne. “It could be a certain type of programming. It could be a special staff person they have available. It could be a product that no one else has in the marketplace.”
Whatever a club chooses, it must revolve around a strength that the competition doesn't have — even if the club owner must go out and acquire that strength, Swayne says. The club owner should ensure that he or she understands that market and is passionate about it.
“If you don't have a passion for that market, I can guarantee you won't do well in it,” says Swayne.
Redefinition can be a painful process, particularly if no one seems to notice the redefinition once it is completed. However, the problem may not be that the redefinition failed; it may be that the club owner just hasn't marketed the new club well enough.
“When a club redefines itself, it is usually around product, people or programs,” says Swayne, “but tied in with whatever you do is promotion. You can't just do it and hope the world knows about it. It takes a promotional shift. Build money in for that.”
The Atlantic Coast club started marketing its new image during construction of the new facility. The club hosted two hard hat tours that attracted 3,500 people. In addition, the club produces a photo-intensive, high-gloss newsletter three times a year that it sends to members and 6,000 to 7,000 households in its target market. Half of the newsletter contains a program guide for the next four months and the other half contains medical and health news.
The club also opens up its conference room to non-profit groups who want to hold meetings at the facility. The local Rotary group holds a casino night at the club on a regular basis.
“Our real goal is to get people in to see the club and form a positive impression so that when they are ready to make the exercise decision, they will remember us and come in,” says Wendel.
Clubs often find that most members come from a tight radius around a club — about three to four miles. Marketing that reaches further than that is not necessary, which means that cable, TV, newspaper and radio may not be the best marketing option. Instead, direct mail may be a club's best option. However, a club owner that turns to direct mail must realize that the first two direct mailings are pretty much worthless, says Swayne.
“It takes about seven impressions to move something from short-term memory to long-term memory,” Swayne says. “If the only impression is just one direct mail piece, your response rate will be about nothing.”
Swayne recommends also using billboards and signage. Once potential members see a club's message in more than one place, direct mail responses tend to increase, he says.
Caro recommends visiting neighborhood associations, church auxiliary groups and other community groups to inform them about the changes at the club. A club might be able to market through e-mails or through inserts for a specifically targeted segment of the newspaper circulation if possible.
“This isn't something that can be done overnight,” Swayne says about promotion. In fact, it could take a year to get the word out.
“They need to understand who is the end user they are going after,” says Caro. “Describe in detail who that person is and then find them. Do they live in a certain area of the neighborhood? Are they of a certain age? Read through the local paper to see what groups meet during the week and connect with them. Study whom the target is and how to reach them. Put together a plan.”
A redefinition can pay off big time for a club. For Wendel, the redefinition has been so successful that he has implemented it in his two other clubs with similar results.
“The change didn't happen overnight,” says Wendel. “In the six years that this new facility has been open, we've grown each year. People who are members are having success and are recommending us to their friends and family.”
Redefined clubs may reach deeper into the marketplace than normal penetration rates and may have an increased member loyalty, which pays off with more member referrals, says Swayne. In addition, the club may become known in the community for something that sets it apart from the other health clubs in the neighborhood. All of that often will lead to increased sales numbers.
“Your sales start to go back to the way they were when you were growing your company,” says Swayne. “They start increasing at an increasing rate.”
Once a club owner sees that, he or she will see that the whole pain of the redefinition process was worth it.
STEPS TO REDEFINING A CLUB
- Look at the marketplace and update any market analysis that needs to be done.
- Network at the conventions and find other club owners who have already redefined their clubs. Ask them what they did and what problems they encountered. Find out if redefining their club was a good decision for them.
- Check out the competition to see what market they serve and what programs/equipment they use to serve them. See if the competition is serving that market well or whether you could serve them better. Investigate who is not being served by any club. Then, determine whether an opportunity exists to attract that market if you redefine your club.
- Put together a mini business plan. Specify goals about whom you're going after, what you can provide that market and how you will get financing (if you need it).
- Involve all the key people in the plan so there's buy in.
- Talk to owners and current investors if they are not the management people.
- If you are sure of your direction, test out your concept on a focus group and talk to members and staff to get their input. If you are unsure of what direction to go in, then bring in staff and members and maybe one or two global thinkers in the community (for an outside perspective) for a brainstorming session.
- If you need additional funding, work with investors to get the funding. You may also want to work with your lawyer to create addendums to original documents.
- Put together the implementation plan, which should include the physical plant, sales/marketing, programming, servicing of new members and new systems.
- Complete the redefinition, which could include adding new staff, changing equipment, remodeling the facility, adding onto the facility, signing up different types of people and saying goodbye to those who no longer fit in the club.
- Market your changes. Let the people in your neighborhood know that the club has changed. Use direct mail, billboards, signage and visits to community groups.