The below Q&A has been edited for clarity and length.
Q: Is price reduction a good strategy in the reopening phase?
JOSÉ: At this time it is really difficult to answer if you must change your pricing structure. I would believe that you will have the answer as soon as you get the first payment in your clubs. So if I feel like if I'm going to open on the first of July, I will see what happens in the first payments.
[Industry expert] Paul Bedford said that this is going to be the biggest presale in the history of fitness. I do believe it's going to be, so we will need to adapt in the first month. I don't know if the members will see the gym as an asset or a danger zone, we don't know at this time.
So, I would keep my pricing structure and try to see the damage of cancellations and suspensions first, then I will move fast if I need to. You need to see the balance when you reopen to see if you lost a membership, and you are going to lose members period. So are you losing a lot or losing a few and then go on the offense and try to move and use the health part of it. Everyone needs to get their immune system up… .
This is a bad time. I don't want to pass a positive-only message because we are operators and we are having some problems. But if anything is going right, is the notion that humans need to be healthy.
At this moment, I will not change my pricing structure. I will see what happens when I reopen. And if you have a club with 2,000 memberships, and 1,000 clients already made a cancellation request, you need to prepare a plan to recover the members and to get new members. No one knows what is going to happen. It's all about scenarios. Do your scenarios, but you never know what's going to happen. Just wait to see what happens. If you have data from your customers, you can attack immediately. But if members are stable, just keep it as you are. And then, I believe, that the market will change and then you need to react to the change on the market.
Q: Do you have a backup plan in place in the event you have to close reopened gyms due to a resurgence of the coronavirus?
JOSÉ: We do, but the thing is, we already have done this one time, so it's easier this time to have some damage control, but we are really focusing on our reopening phase right now. Our reopen plan is already in place. But yes, you need to prepare. When the curve is more flattened, you are going to have for certain a second wave. Until the vaccine, our market is in trouble. I have to be honest with you, we are a little bit in trouble, but I do believe that we did survive a different crisis, this is probably the worst crisis, but we will survive. We will thrive and people will get the real notion of the benefits of exercise. But yes, keep in mind that you need to plan and to make different scenarios for what's happening.
Q: Can you just explain your membership structure currently?
JOSÉ: So if people pay their membership, our [online] platform is integrated with our management software system. So if the payment is in, they have immediate access by an ID, and have access to the base content. We do have some premium content as an add-on, even to members, but if you pay, you have access to the online gym. You can see a lot of classes and a lot of content.
If you're not a member, you can pay for a class, and you get the class for 24 hours. This is like a rental class. You never download the class. Even our members never download the class. We have a Vimeo platform that records it, so you cannot download it. If you are a member, you can see it as many times as you want, and as a member you pay for 24-hour access.
Q: How would you recommend switching from free content to a paid program? Are there any tips you have on transitioning?
JOSÉ: Yes, keep the old ones—don't reduce content. We started with one class, one challenge, one article … keep them. But we have one class a day on our social media for free, and we have 25 in our online platform. So, if you want one, you go to all social media. If you want 166, you go to our group fitness class, and we will change the classes: Zumba, yoga, Pilates, etc. So, if you want to have your class, or set a group fitness class, you go to the online platform. This is the kind of model [where] you have the basics for free and then you get the upgrade doing the platform. But please do not reduce content because people will see that and they will say, “You are trying to get me to go to your paying platform.” We never changed the way we saw things and did that since the beginning. When we started, on the first day when we closed, we said this is what we are going to do, period. And our researchers wanted to give more and we said, “Calm down.” We will do more at the right time. So keep calm.
Q: What is your structure for payroll and staffing?
JOSÉ: Well, at the beginning, we maintained all people working for us as normal. We recently did a reduction because all countries are doing special layoffs. We needed to do this also because we don't have revenue. But we didn't fire anyone and we did renew some contracts. We passed some interns to contracts. We are a big company and we have obviously a huge responsibility. We are going to reduce some timetables [schedules] for a huge amount of people, but they are actually on our payroll and they're still earning at least 65% of their income. … Our main issue is to protect people.
So as you know, we are in a business and we need to make money. I'm not here talking just from my ideal standpoint. But we have sufficient money to pay our instructors and pay our people so we try to get through this crisis without firing anyone. But I do want to say that I'm not going to question people that fire because they don’t have money … . So everyone has to see their own case. I will say this, if you put some paid content, you should have enough money to keep at least some of your top instructors.
Q: Do you believe shifting focus from group training to personal training (one-on-one) training will be beneficial?
JOSÉ: I do believe that personal training is going to ... increase. I'm going to see a decrease in group fitness. In Portugal, we don't have a lot of group training. I know in the U.S., you have it. You are going to see a reduction in social activities. So it's easier to sell personal training because it's one-to-one, instead of one-to-five. We will have a huge amount of problems with group fitness. So, we are figuring out a few ways of doing that right now. We are going to have a plan to try to minimize that. But yes, our clubs will have a huge amount of problems with social activities ... and I strongly believe this is the moment for personal training.
Q: How soon after you open would you have a re-grand opening celebration?
JOSÉ: Well, I'm going to be honest with you at this moment, celebration is the last word in my dictionary, but we will find a way of doing something to get people motivated. This is a really good question. I do believe we are going to open with restrictions so maybe you have the party in September or October or New Year's Eve. But at this moment, I would believe that especially in Europe, clubs will open with restrictions … with masks. Not because we want to, but because the governments will say this is the new normal. You are going to see—as if you went to Tokyo and Beijing some time in your life—this is going [be] normal in Europe [where] people use masks if they are ill and to protect others.
I would say before doing the celebration, we need to do something more of our responsibility—a hygienic way to reopen to say we are safe, we are good to go. We separated ... a lot of things. We did a review revamping our business … and then when we get the vaccine and everyone just goes to 0.001% of mortality, we can do a huge party.
Maybe we can go to Las Vegas to the IHRSA Convention next year and do … a huge party to get motivated again!