Mid-Priced, Midsized Clubs Must Increase Price, Service

The Squeeze, which we wrote about a year ago, is growing tighter. If you operate mid-priced, midsized clubs, as we do - that means with fees of somewhere between ...

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The Squeeze, which we wrote about a year ago, is growing tighter. If you operate mid-priced, midsized clubs, as we do - that means with fees of somewhere between $40 and $60 per month and, say, 10,000 to 30,000 square feet - you know what we're talking about. You are getting attacked from both the low end and the high end. It's even worse if you are, as we are, "independently owned."

What to do about it? A year ago, we said that these threats meant "always executing at our best," and making sure that our market understands what we offer. But with the trend gaining steam, our thoughts on the subject run deeper than that.

When you are stuck in the middle, as we are, you have no choice but to nudge your business toward the high end in terms of both pricing and services. If you disagree, and think the answer is to reduce prices to move closer to the low end, we wish you luck. (Later, we'll tell you "We told you so.") The simple reality is that mid-priced, midsized clubs are laden with expenses that cannot easily be stripped away. So, if you want to go low end, be prepared to tear your business down to the ground and rebuild it, because you must align your expenses with your prices. Even then, your low-priced competitors are already much better at that than you (the chains' economies of scale give them a substantial edge), and anyway, does your market really need multiple low-priced clubs?

So, commit to move high end. Notice our word choice: "nudge" your business that way. There's no need to rush right out to raise your prices overnight, offer towel service, buy new equipment or hire all new staff. What you do need to do is start moving in that direction.

Embrace the Middle

The first thing you need to decide is who should be a member of your club. The answer is not "everyone." The days of "The Gym for Everyone!" are long gone. We sometimes think this is easier to describe in terms of who you are willing to let walk away.

It's not that those folks aren't welcome to join. Of course they are. Do you want young guys who lift heavy weights? Do you want senior citizens? Do you want moms? Do you want white-collar professionals?

You need to decide who belongs at your facility and then develop your message (your "unique value proposition," as many will call it) and the reality of your facility to appeal to the people you are targeting. You must believe and have your staff understand that there is a certain type of person who was born onto this earth to join your facility. You have to become passionate about who "needs" to join your gym, while also being confident about who you are willing to let walk out the door.

The second thing you need to do is to better train your staff. You need to consider every interaction that your staff has with members, every day, and make them better at it. If you don't know how to make them better at it, then hire a consultant or send them to training. (A recent article in AB, "Practical Magic" [Feb., p. 53], provides excellent food for thought.) They need to answer the phone better than they do now. They need to be consultative with callers and walk-ins in order to match prospects' needs to what you offer. They need to properly address questions such as "When is this treadmill going to be fixed?" They need to learn to shake hands and look people in the eye. (Yes, they do need to learn that.)

Why? Because this type of behavior is not what consumers will experience at your competitors. Planet Fitness once described its customer service as "hello" and "goodbye," and the chain obviously sells on price. On the high end, there are salespeople who have cubicles and quotas, and the consumer knows they don't give a rat's buttock about them. You are in the middle - embrace it! You have to care about those folks who are looking for a gym. They need to see that at your facility, they are more than just another warm body or just another sale.

The Gym That Cares

You have no choice but to be the gym that cares, the gym that can help people reach their goals. Where they will be comfortable and fit in. Where they'll have lots to do so they won't get bored. And all of that starts with a staff that is professional, polished and prepared.

While you are working on your staff, you had better get busy with your online presence. Check out the websites and Facebook pages for these competitors who are coming your way. You don't have to match their glitz and high-resolution images, but you do have to create an online presence that is consistent with your unique value proposition. It must speak to the "right" consumers. If you don't do that, why would anyone bother calling or stopping by in the first place? They'll go to the cheaper place or the more expensive place with the better website.

And then your "product" - your gym - has to be consistent with everything your prospects read and hear about you. You have to take your perceived disadvantages and turn them into advantages. So, the low-priced player down the street is packed with equipment and charges $10 per month? Maybe you have lots of open floor space with the sort of old-school equipment like kettlebells and medicine balls that are currently all the rage. Maybe a new cycle studio has fancy bikes and computers that display everyone's performance on a big LED screen. You can't match that, but you can have well-maintained bikes, instructors that are just as good, and rides that leave your members wanting to come back - which they can afford to do with you, but maybe not at that cycle studio.

Finally, you have to increase your "wallet share" from your members. Every study in our industry shows that members who spend money with you stay longer, which just makes sense. You need to sell programs and integrate your members deeply into your business. Personal training and small group training are obvious choices, and you must make these successful to be profitable. A mid-priced club without a successful personal training business is hugely exposed to the next gym that moves in down the street. You need both the revenue and the relationships that are forged by personal training. If you aren't doing well with PT, get help. Find other revenue-generating and relationship-building activities, too. Maybe it's group outings, maybe it's 12-week specialty programs. Whatever you do, you need to find ways to get your members to spend more money with you and build lasting relationships.

Be the Best

The challenges faced by clubs caught in the middle are not insurmountable. We absolutely believe that reports of the pending doom of independent, mid-priced, midsized clubs are greatly exaggerated. We're not going away any time soon, and we believe that squeezed clubs will thrive if they are run well.

That said, this is the new reality facing us, and you need to get busy adjusting to it. You're not the biggest and you're not the cheapest. You've got to be the best.

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