Bringing Your Fitness Chain into the Rapidly-Evolving Tech Industry of 2020

Jake Curreri
Jun 5, 2019 · 7 min read
Wexer https://www.wexer.com/

In June of 2016, at the annual Fortune 500 summer meetings, 72% of the Fortune 500 CEOs agree with the following statement: “These days, I consider my company to be a technology company.” Even more, 97% say their companies will change more in the next 5 years than in the past 5 years. 62% “strongly” agree.

Technology is expanding at a rate where new and established businesses fear the capacity to handle the change. Their quarterly earnings show slim margins to invest in ever-increasing licensing fees — and by extension R&D departments. With the dawn of the SaaS world, product specialization is clearly defined with tools focused on solving the most minute of problems.

These businesses find themselves at a loss of paths moving forward. No one — including industry experts — know what the next 5 years hold.

Tech in Fitness

The once-heralded, bare-bones, shoes-to-the-asphalt, raw-body industry has found itself at the center of the struggle.

Peloton https://www.onepeloton.com/bike

Peloton. SoulCycle. ClassPass. Headspace. Orangetheory.

To name a few of the industry disruptors, these companies are set on revolutionizing the fitness experience. Individually, they have mastered an elegant balance of branding, technology, community, and experience. Orangetheory just recently became the #1 retailer of Heart Rate Monitor (HRM) equipment. Peloton recently raised a $550M at a $4B valuation.

These case studies will continue to prosper. Why?

Orangetheory abides by this simple axiom:

Offering heartrate-based workouts, combining technology and science with community and accessibility for all.

Established chains often lack the infrastructure to replicate these types of technological innovations. Larger chains — Crunch Fitness or Equinox — have no trouble. Smaller chains are then left to mitigate club operations, automation tools, and marketing campaigns on tightly-lined margins.

Smart, scalable digital transformation exists.

Fitness chains are going nowhere (at least for now).

The top 10 markets across the globe account for more than two out of three health club members and 71% of total industry revenue. While the U.S. leads all markets in memberships and revenue at 62.5 million and US$32.3 billion respectively, Germany was second in both metrics with 11.1 million members and US$6.3 billion. The UK was third in the number of members and revenue at 9.9 million and US$6.2 billion, respectively.

Your Audience: The Millennial Market

SoulCycle https://www.soul-cycle.com/new-to-soul/

28% of club-goers are within the Millennial age bracket (25–33). Boutique studios attract a significantly larger percentage of Millennials than other facility types.

More than one-third of Millennial health club-goers participate in personal training (37%), while nearly two out of five engage in small group training (39%). Millennial health club consumers have the highest personal and small group training utilization rates across generational groups. This may be understood in light of their frequent participation in studio facilities, which primarily offer programs taught by a fitness trainer.

Full-service club operators can stand to gain from the increased likelihood of Millennials to engage in personal or small group training. Offering a specific training workshop for a limited number of sessions in a small group training setting can join together members with similar fitness or athletic goals. Even more, cultivating a studio concept within a club, if space allows, can make a full-service club stand out from peers.

This group demands technology and science with community and accessibility for all.

The Future of Fitness Chains

U.S. health club membership reached an all-time high in 2017, attracting 60.9 million members, an increase of 6.3% from 2016. Another 9.1 million non-members exercised at clubs. In all, nearly 1 in 4 Americans use a health club to pursue fitness and wellness goals.” Jay Ablondi, IHRSA’s executive vice president of global products.

Consumer-driven well-being is oriented around betterment. Interconnected dynamics for new business models based on mega-trends.

This leads to more wearables & apps, more personalization, more control.

Great. Where do we begin?

What does this mean for your facility?

6 steps to your digital transformation.

In the early 2000s, membership management software (MMS) functioned little more than a payment processor (the original days of ABC Financial or Jonas Fitness). They had a core job: process payments. Inspired by this success and the opportunities of scale in Inventory Management (IMS), Employee Management, and Access Control extensions, small-scale MMS providers entered the market.

Then, 2007 brought the era of the smartphone.

Consumers began to want more out of their fitness experiences. Lightning success stories such as the 7-Minute Workout app began to dominate the market. P90X proved the viability of at-home workout with over $200M in sales in 2010, accounting for the rise of Beachbody.

The MMS market struggled to keep up. The largest players went into rapid development sprints to push towards Open APIs and technology integrations. Over the last year (2018), most major providers have made great strides in these departments.

Digital classes. Virtual reality. Artificial intelligence. Machine learning. World-class content.

At one time the expenses for these technologies were insurmountable, but providers like Wexer, Precor, NetPulse, iFit, and TINOQ offer brilliant 3rd-party content, promoting MMS integrations and handing digital transformation back into reach of small fitness chains.

Fast-forward to present day, and MMS providers are all hopping on board with Open APIs, structure data warehouses, and secure member-facing tools. In fact, the conversation of payment processing is usually towards the end of their sales deck. Your MMS must be able to integrate with these 3rd-party players.

Picking a proper membership management software is operationally vital.

Each provider has its strengths and weaknesses. Only you know the right provider that fits the product of your clubs and matches the goals of your members.

Not only should PCI compliance be your first concern, but also your members’ general account information. Data migration of any software can be messy. Be sure to vet your MMS on how they mitigate transitions.

Good questions to ask:

  • What is the expected downtime during the transition?
  • How many engineers are assigned to the migration team?
  • Will a migration specialist be on-site during the transition?
  • Will there be migration test-batches of data prior to going live?
  • Have you migrated from X provider previously?

Use key resources to perform time-studies on your day-to-day operations. No matter the MMS provider, only you fully understand your club operations and processes. Prepare an internal team who will be able to perform and train the remainder of your staff on new process flows.

This is also a great time to implement a new communication tool such as Slack.

Some suggestions for time studies:

  • Adding a new member
  • Adding family members
  • Joining your facility online*
  • Freezing an account
  • Canceling an account
  • Making changes to an account
  • Refunding a transaction
  • Inventory management
  • Employee management
  • Childcare management
  • New California law: If you allow members to join online, you must also allow members to cancel online.

This team will also help with support beyond the capabilities of your new provider.

Outline what you want from your digital transformation. What are your key performance indicators (KPIs)? What sort of reports do you want on your facilities? When should you release your mobile app? Questions such as these allow for educated decisions prior to implementing an MMS. The implementation will take longer than you plan.

Set goals. 5-minute new-member journeys. 24-hour unstaffed, personalized locations. Daily-earnings reports emailed to general managers each morning.

New revenues streams take time to generate. Be sure to have proper analytics set up to track the success of different products. Your product offering is no longer a fitness facility. You have expanded into your members’ pockets, wrists, cars, and homes.

Take inventory of your changes. Setup training protocol for your staff. Allow yourself a 2-month period post-deployment to assess operations. We like to call this period the time for support.

Pressing Forward into the Era of 2020

Find an MMS. Prepare for data migration. Build an internal change-management team. Allocate time to strategic planning. Vet each vendor as if hiring a new employee to manage your most intimate financials. Be willing to expand into a tech company.

We’re in an exciting time where people are passionate about new, progressive ways to incorporate a healthy and holistic lifestyle.

It’s not a matter of if but when digital transformation will completely overtake the fitness industry. The task today is to align with industry partners for the transition.

(If you’re overwhelmed, give us a shout. We’re happy to guide you through digital transformation.)

SmallWorld

A global tech consultancy.

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