Thursday, 16 October 2008

Abdominal Credit Crunches

Gyms and health-clubs have hard times ahead. The credit crunch is going to impact on membership figures as people start to cut-back on non-essentials; anything with a monthly direct debit will suffer, starting with the £50+ per month gym fee, then down through the satellite TV subscription to the charity donations.

On top of this, new budget offerings from clubs like MiFit and FitSpace costing from £9.95 per month are going to look more and more attractive to the average person who wants to work out once or twice a week, and doesn’t want the frills. This will hit local authority and public clubs first, as there is less to differentiate them, and they often run short term contracts, or none at all.

So how do gyms survive in this brave new world? Some clubs plan to try to increase sales, which is the wrong answer. Increased sales means more focus on new joiners, and unless you are taking on more staff, this means less focus on the existing members, which will increase drop-out. Retention is going to become so very important over the next 6 -12 months; clubs without a retention policy are likely to be in big trouble. Some suggest that 50% of the club’s marketing budget should be spent on member retention, which is a good start!

Measuring monthly attrition (drop-out) rates and then setting a target to improve (or at the worst, maintain) that attrition rate should be a priority. All staff in the club should somehow be accountable for part of the picture, and everyone should pull in the same direction to ensure members are motivated and returning to the club on a regular basis.

The health club industry is facing some major changes. The combination of the credit crunch and budget gyms means many clubs will have to evolve to stay alive. Differentiation will be the key, and clubs must demonstrate value for money to their existing members whether it be a fluffy towel and sauna, or simply tracking improvement in the member’s fitness levels.

1 comment:

Ray Algar said...

Hello Guy

Health club failures will probably peak during 2009, but the industry should be left stronger. Hopefully, clubs will revert to genuinely focusing on members. Let's also look forward to more innovation as evidenced by the arrival of low-cost clubs to the UK.