I’ve spent a lot of years involved in the business of health and fitness.
So I know the metrics well. Still, when I stumbled upon this sentence in a fitness chain’s public disclosure report, it bothered me:
Operating margin was 8.0% for Q4 2010, which includes the benefit of $2.7 million of revenue from unused and expired personal training sessions.
The clubs benefited from being able to take in $2.7 million in personal training revenue from people who paid for their services, but then bailed on their programs.
Yes, I realize that as a business owner, you cannot be held accountable for your customers’ actions. You cannot force someone who has paid real money for your services to to then show up and actually use those services. And there may be at least a partial argument in there when it comes to general memberships (more on this in a sec).
But, when people are willing to plunk down $2.7 for high-touch, individualized, results-driven services, then walk away without receiving value, can you honestly say it’s really all about them?
Doesn’t that make you wonder about you?
Where are you dropping the ball that so many people would rather walk away from their investment than avail themselves of the services they’ve already paid for?
Is leaving 17% (that’s what it came out to) of your most-motivated, committed, results-driven customers so unhappy with the service you provided and the promises you made they’d rather walk away than get their money’s worth really a “benefit?”
As long as we’re having this conversation, let’s broaden the lens.
One of the things that’s bugged me about the fitness industry for a long time is the fact that a high-percentage of paying quitters or non-attenders are built into the model. In fact, most clubs would go broke if everyone who paid them actually used their services. Because they’d have to expand their space, add a ton of classes and equipment to handle the load.
Clubs bank on the fact that many members will either never or rarely ever come.
They know that a large percentage of their members will pay, then stop coming fairly rapidly, but keep paying for a while. Because canceling the monthly auto-pay is tantamount to saying “I give up,” and that’s a tough psychological pill for most people to swallow. So, even after they’ve stopped going, the money keeps flowing for a while. Eventually, 40% will work up the nerve to quit and stop paying.
Same thing with the personal service packages they offer. Many expire with substantial chunks unused and this is built into the model.
Yes, there are standouts who defy these metrics, but sadly, they are the outliers, not the norm.
As much as the mainstream fitness industry claims publicly to be working like crazy to figure out how to up participation and retention, fact is very few providers have made even the slightest dent in their awful numbers.
Because the fundamental model is built on the backs of paying quitters.
They can’t push too hard to get people to love them because if they do, everyone would start showing up, demanding more and stressing facilities, services and staff that are built on the assumption that a huge number of paying members will never or rarely-ever actually show up.
That provides a huge disincentive for club owners and service providers to make the extensive changes to the model needed to build their businesses around services, solutions and experiences that are so enchanting and delightful that people can’t get enough, then charging what needs to be charged to deliver on the promise of lifestyle genius.
The industry says:
We can’t do that, people aren’t willing to pay what it would really take for us to create an experience that consistently blows their minds.
People aren’t willing to pay for the repackaged, lip-service modifications of the same old same old that tend to be offered up, then dismissed as failures.
They are willing to pay for “Sweet Mother of God, if I’d known it could be like this, I’d have been doing it decades ago.”
C’mon, industry, for years…YEARS…more than 90% of us adults have been saying we believe in our hearts that exercise is mandatory if we want to live well into the second half of our lives.
You don’t need to do any convincing! We’re sold.
But at the same time, for just as long, 85% refuse to participate in mainstream health clubs.
Okay, let’s make this easy for you:
- We want to have more energy,
- We want to be more pain-free,
- We want to sleep better,
- We want to be less-stressed,
- We want to feel great,
- We want to feel connected,
- We want to look hotter (yep, even old dudes like me), and…
- We WILL PAY if you can deliver on that promise.
But what you’re offering, at least for 85% of us is so devoid of the ability to make us feel this way and it’s being delivered in a setting, manner and mode that’s so insanely unappealing, guess what, we run like hell from it.
So, to the mainstream fitness industry, I’ve got a message.
Wake up! What got you here ain’t gonna get you there!
When millions of dollars of personal training services go abandoned and 40% of your members say I’d kill to get what you claim to deliver, but then quit, that’s not a “benefit” to your organization.
We want more. We want better. And, yes, we are willing to pay for it.
But, you’ve got to give us something that works not just for you, but for us.
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