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Entries in pricing (8)


5 Reasons Health Club Members Quit (and How to Make Them Stay)

It’s easy to blame member attrition on outside sources—maybe a boutique studio just opened up nearby, or perhaps your most popular group exercise instructor left. But, while those are legitimate obstacles, there are several factors causing members to leave your club that are well within your control.

In this blog post, we dig into five reasons your members are quitting, and offer strategies to make them stay.

Reason 1: You’re Not Offering (or Successfully Marketing) Group Fitness

Health club members who participate in group exercise are more likely to retain their membership than those who only use gym equipment, according to a The Retention People (TRP) study.

For the study, researchers analyzed survey results from 10,000 UK health and fitness members and followed up with them at regular intervals to measure changes to their habits and membership behavior. They found that 48% percent of members reported just one activity as the usual reason for a club visit, 32% reported two and, 20% reported three or more.

As of January 31, 2014, 88% of group exercise members retained their membership compared to 82% of gym-only members. And the risk of cancelling was 56% higher in gym-only members compared to group exercisers (27.6 cancellations per thousand per month versus 17.7). 

Action Point 1: Think about the barriers that stop members attending group exercise and overcome them. Remember—the uninitiated look into a group exercise studio and see a room full of lycra clad people all completing complicated moves in perfect harmony. Also, think about what would make group fitness classes more engaging for young males, who are the most likely to be gym-only members.

Continue reading "5 Reasons Health Club Members Quit (and How to Make Them Stay)."

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9 Takeaways from the California Clubs of Distinction Spring Symposium

From member engagement to pricing strategy, there were many takeaways to be found at the California Clubs of Distinction (CCD) Spring Symposium in Palms Springs, CA, held April 19-21. 

IHRSA staff was there, attending sessions and gleaning insights for health club owners and operators who weren’t able to attend. Here are our top nine takeaways from the three-day conference. 

1. Focus on customer experience, not customer service. Building a great team is critical to any health club’s success, said Chris Stevenson, owner and founder of Stevenson Fitness, during his session. By hiring the right staff—and keeping morale high—club operators can deliver a member experience where “everyone leaves feeling better than when they arrived.” 

2. Build membership through community engagement. Karen Woodard of Premium Performance Training explained the many benefits health clubs can gain by getting involved in their communities. Doing so promotes member engagement, builds brand familiarity, and may ultimately increase memberships.  

Karen Woodard leading a team building activity.

3. Perseverance is the key to success. Shaun Quincey of DebitSuccess became the second person to row across the Tasman Sea between New Zealand and Australia at age 25, but the feat didn’t come easy. In his keynote address, he detailed the preparation and training that went into the 1,200-nautical-mile journey, including the 390 sponsors that turned him down. 

4. Strategy and execution go hand-in-hand. Bill McBride of BMC3/Active Wellness and Brent Darden of Brent Darden Consulting stressed the importance of creating a goal-oriented strategic plan, and also assigning the right people to execute that plan with the needs of members in mind. 

5. Pricing is a mix of art and science. McBride and Darden also spoke to the art of finding the pricing sweet spot. They recommended starting by by determining a product's or program’s usefulness, usability, and desirability. 

Brent Darden

6. Make time for team-building activities. Different team-building and team-bonding activities can help to improve relationships between co-workers, said Karen Woodward. Club operators should consider incorporating team-building exercises into existing meetings or holding team-centric events outside of work.

7. Think like a customer. Club operators should wire customers’ mindsets into their decision making process at every level, said Blair McHaney of ClubWorks. This will help operators better understand how to develop an emotional connection with customers, and thus increase loyalty.

8. Health club medical wellness programs can curb obesity. Successful medical wellness programs facilitate the relationship between fitness and healthcare professionals, said Mark Kelly of Principle Centered Health. Doing so may slow the rise of obesity, which is related to more than 50 preventable diseases. 

9. Differentiate your club by doing meaningful, purposeful work. Mike Alpert, president and CEO of The Claremont Club, which received the Outstanding Community Service Award at IHRSA 2016, shared his experience with partnering with the medical community to help people live healthier lives. In addition to serving as a differentiator, this practice will improve the overall member experience, which will lead to higher retention.


