Today's world is "on demand." Didn't catch your favorite TV show? Just watch it on your laptop tomorrow — or wait until the end of the season and binge-watch the entire year. Heard about a great "Tonight Show" sketch? Just go to YouTube. Want to take a group exercise class that's not offered when you're free? Well, there is a growing answer to that, too, and it doesn't involve people moving furniture around their living rooms to make room to follow along with a DVD.
Increasingly, health clubs and other fitness facilities are adding pre-recorded group exercise classes to their mix in an attempt to increase programming options and eliminate objections in the membership selling process. This is extremely important, as group exercise class members are historically among the most loyal members and leading referral-givers.
There are initial and continuing costs associated with utilizing a third-party provider — up to $10,000 for initial setup costs and ongoing monthly fees of about $150, as well. However, money-saving and revenue-generation can result over time, as more classes can be offered with less staffing and better utilization of dead space.
"In the traditional model, clubs can only offer classes during peak hours of the day so that the high traffic creates a low cost per head that will justify the class offering," says Jason Campana, vice president of Minneapolis-based Wellbeats, which provides equipment and programming for facilities offering on-demand group classes. "The industry average for a good cost per head is about $1.25. Based on the cost per month of offering Wellbeats virtual classes, and the number of class plays our customers traditionally see, our cost per class is well below the industry average on a cost-per-head basis."
In fact, about a year ago, in an attempt to keep popular group exercise classes available in the face of potential staffing cuts, the Air Force expanded implementation of its Fitness on Request (as Wellbeats was known at the time) exercise kiosks to 66 bases, saving the Air Force as much as $10 million. And while the impact on a health club may not approach that number, the long-term ROI can make on-demand group exercise classes worthwhile.
Can offering these on-demand classes really help a health club owner grow his or her business?
According to Garrett Marshall, business development director of Fitness on Demand, in today's online shopping environment every bit helps. "Today's member is shopping for health clubs the way they shop for everything — by looking online — and it is so easy to shop clubs without even leaving his or her desk," Marshall says. "If a potential member looks and sees you don't offer a certain class at a certain time, he or she may not even come in to kick the tires of the club. Offering these classes in your mix can help eliminate an objection and bring in someone who may never have even picked up the phone."
In fact, in a case study soon to be published by Fitness on Demand, Desert Sports & Fitness of Tucson, Ariz., reports it has utilized the on-demand classes as a differentiator to attract new members. "It allowed us to raise our ticket average because we are offering a product like Fitness On Demand," Desert Sports & Fitness manager and trainer Victoria Vega says in the study. "It really has become a great sales tool for us."
While early in the process, Bill Rundle, owner of Boston-based Mission Fitness, is considering adding virtual classes, but is still unsure of the potential ROI. "As a very small, boutique club, we've never offered any kind of group training, especially with limited space and budget," says Rundle, whose 24/7 gym fits into roughly 2,000 square feet but could double its size in the coming months. "But we are expanding a bit and believe this may be a cost-effective way to offer classes, overcoming some objections we've gotten at our current price point. Also, we see this as a way to graduate members into paying for live, small group classes, as well. We just need to be sure the numbers really work."
Jim Thomas, founder and president of Fitness Management USA, a management consulting and turnaround firm specializing in the health club industry, believes the numbers may work and has several of his clients considering adding virtual classes to their mix.
OUTSIDE THE BOX
There is a twist. Thomas and his clients are looking at skipping the "middle man" and utilizing their current instructors and classes. "Our clients who are looking at this are recording group exercise classes. Generally most clubs already have the equipment it takes to get something started, but if not, the investment is usually minimal," Thomas says. "We are looking at this as a way to save potential cancels, keep the member onboard in a different manner and continue to receive revenue."
Thomas adds that some clients are exploring the use of technology to deliver classes off-site. "Clubs are considering showing classes live via Skype right in the person's home, in addition to offering them in-club," he says. "We're looking at this a bit differently than just the virtual trainer inside the club. This has great potential to keep members who move away or even attract those who are not comfortable in a gym environment and have them be a revenue source."
While few clubs are likely willing to undertake the production and distribution of video classes themselves, or have it be the sole delivery system of group exercise classes, making virtual programming at least part of their delivery options is the most common scenario by those who have signed on with Wellbeats, according to the company. "Virtual programming can and does coexist with traditional group exercise," says Campana. "We've learned that when integrated successfully, clubs can spread out participation, attract new participants and create a bridge for those intimidated by the live group class format."
It is that bridge — to traditional group exercise classes or fee-based small groups — that may be the benefit of delivering group exercise on demand. They may never completely replace live instructor-led group exercise classes, but virtual, on-demand group classes may be worth a look for club owners hoping to fill empty rooms, provide more alternatives and perhaps improve the bottom line.
"These classes attract a similar demographic that traditional live group exercise classes do," Marshall says. "And many in that profitable demographic may not have taken a group exercise class for one reason or another — be it intimidation, time restrictions or some other reason. This is a way to get them not only in the club, but involved with the club."
John Agoglia has spent nearly two decades either working in health clubs or writing about them. He currently writes for several digital and print publications in and out of the fitness industry.
This article originally appeared in the July 2014 article of Athletic Business under the headline, "Demand Performance."