January, with all its New Year’s resolutions, is easily the most important month for gyms.
But faced with increasing competition in the fitness industry, many gyms are moving away from a longstanding but sometimes controversial business practice.
Historically, many fitness clubs would rely on a portion of customers rarely using their memberships while still paying for them.
It’s in the interest of the organization to sell as many subscriptions as possible. You hope that they set it, and forget it.
– Robbie Kellman Baxter, author of The Membership Economy
“If you think about the traditional gym model, they have limited stuff, limited equipment, limited space and people are paying whether they use it or not,” said Robbie Kellman Baxter, marketing consultant and author of The Membership Economy.
“So it’s in the interest of the organization to sell as many subscriptions as possible. You hope that they set it, and forget it.”
The gym and the buffet aren’t so different
In other words, running a gym is a lot like holding a buffet. Pasta and bread eaters — those who consume less, or the cheaper items, and cost the business less money — end up subsidizing the folks who hover over the more expensive oyster table.
And just like restaurants, gyms are notoriously expensive to operate. They require a lot of space, a lot of equipment, a lot of staff, and a lot of towels!
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Add in that gyms are typically open 18 to 24 hours a day and you have a very expensive business model that becomes difficult to sustain if everyone is taking advantage to the maximum extent.
That means if you only use your facility membership a few times a year (or never!), you’re effectively subsidizing the hardcore gym rats, like the people who wear down the rowing machines and use up all the lemongrass-scented shampoo.
Sounds like a plan built on fitness failures, but according to Kellman Baxter this kind of business model is starting to go away.
Disruption hits the gym
Like many other industries, the fitness world is being disrupted.
“There are new entrants that take different approaches,” said Kellman Baxter.
“I talk a lot about Crossfit, which is a kind of fitness franchise. They believe that if people aren’t coming, they don’t get the benefit, and if they don’t get the benefit, they’re going to cancel.”
Kellman Baxter describes Crossfit clubs as actively encouraging and almost requiring members to come to the gym regularly.
Boutique gyms, including Crossfit, spin, yoga and bootcamp studios have more than doubled in numbers globally from 2013 to 2017.
They’re now the fastest growing category among brick-and-mortar fitness establishments, according to the International Health, Racquet and Sportsclub Association.
“People actually get results which makes them more loyal and it turns them into evangelists who recruit other members,” said Kellman Baxter.
Gyms welcome ‘retain and refer’ model
Some gyms, including Calgary’s Big Sky Fitness and Alberta’s former World Health chain, are welcoming the changing emphasis on building customer loyalty.
That means these gyms actually encourage their members to show up, and will do things like arrange check-in phone calls, organize events, and assign staff to accompany people’s workouts.
A lot of gyms are under pressure as a result of outdated practices.
– David Brodmann, GYMVMT
“It’s no longer necessarily just about what’s the closest and cheapest,” said David Brodmann, president of International Fitness Holdings, which re-branded all Spa Lady and World Health gyms under the name GYMVMT.
“A lot of gyms are under pressure as a result of outdated practices,” he said. “We to a large extent welcome this wave of consumer choice and knowledge.”
As part of its recent makeover, GYMVMT “de-bundled” all the various services offered by its 19 locations in Calgary and Edmonton to give customers more flexibility in access and pricing.
Brodmann said the decision to move away from the one-plan-fit-all scheme was a “difficult but necessary” one.
“We took a real, fresh look at how we’re serving the modern consumer and concluded that not everybody needed everything that we were offering,” said Brodmann.
Spending more to sweat more
Similarly, Big Sky president and former Calgary Stampeder Brian Strong says he’s been able to grow his gyms’ membership yearly by doing things competitors might deem counterintuitive which increased costs.
“We arrange things like a snowshoe adventure,” said Strong. “We lead it and we bring all of our members for just the cost of the snowshoes. That’s part of the community part of the club.”
Unlike most gyms, Big Sky also imposes a limit on membership numbers to ensure they don’t sell more than they can accommodate if more members access the facilities.
“Honestly the people who are here that use our club a lot — the highly active — they are also some of the highest referring because they’re happy,” said Strong.
“And honestly, they are the best ambassadors we have for our business.”
Written and produced by Falice Chin.
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