First Person: pricing and competing with budget clubs

CBI magazine's First Person feature talked to pricing strategy consultant Rafi Mohammed. The regular contributor to the magazine spoke at the NEHRSA/IHRSA Fall Conference and Trade Show on pricing of health and fitness clubs. 

In the feature he answers questions about the greatest misconception about pricing and how to compete with budget clubs.

Click here to read Mohammed's answer.


“Stuck” in the middle? Don’t play the price game!

Antonio Scavem at IHRSA’s European Congress in Madrid on October 19

As tempting as it is to discount or slash membership prices when a low-price competitor comes to town, don’t do it, advised Antonio Scavem at IHRSA’s European Congress in Madrid on Oct. 19. Scavem addressed the topic of “Business Modeling and Performance in the Fitness Industry”.

Scavem urged middle market clubs, in particular, to find a unique value proposition. He noted that you should be able to pitch your business model in 90 seconds. As one example, he asked Nick Coutts, CEO of Fitness Hut in Portugal to talk about how he is succeeding as a premium low cost club. 

Fitness Hut charges €18 (USD $24) per month for a membership.

Coutts, who was the recipient of the IHRSA European Club Leadership Award at the Congress, said that he believes strongly in engaging with members in the fitness area. To that end, he goes beyond offering classes in the group exercise area; he invests heavily in classes that take place in the fitness/equipment area. At least three 10-minute classes are held every hour throughout the day on the fitness floor. In January, he plans to add 20-minute, full workout classes that will be offered several times a day.




The age old question: price vs. value

With five industry experts answering this week's question, you can be sure to get a wide array of information and suggestions on the subject of value vs. price. But one recurring theme is you get what you pay for.

What does Brad Wilkins, Bill McBride, Brent Darden, Jay Herson and Mark Stevens have to say?

Q: I recently attended a conference where a club owner from Indonesia expressed difficulty in changing consumer perceptions of price vs. value. In their culture, price is still a major decision factor for gym members in Indonesia. The same exists in US health clubs too, so how do you successfully convey the perception that value > price? What do you do to prove to consumers that they should join your club over a low cost club.

 A: Conveying to your market that value is greater than price requires you to deliver value. Apply the universal principal of supply and demand. Price driven businesses are offered as a commodity. The specific application of the term here that there is a class of goods or services in a market where there is demand and there are no discernible differences between the suppliers.  

The challenge is to differentiate your business through your mission, vision and values. In a competitive market there are five areas to evaluate: staffing, competition, facilities, programs and services and service. 

Employees are selected, trained and utilized is intentionally.The club leader must display the ability to blend a keen financial background with the ability to employ and manage people. Once on board, when a performance management approach is applied, the culture will evolve and a value will emerge.  

The physical plant, types of equipment, color, set up and cleanliness of your facility are fundamental to setting up a remarkable and outstanding club. Service is applied in all parts of your business including the sales process, member interaction, management and program delivery. Ensuring branded delivery is a significant value driver.    

A firm grasp of the competition is a must including member counts to assess market penetration will provide you with the fit for all clubs in the market. The menu of programs is a large part of the value proposition.

Knowing the current member base and an assessment of the attitude toward your business is paramount in the value business. Driving growth through customers who are promoters (the NPS approach) must be part of the club operating plan.

Taking a systematic approach to defining your business in your market defines you on the spectrum of clubs with a commodity on one end and an intentional, differentiated and member driven enterprise on the other end.  Differentiated business drive value and price and over time as the experience people gain with the business changes, results from their activities increase and the discussion goes to results and experience.

Jay Herson 
Boston Athletic Club


A: Price has two aspects – “affordability” and “value.” Can someone afford your product or do they not see the value provided exceeds the “cost”?  When a value proposition is met, it occurs at the intersection of these three attributes:  Is the product “Useful” – does it solve my problem? Is the product “Usable” – is it easy to use and “hassle” free?  Is the product “Desirable” – do I want to belong there?  Is there some aspect that makes me emotionally connect with the product? Desirability comes when internal “wants” are met – prestige, pride, confidence, self esteem … this is usually created by the PEOPLE involved in the business and the BRAND that is built.  Showing how your club exceeds competitors (low price or high price) on these three attributes (especially “Desirability”) will help enhance, define and articulate your Value Proposition.

