I’ve never liked people who criticize someone without offering their own ideas for a solution. It’s counterproductive and, on some level, cowardly.
Last week I said believe Planet Fitness’ low-priced membership strategy may cause long-term harm to the industry. Whether I agree with it or not, it is a valid attempt by a successful business to find a solution for a problem every club is facing: getting more customers in an economic crisis. And, in the spirit of my statement above, I would be remiss if I didn’t offer another possible solution for clubs looking to lower prices without devaluing their services.
Here is my idea:*
Forget the “Pay as You Go” membership model. What about “Pay as you DON’T Go”?
Clubs want to build loyalty, right? You want your clients to build fitness into their routines, value the services they receive at the club, want to spend time there. Why not reward them for doing exactly that?
Say each club visit is worth $5. You establish an “ideal” visit rate of three times per week, averaging out to $60 per month. So, the member’s base fee is $15 per week. If they go once a week, knock $5 off their dues. Twice a week, knock off $10. Three times per week, and that week is free. Your members are saving money by working out at your club.
And while these sensible members are at your club, sell, sell, sell. Sell personal training sessions, sell smoothies, sell weight gloves, sell private Pilates lessons. Sell the heck out of everything you’ve got without being too aggressive or annoying.
If you employ this model, you’re obviously taking a risk. What if members do exactly what you want them to and come to the club like clockwork? Perhaps you could establish a base fee, and the $5 per visit is on top of that. What if members stop by on their way to the grocery store, swipe their card at the front desk and count it as a workout? Perhaps you could require members to swipe in and swipe out, with a minimum visit length of 20 minutes. Problems will pop up, but so will solutions.
Now’s your chance to tell me why you think this idea won’t work — or why it will. The comments are open.
*Whether you love it or hate it, I promise this is my own idea. I thought of it at my dining room table while nursing an epic Easter head cold. However, if another club has already come up with a similar idea, please let us know in the comments section.
1 comment:
Hi Heather,
A couple of things before I discuss your idea in more detail.
First, even though I disagreed with the assertion in your original post that the low price business model (specifically the Planet Fitness model) will exert a deleterious effect on the industry I always appreciate and encourage divergent thinking. In my opinion there is too much ‘monkey see monkey do’ in our industry and original (and critical) thinking is often in short supply.
Second, I think it is perfectly reasonable to ‘criticize without offering a solution’ if the criticism is given in good faith (not malicious for the sake of being malicious or to advance an undisclosed agenda) and is constructive (provides alternate avenues of inquiry).
Finally, I commend you for having the conviction and courage, after some rather pointed criticism of your previous post, to invest your time and energy into exploring alternative business models, offering it up for scrutiny and encouraging an open discourse.
Here are some thoughts on your idea.
The Good
It is a novel solution (I have never come across it in practice). I guess it is conceptually similar to a reverse auction where bidders would bid down the price. Under your simple premise the member would ‘attend’ down the price?
The Bad
Your idea focuses on a singular dimension… price. To compete against the low price model businesses have two choices (1) implement the same disciplined operational economies and efficiencies through innovation and technology; or (2) differentiate themselves in ways that offers compelling value to their market(s) that they are willing to pay for e.g. demonstrable expertise, superior experiences, improved training outcomes, complete health, fitness and wellness solutions etc.
Businesses that try to do both (and most do to some extent) typically get caught in the middle and feel the squeeze from both ends. You can not be the cheapest and the best. And you can not be the best at everything for every single market.
I understand that the idea is to encourage members to attend more often but I think that there would be a very real danger that once the member had missed one or two sessions for the week they would feel like they were being gouged at $10 or $15 per week since their expectation was to train for free. As their ‘penalty payments’ accrue they effectively have a financial incentive to cancel their membership.
Even if you are able to increase attendance rates your idea does nothing to improve the quality of the member’s experience once they are in the facility. It may just result in 'more of a bad thing' from the member’s perspective. I understand that attendance correlates with retention but a correlation does not necessarily demonstrate causality.
Finally, even if you do meet your stated goal and achieve your desirable attendance rates those members will be your least profitable i.e. training for free or at very low cost. Your core membership of most profitable members all of a sudden becomes your least profitable members and your least reliable members (the ones most likely to drop out) represent the most profitable… if they keep not attending and paying for their non-attendance.
The Ugly
I think that administration, compliance and payments would be a nightmare (especially with existing front desk software).
Attempting to subsidize free or very low cost memberships with ancillary sales is an extremely tall order especially since you need to recover the lost membership revenues just to breakeven (i.e. get back to where you were before). Would the member who now trains for free feel compelled to purchase 10 personal training sessions (or their equivalent) or would they simply put their savings towards other things.
I hope this helps get your idea to the next level. If you need further explanations of my views I’ll be happy to provide them. I have myself been working on a Product and Service Innovation Framework for health, fitness and wellness businesses which I intend to put up for public review soon. I hope you will offer your feedback (positive and/or negative) when it comes online.
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