Health Club Operators Must Face the Economy Head On

Fear is spreading across the country these days. A late February poll from CNN and Opinion Research showed that 73 percent of Americans surveyed are fearful about the way things are going in the country. Fear can cause some people to do crazy things with their businesses and their money. It also can cause some to just quit when in other times they might have stuck it out. (Read an interesting column, “The Quitter Economy,” about this topic in the Feb. 2 issue of Newsweek.)

I don't blame anyone for wanting to curl up in a ball and ask someone to wake them when this mess is over. But this mess will end some day, so no curling up is allowed. And that's what smart business owners need to keep in mind. Smart business owners need to put aside fear and position themselves so they survive this recession and thrive once it's over.

I'm not an expert on business or surviving a tough economy, but I have been reading about businesses that gained market share during other recessions. Procter and Gamble is perhaps the most well-known case. The company increased its status as a manufacturer of soap and other household products and increased its sales during the Great Depression by continuing to advertise when other companies cut back. In fact, the company spent money on a radical idea at that time — radio serials for homemakers to listen to while they did their housework. (Later, these programs became known as soap operas and moved to TV.)

However, plenty of other companies also saw growth during recessions. During the 1989-1991 recession, a MarketSense study found that the following companies increased sales by the following percentages: Jif peanut butter (57 percent), Kraft salad dressing (70 percent) and Pizza Hut (61 percent). How did they do this? Each of these companies increased their advertising during the recession. Taco Bell also increased its advertising and raised its sales by 40 percent. At the same time, its competitor, McDonald's, cut back on advertising and had a 28 percent drop in sales.

A Buchen Advertising study found that companies that decreased their advertising in the recessions of 1949, 1954, 1958 and 1961 lagged in sales behind companies that did not cut back on advertising. The lag continued even after each recession ended. It makes sense that pulling out of the spotlight provided by advertising would hurt sales, doesn't it?

Of course, advertising these days isn't just about placing an ad in the paper or on the radio. It's not even just about sending out direct mail. As more people turn online, club operators must also turn online (see the cover story on lead generation), and they must reach out into the community for low-cost methods of “advertising,” such as speaking at community events and meetings.

But it also means that once you have people in your doors, you must follow through with the promises that you've made. As Allen Adamson, managing director of brand consulting company Landor Associates, said in “Marketers: Don't Make Promises You Can't Keep,” a Jan. 20 column, “A brand, for every intent and purpose, is a promise.” If you break the trust of those you seek by breaking promises, then no amount of advertising will help you through this time.

Advertising and keeping promises. It's a plan of action that's proven more profitable than simply reacting. It puts you in the driver's seat, albeit on a very bumpy road.

TAGS: News
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