Bill McBride
President and Chief Operating Officer
Club One, Inc.



A: Your price point reflects the quality of the product. As you develop your product and services and compare your product and services to the competition, you must make sure you are confident in your pricing. Whether your product is a Northface jacket, the iPhone 5, a Coach purse or a Health Club membership, the Owner needs to set the price accordingly and stay true to the pricing without discounting the price.  Discounting your price causes an immediate reduction in product value.

Mark Stevens
Regional Director
Houstonian Health Clubs and Spas


A: Creating a successful value proposition often depends on a very diverse set of factors. Unfortunately, there is no single proven formula for differentiating your club from competitors based on perceived value. One thing consulting with clubs of all types around the world has reinforced with me, is that every situation is different. A club that customers view as having a very high perceived value in one setting, may be seen entirely differently in another competitive environment. A common theme among clubs that have successfully established a consistent value proposition is their adherence to a specific definition in the mind of consumers regarding their place in the market. Even “low priced” or “budget” clubs must validate the value offered compared to the price. Behavioral scientists have confirmed that even the price of one cent is “too expensive” in some cases for people to perceive a product or service as worthwhile.

In today’s hyper-competitive culture, clubs wanting to charge higher prices must justify this positioning more than ever. The best way to do this really does depend on each unique situation. Perhaps it is a more prestigious location, nicer facility, better equipment, higher quality programs, extensive class offerings, staff expertise, overall customer experience, or all of the above. Think about what makes your club different (noticeably different to the consumer) and consciously build value around this premise. A good book on this strategy is Differentiate Or Die, by Jack Trout.  The proliferation of clubs across different price points is presenting new challenges to operators around the globe, and this will continue to stimulate the need for heightened awareness of value creation /perception.   

Brent Darden
TELOS Fitness Center


A: In today’s competitive market, consumers are judging us on the entire package; because, a treadmill is a treadmill, and a bike is a bike. Creating a strategic plan that allows you to optimize your uniqueness in the marketplace is what’s key in allowing you to capitalize on you value proposition. If you are having trouble differentiating your club’s value from one that is supposed to be in a different market segment, then there is most likely a disconnect in how consumers perceive your club’s value.

I was taught a long time ago that a club’s value proposition is made up of three pillars: 1) Facility, 2) People, and 3) Offerings. Like a three legged stool, each pillar is unique to itself, yet contributes greatly to the overall performance/success.  Within these three pillars you are able to recognize the strength and weakness within your product; and identify what truly differentiates your club.  

In order to optimize the value proposition you must first understand what your customer is looking for; and then establish a value proposition to capitalize on it. Your ability to understand what your customer is looking for, and align these three value proposition pillars, is what helps create an effective sales strategy in the market. 

Always remember, your club’s value proposition is a promise, a promise of value to be delivered to the customer, and a belief from the customer that value will be experienced.  If your price and value proposition are aligned, then you should have the success you are expecting.

Brad Wilkins
Vice President/General Manager
Cooper Fitness Center



Pricing, Sales Staff, and Market Research

Everyone once in a while, we get some answers that aren't quite comprehensive enough to post on their own. That's why today, we've got a special edition featuring three important questions and three informative (though short) answers. Enjoy:

Q: “What is the appropriate number of sales people at a club?”

A: The right number of sales people depends on the right type of sales people, 2 good ones can do the job of 4 poor ones. Based on selling around 200 memberships per month it would make sense to have 3 or 4 good sales people based on the number of prospects they can see and number they are likely to close. All staff should assist in selling but part-time people can be very useful at peak times.

Andy Jackson, Global Commercial Director
FitPro LTD

Q. We are planning to open a yoga studio, and are curious where the best information can be found regarding all of the business needs for a small health club facility? Is there a guide or something you recommend to startups?

A: The best course of action for someone who is opening a studio is to shop comparatively in their area and look at health clubs and studios to see what is working and what is not. YogaFit also offers consulting and a partner program to assist businesses. Its important to look at local demographics as well and choose carefully where they open.

