Winning In The Fitness And Health Club Industry Will Require New Approaches In The Decade Ahead

By: Bill Davis

Before I share thoughts on winning in the new decade ahead, I first want to wish our customers and team members at ABC Financial a very happy new year. As my mentor and our Vice-Chairman, Paul Schaller shared recently; it is the most wonderful time of the year. We certainly have been working diligently at ABC Financial and thinking a great deal about the future ahead for the health club and fitness industry and how we can play a larger role and make a bigger impact for our customers.

Winning in business certainly required new thinking and new approaches in the last decade. When 2010 began, the world’s ten largest public companies by market cap were based in only five countries; only two of them were in the technology sector, and not one of them was worth more than $400 billion. Today, all of the top ten market cap companies are in the United States and China, the majority are tech companies, and some of these have even crossed $1 trillion in valuation at least a few times as their stock prices fluctuated.

According to the IHRSA, the health club and fitness industry in the U.S. has been changing dramatically as well, growing by at least 3-4% annually for the past decade and showing no signs of slowing down. In all, according to IHRSA, nearly 1 in 4 Americans use a health club to pursue fitness and wellness goals today, a number that could double in the decade ahead. Concurrently, competition is at an all-time high as a combination of low-price, luxury, boutique, and digital brands and services for fitness continue to enter the market and grow. The keys to success will be just as different in the decade ahead as they have been for the last ten years.

Several trends are likely to fundamentally reshape the future environment for fitness and health club brands and operators. The rapid advancements of new technologies such as big data, along with new ways of operating businesses including thoughtful investments in human capital, management of the revenue cycle, creation of more valuable member or customer experiences, and alliances and collaborations with strategic partners, among many other factors, will all be a part of this next decade of transformation for successful companies.

To stay ahead of these forces and changes, fitness and health club industry leaders will need to question current thinking and be prepared to retool their organizations. This will be applicable for both traditional and newer types of fitness and health club concepts, who will face equally critical challenges in the decade ahead.

How should you prepare your fitness and health club business to emerge as a winner in the decade ahead? The team at ABC sees five imperatives that will be key to winning in the next ten years.

1. Embrace a new competitive approach

The emerging wave of technology will turn almost every fitness and health club business into an information business. With exponentially more data available, better tools to support decision-making, and a rapidly changing business environment will become table stakes for each business. Fitness and health clubs will soon compete based on how effectively they can fulfill each individual member’s needs by leveraging the right technology and providing personalized experiences.

The arenas of competition will be different as well. Traditional industry boundaries will be blurred; competition and collaboration will occur in new ways. Businesses will need to be more externally oriented and evolve with their trusted partners to share risk and gain expertise. Ecosystems will enable competitive advantages. This has become apparent in the recent past in other industries. Alibaba, for example, became one of the world’s most valuable companies by building platforms that connect providers of all e-commerce functions with each other; they orchestrated an evolving ecosystem, and their partners worked with it to gain competitive abilities. It is certainly an era of new approaches when competing in the fitness and health club space.

2. Design the organization of the future

Innovation is needed to unlock the full potential of new technologies. Applying tech to existing processes is not enough; companies must embed the technology and continuously gather information from data ecosystems, derive meaningful insights from their data, and, most importantly, act on those insights autonomously, and quickly.

Leaders will need to design teams that learn and adapt by combining the best of people and machines. Algorithms should be trusted to recognize patterns in data and act on them autonomously, while people should focus on higher-value tasks such as providing high-value touch points to members.

The new “learning” organization should be designed with a flexible backbone of systems, so it can constantly adapt to the environment. It also requires new interfaces that enable humans to understand and trust the actions of systems and machines. Management must evolve as well, building a culture of experimentation, cooperation, and learning. Business leaders will need to shift their emphasis from creating hard-wired processes to orchestrating flexible and dynamic systems designed around meeting customer needs.

3. Rely on data to navigate organizational change

Reinventing organizations to compete in 2020 and beyond will not be easy. Whether in risk aversion or complacency, leading health club and fitness companies may be very reluctant to unleash fundamental change. Research shows that the single biggest factor impacting the success of major transformation is how early it is initiated. Therefore, it is important to create a sense of urgency within the organization to ensure that everyone really understands the need to change.

Even for companies that are committed to transforming, it can be a risky undertaking: recognizing most large-scale change efforts fail. Therefore, leaders need to employ data-based transformation founded on understanding empirically what works and why, rather than relying on plausible assertions, guesses, and rules of thumb. This enables companies to measure what matters. The team at ABC Financial calls it learning from data insights, and you can learn more about it here.

Club managers and operators also need to be prepared to diversify their approaches to implementing change and to succeed; they will need to tailor their tactics accordingly, moving beyond one-size-fits-all solutions to customized ones based on the facts, the culture, and the experience they are trying to create for their members.

4. Deliver higher levels of consumer experience

Customers are the heart of any business, and in the next decade, taking care of them will require personalization and consistently high-quality service in order to be successful. Members have many choices and, in the decade ahead, this will only accelerate. So, understanding your customers and having a plan to surpass your competition by creating unique experiences will be key. For example, onboarding, serving, and interacting with your health club members in a very easy, repeatable, and “frictionless” manner will be rewarded.

As the ABC article, Frictionless Experiences. What They Are And How They Will Impact The Fitness Industry, outlines, “Frictionless customer experience (“FCX”) is a mindset and approach to business that continuously pursues the best combination of a product or service to a customer at the right moment and in the right channel. Three underlying concepts define FCX : the product or service, the moment, and the channel.”

Taking a truly thoughtful approach by “walking in the shoes” of members and customers is challenging for many businesses. Developing choreographed experiences requires the willingness to tweak messages and processes, both digitally and in-person, and having the systems and people to do so. Different members seek unique experiences, and therefore one must have the ability to message in a personalized or tailored manner. Ultimately, members crave simplicity when interacting with a fitness and health club brand; frictionless designs are synonymous with simplicity because it makes things easier and often more enjoyable.

5. Select the right strategic partners

With the level of change expected in the decade ahead and with technology constantly and rapidly evolving, selecting partners, you can trust to be a part of winning is equally important. How you manage your revenue cycle, leverage your member data, and interface your platforms, among a number of solutions, applications, and other requirements is more complex than ever. Who you can trust to help you make the best decision for your club, and your members could prove to be a key differentiator for you and your business’ success.

You might find this article on How To Choose The Right Fitness Technology Partner For Your Health Club, Gym, Or Fitness Facility helpful as it outlines five important tips to keep in mind when evaluating someone you can trust in guiding you through the next 10 years and more importantly setting yourself apart from your competition.

Our team at ABC Financial has the know-how and expertise to deliver important insights, tools, and resources to assist leading fitness and health club brands intending to excel starting in 2020. Thanks goes to our valued customers and partners as we work together to help them achieve greater business success given a convergence of industry, consumer, and technology trends. We would enjoy the opportunity to discuss how we can help you win as a health club operator in the decade ahead.