Identifying Operational Challenges as an Independent Club

Because I write a column that often focuses on helping club owners and managers become more successful in their own clubs, everyone usually assumes that we have a great club (true) and are wildly successful (not necessarily true).

I wrote last year about the closing of our second location, how it came to be necessary, how we handled it and how it impacted the community, our staff and our members. Well, we have also experienced some tough times at our main location. Last year was easily our most difficult year since we started in 1995 — both professionally and personally.

The club experienced a slight decline in membership as 2015 progressed, but I assumed that we'd see renewed signs of growth by January 2016. When the New Year arrived, membership numbers were better, but certainly not great. February and March weren't great either. And then membership began to shrink again.

Revenue declined in almost every category. We didn't have enough new business (memberships, corporate clients, personal training signups, etc.), and we were starting to incur debt. Things were sliding downhill — fast.

We had been at our main location for more than 20 years. We had had our ups and downs, but for the most part we had grown as the area around us had grown. We had always been a part of this community. Something wasn't right, but I could not figure out what it was. What was the problem and how were we going to fix it?
 

Statistics and opinions
I examined my numbers to see what they showed. We were signing up new members, but far fewer than ever before. In 2016, we averaged 10 fewer new members per month than in 2015 and 20 fewer members per month than 2012. Cancellations weren't increasing, but they weren't going down either. Our total membership base was eroding.

I turned to a friend who is a longtime member of the club and a successful businessman. I showed him my statistical evidence of our membership and revenue declines. He immediately pointed out that all of my statistics were looking backward. There were no projections for growth and no goals. I had no plan to move forward.

The next thing he said shocked me: "The club isn't the same anymore." I thought to myself that this couldn't be true. It's clean, we have great equipment, great classes and great staff. And I'm here every day!

So I went to another friend. He and his wife are also longtime members, and he and I often discuss business issues such as marketing, staff training and customer service. I asked him if he thought the club was different than in the past. His response: "Absolutely. It's not as friendly, there aren't as many staff people in the club, and I don't know the ones who are here now."
 

Personnel and competition
I had to take a hard, critical look at my club. We had lost several fulltime personal trainers in 2015 (all of whom were in their 30s and 40s), and two of our department heads (both with us for more than 15 years) had left the club business.

We always try to promote from within, and we had filled these positions with a combination of new hires and younger staff people. I had moved off the floor and into an office as a result of some behind-the-scenes changes that took place in our business. We had fewer senior staff people on hand to show the new staff "how we do things" and to lead by example. The result was, in fact, a club that wasn't the same.

But I knew that staff, training and customer service issues weren't the only explanation for our recent decline. We also had increased competition — first from several small boutiques (personal training, Zumba, climbing, yoga, cycling), then from a large, low-priced franchise.

I wasn't worried. We always said we were a great club that was worth a little more per month. We were fanatical about cleaning. We offered great classes that other clubs simply couldn't match. And, other than an aging YMCA, we had the only indoor pool in our market. Was that not enough anymore?
 

Uncertain future
We were still marketing and advertising, and we were using methods that had worked for us in the past. We did a billboard campaign with a humorous theme, something that in other years had always generated a little buzz in the community. We took out a large ad in a direct-mail coupon magazine — "Enjoy a Free Week at Elevations" — that traditionally resulted in dozens of new members and lots of excitement in the club. We did a "refer a friend" promotion, allowing our current members to bring their friends to the club and offering members prizes if their friends signed up.

None of these marketing campaigns resulted in a significant increase in membership. As 2016 started to wind down, we were in danger of not surviving through 2017. I knew I had to make some significant changes.

How was I going to address our shortcomings when it came to customer service? How could I get my staff to see that we were falling short of our customers' expectations and get them on board with new training procedures? Moreover, what could I do about our seeming invisibility in the marketplace? How could we become community members' go-to place for help in meeting their health and fitness goals?

That's the uncertainty we faced as recent months unfolded in a year that could have easily unraveled — that is, were it not for advice I sought from outside our club's inner circle.

Next month, I'll tell you about the person who convinced me to change our membership structure, pricing, services and marketing — and how well it's working for us. And I'll also reveal why I'm a little afraid of her.

This article originally appeared in the September 2017 issue of Athletic Business with the title "Our pivotal 2017, Part I: Operational uncertainty" Athletic Business is a free magazine for professionals in the athletic, fitness and recreation industry. Click here to subscribe.