Download Studio Success by Beth Shaw (PDF)

Beth Shaw, Founder & President
YogaFit Training Systems Worldwide, INC.

Q. We know some of our competitors are going to undercut our prices significantly this January (for the New Year's rush). How can we continue to attract prospects without lowering our prices to an unreasonable level?

A: I feel strongly that we must refrain from the dangerous and vicious discounting cycle. IHRSA is the association of "quality" clubs. Even during the most challenging economical times I feel the consumers will pay for quality athletic club memberhips, automobiles and other personal consumer items.

Competing on price alone hurts all of us and sends a message to the consumer that we are only worth the discounted price. Rather, we need to be doing anything possible to stay the course with our pricing but add value in other ways. I urge all of us to compete by adding quality services and member experience and not on discounting.

Steve Krum, VP of Facilities & GM
Spectrum Clubs


How to Price a Personal Training Business

Q: “I have been running my own personal training business for over a decade with many long-time, loyal clients. I am planning on moving out of the country soon and am considering selling my business. How can I price a business like this?" – Derek

A: The net worth of your business is equal to the net revenue generated from personal training sessions during the previous year.

It goes without saying that your marketing, wage, payroll and operating expenses have been subtracted from the gross procured to get to your net. Many will negotiate a price using numbers that reflect the expected net for 1+ 1/2 years rather than the year’s actual net, when business is as well established as yours, when the business has a branded program option attached, or when the business has a history of high renewal or resign.

Most believe that these figures can be seen as fictitious, though, and can often lead to concerns with breach of contract. Experts will recommend that a buyer sign an open ended contract so it is best not to address estimated numbers during the sales process.

Studies have shown that new owners may be in need of using your services as a consultant when buying. Establishing this relationship at the point of sales is often recommended.

Ann Gilbert, Reg. Dir. of P.T. & Operations
Shapes Total Fitness for Women


A: You may want to rethink simply selling your business. If you have a great accountant or business lawyer, talk to them about the advantages of keeping your business and/or perhaps partnering with someone. If it’s a thriving business, you could still bring in income as a “silent” partner.

Next, consider the following:

Are you the business? In other words, if you’ve built your business by branding yourself and your image as the business, someone may view that as a negative once you’re gone, (thus the advantage of keeping some ownership or all of it and having someone run it). It makes a business tougher to sell.

Take a look at the market demand and perhaps research what similar businesses are selling for in your area. This is something that again, your business expert can help you with.

There are dozens of areas to cover when it comes to selling a business. So my first suggestion is to connect with a solid business resource as I mentioned above, i.e., Accountant or business attorney. They will be able to walk you through the steps and give you an idea on what your business is worth, thus allowing you to make a more educated, profitable decision.

Nicki Anderson, President
Reality Fitness, Inc.


Increase Prices Without Killing Retention

Q: We solely rely on cash payment from customers owing to an absence of EFT direct debit system and also because this country is largely a cash based society. We have prepaid monthly membership, which means that the customer has the option every month to bail out of the contract if he seems a discrepancy between the price-value relationship. This, in turn, makes us work very hard in the sense that we're unable to estimate our attrition rates.
How does one determine the right time to increase prices and still uphold the value proposition for the customer?

A: It was not that long ago that the US health club industry felt that the public would not accept EFT payments for membership. We began offering lower dues to members who were willing to try the EFT billing system. Within a short period of time, the majority of members were selecting this option. We continued to offer the cash payment option at a premium price.

  I recommend that you get into a practice of increasing your dues once a year. Let members know they can expect to see an increase in dues, relative to increased costs, each year. You can explain that your club prefers not to solve these increased costs with staff or service reductions.

The best time to do a dues increase is in conjunction with your busiest sales season. In the US, this is typically January when clubs experience a high volume of new memberships as people make New Year's resolutions to take better care of themselves.

My suggestion is that you consider combining these two issues into one solution. I recommend that you revise your membership pricing structure. Increase the cost of your current cash payment membership offer and offer a new EFT membership at the current dues rate. Notify all of the existing members that you are imposing a dues increase but they can choose to avoid this increase if they sign up for EFT billing.

Jill Stevens Kinney, Managing Director
Clubsource Development Partners LLC