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Entries in value (5)


Best Practices: Convincing Consumers to Choose Value Over Price

The following post was written by Brent Darden for our Best Practices series.

Question: How can we convince consumers to choose value (our club) over low price (the competition)?

Brent Darden: Creating a successful value proposition depends on a diverse set of factors. Unfortunately, there’s no single formula for differentiating your club from the competition on the basis of perceived value. I’ve consulted with clubs of every type throughout the world, and doing so has reinforced my conviction that every situation is unique.

A club that consumers view as having a very high value in one setting may be regarded quite differently in another environment.

The clubs that have succeeded in establishing a consistent value proposition have one thing in common: they’ve identified and clearly defined their place in the market, and everything they do conforms with that definition. Even “budget” or “low-priced” clubs have to validate their value-price equation.

In today’s hyper-competitive marketplace, the clubs that charge higher prices must justify this positioning with a more prestigious location, a nicer facility, better equipment, higher-quality programs, extensive class offerings, staff expertise, a better overall customer experience, or all of these.

Think about what makes your club special and distinct, and consciously build value on this premise; a good book on this strategy is Differentiate or Die by Jack Trout. The proliferation of different price points is presenting new challenges to club operators worldwide, which makes the issue of value more important than ever.



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



Sell Value, Not Price: Tips to Exceeding Your Sales Goals

Chuck Hall, Executive Director & Membership Director, Big Vanilla Athletic Club moderates "Member Center" Networking Roundtable.


Can Seasonal Memberships Diminish Value for Year Round Members?

Photo: Stuck in CustomsMike Minton discusses the adverse affects seasonal memberships can have on loyal, year-round members in this week's Best Practices.

Q: In the summer our club can become overrun with children on summer vacation. How can we manage that extra traffic and keep our year round members from becoming irritated with children running around the club all day?

A: I've detected two issues in your question. First, overrun with summer children traffic. Second the adverse impact seasonal usage has on year round members. Great questions both were challenges we faced and overcame through the years.

You must plan months before summer what facilities, programs, supervision, days and times you will allow various ages to come and partake in various activities. Children under the age of 13 must be accompanied by a parent or enrolled in a supervised club program. A common mistake made by operators is to allow children the same access and privileges adults and parents have. For all the right reasons (safety, fun, cost, disruption, ect...) you have to limit age groups to specific times and programs. Even better is to have facilities designed for use by children. These can be on site or off site depending on your offerings.

I'm not a supporter of summer memberships. We have the largest and most desired summer aquatic facility in the region. Our biggest issue is everyone wants summer usage and not a year round membership. We always want to create a value to being a year round member so we do not sell summer memberships. Yet summer is our busiest time of the year. We sell more year memberships in May, June, July than in January, February and March, the typical busy season in the health club industry.

It's not fair to adults to be adversely impacted by someone else's kids. Particularly non year round members. If you are utilizing common areas of the club you must provide proper supervision and specific programming that minimizes such conflicts or KAOS as we call it. Furthermore, post and use internal communications letting your members know when and where you are offering children's programming. Most members will appreciate what your doing with the children and avoid those times.

In closing, children present challenges but without kids and kid programming we would not be here today.

Michael Minton, Owner 
Minton's Sportsplex


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