How to Beat the Low Price Competitor

Learning that a low-cost, franchised health club is coming to town is every gym owner’s biggest concern. Club owners everywhere are faced with this enormous challenge. Huge, well-equipped, low-cost, franchise-supported health clubs are populating the fitness landscape, causing more gyms to close or be for sale now than ever before.

Matching the lower price would devastate your profit margins, but ignoring the threat will cause your members to leave. Don’t panic. Taking on a low-price competitor requires a careful examination of how your business operates.

Taking on this challenge requires a well-thought-out strategy. You can win the battle using these five basic principles of business: planning, organizing, staffing, implementation and control. The absolute best advice is to be proactive and not reactive to competing with your low-price competitor. For every action there is a reaction, so make yours count.

1. Planning. Decide in advance what to do, when to do it and how to do it in order to create a realistic view of your expectations. Start at the source by re-evaluating your mission statement. Was your mission statement created by your marketing team to sound good on paper without taking it further? Or does it really mean something to your members and, more importantly, to your staff? Analyze your business plan. A good, solid business plan needs to be reviewed annually. When was the last time you did so? Make sure that your management team is involved in this process.

Take an objective look at your team and product. Have an outside company send in a mystery club shopper or send in a trusted source who is knowledgeable about the health club industry and your mission to help measure your strengths and weaknesses. Will you be happy or surprised with the results? See through the eyes of your competition by putting yourself in your competitor’s shoes. Think about why they chose your market or how they would beat you in order to determine if you can provide more value. Can you add to your offerings?

Learn everything you can about your competitor by shopping at your competition. A franchise operator has standard and well-documented operating procedures and profiles. Shop existing clubs in different markets or consider the same mystery shopper to shop your new competitor. Develop points of differentiation. Why would you join your club as opposed to the new competitor? List the reasons logically and incorporate them into your sales presentation as well as your general philosophy. Each staff member must be able to repeat your points of differentiation and what makes joining and staying at your club a wise decision.

See how other industries in the same circumstance compete successfully with their larger competitors. Study how local coffee shops compete with Starbucks. See how the local restaurants compete with large chains such as Applebee’s. Focus on relationships with members, staff and community.

2. Organizing. Bring together the physical, financial and human resources you have developed. Document in a simple, direct and detailed fashion the action plan that covers who, what, when, where and why. Review final documents with management to ensure you have complete agreement.

Communicate with your entire staff by meeting with all employees. This is the foundation of disseminating information. Direct lines of communication have been established that can be reinforced through weekly staff meetings, daily emails, telephone calls and in-person discussions concerning sticking to the plan and meeting objectives. Be open to feedback whether positive or negative. Respond and act quickly by reviewing your master plan and making adjustments if necessary. Don’t forget to communicate changes to staff in person and in writing.


3. Staffing. The most difficult and important part of battling your low-price competitor, or any competitor, is having the right team in place. One would hope that through proper hiring and vetting processes you already have the right team in place, but do not hesitate to make adjustments and/or hire professional help.

Depending on what level of management you assume and the managers that you already have in place, you need to develop a strategic competitive club leadership team. These team leaders are responsible for the implementation of the action plan. Each team leader will be responsible and held accountable for their assigned tasks. Team leaders will report to the designated project manager.

The project manager should be a senior manager already on staff or an outside source identified as an expert in this area. That person should hold all team leaders accountable for implementing their portion of the action plan and will report directly to ownership or the general manager.

The entire club staff must be onboard with the action plan and understand the gravity of its execution and success. The largest group of staff consists of part-time employees. Make sure that you, your team leaders and the project manager interact with them daily to reinforce their roles.

4. Implementation. Supervision, motivation, leadership and communication are key components to proper implementation of the action plan. Team leaders must adhere to the action plan and insure that their team does so as well. Be consistent with your current management style. Positive motivation is long lasting while fear and intimidation offer short-lived results, and prolonged use of fear and intimidation actually disables the team, leading to negativity and poor results. Motivate your team by inspiring, stimulating or encouraging them.

Leaders must be clear about the results that are required from teams. The action plan was approved and resources were budgeted based upon a business plan that outlines which results are necessary. Subsequently, leaders need to be incredibly honest about team results. Celebrate and reward your team when they do well, but if the team did not reach the mark, stop giving them credit. Don’t applaud lackluster results or justify shortcomings by considering the circumstances. Teams need to learn to succeed by mitigating the risks of the circumstances while implementing and executing.

In this case, communication must be clear and succinct. Each team member must be educated and then tested on the action plan. You cannot hold someone accountable if you have not communicated to them the specifics of the action plan and their role in doing so. A constant flow of communication in various forms must be exacted in a professional and timely manner.

5. Control. The purpose of controlling is to ensure that all actions conform to the goals and requirements of the action plan. Establish a standard performance, measure their actual performance, compare actual performance with standards and evaluate deviation to correct their actions.


Tony Santomauro is owner and president of The Santomauro Group, a health, fitness, martial arts and sports consulting and management company. Santomauro, a 35-year health and fitness veteran, was co-founder and former president of Can Do Fitness Clubs in New Jersey for 12 years. He has extensive direct/corporate sales and marketing experience as well as expertise in advertising, public relations, martial arts and kids programming, equipment layout and design, class and fitness programming, and all operational aspects in the field. He is an internationally certified Kukkiwon black belt. He can be contacted at [email protected] or 973-396-2100.

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