The Extinction of a Business Model

A species on the planet that does not adapt to changes will eventually become extinct. Business models, just like species, either adapt to changes, or they too will become extinct. The business environment, the fitness industry and most importantly the health club consumer have changed. It is imperative that successful fitness centers don’t ignore these changes and adapt accordingly. As hard as change can be, failure to change may mean the difference between continued successes or the “extinction” of your business.

The following are some of the features/services that now seem to be absolute prerequisites for a successful fitness facility:

Online joining: Provides the ability for non-members to join your facility online (easily and completely).
Online scheduling: Provides the ability for members/prospects to schedule appointments (with trainers or sign up for classes).
Online member portal: Provides the ability for members to view usage, view accounts receivable, make payments or change information easily.

We all know the arguments, and might have said them ourselves at some point — “A sales person is essential to sell any product that is not at the lowest price.” Recent evidence suggests that the previous statement is no longer the case. From all the centers I have spoken with, online joining, as an option, increases the number of sales your center makes — as many prospects prefer the convenience. Some consumers don’t need, and more importantly don’t want, a sales tour. Forcing a tour on those potential customers by not disclosing price will decrease your potential members and your revenue.

To appeal to the 40 and younger demographic, developing a “kiosk” location can assist in generating sales. Setting up a “kiosk” location in your front desk area, or other strategic areas, is as simple and inexpensive as installing a computer connected to the Internet that is set to only access your offers. The client can join your club or buy services without being taken hostage. The customer has changed and we must also.

The module of a club’s online system should result in one or more of these three objectives: increasing revenue; saving money/reducing staff; providing a better, easier, and more satisfying experience with your company for the customer. The online system can easily allow members to log in, purchase nutrition plans, sign up for personal training and put their name on the Group X list. Also, potential members can enter your website and have the ability to receive a guest pass or sign up for a membership without ever having to speak to a sales representative. This may put a frown on your sales team’s face, but utilize them by having them available for club tours when new (online purchased) members enter the facility for the first time.

Most owners that are successful in implementing online services use the following game plan. They develop a list of the 12 to 15 components that are contained in the different choices of products — contacting a couple PCI compliant management software companies and comparing their modules can assist in accomplishing this goal. The next step is to rate the menu items based upon the expected return on investment. Now, compare the expected costs. One important note: the online implementation results in all incremental profit, over and above the traditional business model — which is rapidly experiencing declining profits due to increased competition.

Keep in mind that there are up front and on-going expenses involved. Lead-time is necessary for implementation and your input will be required in the development process. This will also require a re-allocation of marketing resources. Many clubs are now linking social networking and advertising sites to special offers for online joining. We can count on these trends expanding and multiplying as time goes forward.

There are many advantages to implementing online capabilities, such as less no shows for appointments, better retention by focusing resources on current versus potential members and better accuracy on member records. The time is now to decide whether you want to evolve into the solution or go extinct.

David Porter has been a sales consultant at Twin Oaks Software Development for many years. Previously he ran several businesses, including Suburban Athletic Club outside of Boston, which he co-owned and operated for 10 years. He can be reached at 860.829.6000 or dporter@tosd.com.

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