The Business Model of Guilt

“Come on. Last ten minutes of hard work. Keep going. Work off all those mince pies.” Shouts the smiley instructor sat on her spinning bike at the front of the gym class. You can feel your heart rate increasing, breath panting and sweat dripping. Later on in the changing rooms, you overhear murmurs of “I hate January” and “ Gosh, I ate too much over Christmas.” Once the sparkly dust settles in a new year, the guilt from your overindulgence comes to fruition.

New Year. New Guilt.
The christmas holiday prides itself on spending time with family members, partying with friends and colleagues, all of which tends to involve a mince pie, a chocolate, and a drink or two (or three). The notion of it’s Christmas is used as a reason — an excuse — this is because people have broken free from their usual everyday routine. As a result, the new year brings new guilt with new aspirations for the year ahead. Here, gyms and health clubs trade with this new year guilt; they incentivise new year memberships and advertise exercise programmes to get lean in 2016.

The Achilles Heel
The business model of guilt can be the gym’s achilles heel. It certainly gives opportunity to attract new members, in fact memberships can increase by as much 33–50% during January. On the other hand, the churn rate of members is huge and can impact the existing gym culture in which loyal members can feel threatened (similar to how the banks, energy and insurance firms have come under attack for betraying loyal customers).

As over 13% of Britons attend a gym this year and with spending up by 44% in the market last year, it will be interesting to see how the likes of PureGym and Virgin Active continue to compete for growth.

Business Model Innovations
Over recent years there have been various business model innovations tapping into this guilt. For example, Fitmob (now acquired by ClassPass) reduced the cost of exercise classes, sometimes by up to a third, the more frequently you used their service. Also, a service called Pact allowed users to earn cash for living healthy, paid by members who don’t. Pact (now called Pact Health) has since evolved into a provider of employee health insurance which acts a layer on top of a current policy, people can gain or loose money off their deductible coverage based on their workouts.

I would hedge my bets, that similar kinds of insurance models are on the road maps of other startups, with services such as Yomp combining the benefits of a healthy lifestyle with employee engagement.

Source: slice-of-slim.com

Not just for Christmas
Further more, guilt isn’t just for christmas or just for gyms. Guilt can be triggered in various situations throughout the year — Marks and Spencer’s guilt free snacking brand, epitomises the situation of being on-the-go, peckish and potentially guilty.

Jan Chipchase, a design researcher and founder of Studio D Radiodurans, extrapolated the notion of guilt further in his post on New Forms of Consumer Guilt. Chipchase reflects on his guilt for not using the internet connected product Twine and one of several questions asks: which companies will base their entire business model off the the disparity between intended use at the time of purchase versus actual use?

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Also published on Re-Fi Medium