The clock is ticking. And that’s a good thing. there have been some major changes in the 24 Hour fitness group since founder Mark Mastrov said goodbye in January and former home depot bigwig Carl Liebert took the reins, but the future looks bright for the fitness chain.
We talked to CEO Liebert and his right hand man COO Mike Sheehan to get the scoop on where 24 hour fitness is right now-and where it’s growing.
“I could sell drywall and paint, or I could change people’s lives. Let me tell you, changing lives is a lot better than selling 2x4s.”
Carl Liebert cannot stop grinning when he talks about his job.
Liebert is one of a new generation of fitness industry leaders-high-powered business school grads who made a mark on other industries before coming to the health club industry. But Liebert is so passionate about his position, it’s actually hard to imagine him working in another industry.
“I love my job,” he says with unabashed enthusiasm before launching into what’s obviously one of his favorite stories-the day he told his dad he was leaving his top-of-the-food chain job at Home Depot to take over the leadership of 24 Hour Fitness.
“He said ‘You’re going where? You did what?'” Liebert says. “Even my coworkers at Home Depot were shocked. But I’m lucky to be here, and I can’t imagine being part of another industry.”
“It’s hard not to get excited because what we do is fun.”
The only person in the room with a smile that can compete with Carl Liebert’s is Mike Sheehan. Sheehan’s background is in big business-he helped shape companies including Nestle, Pepsi Co. and Tricon-Yum Brands-but he’s got an enthusiasm for the health and fitness industry that lights up the room.
“I think despite the economy we’re positioned really well here at 24 Hour Fitness,” he says. “People will give up a lot of things before we give up our health.”
“Too much of a good thing is too much.”
One of the biggest changes Liebert and Sheehan have made at 24 Hour Fitness is consolidating power at the club level. Now there’s one person captaining the ship for each club, a change that makes it possible for the entire 24 Hour Fitness operation to run more efficiently.
It’s not an easy transition to make for any company, but it’s especially tough in one that’s been around for more than 25 years. But Sheehan and Liebert tackled the challenge headfirst-and with a candor that seems refreshing in today’s business world.
“We were extremely transparent,” says Sheehan. “We told people 4 months ahead of time what we were going to do, and we brought people into the decision process.”
“We had too much tradition to change from the outside in,” says Liebert. “We wanted to make this change from the inside out. It’s something we’ve talked about doing for a long time, but we never had the stomach to go through with it.”
“Now we’ve got the stomach,” says Sheehan.
Liebert and Sheehan were right to be wary-the change ruffled some feathers in a big way, and there were some bumps early on. But as of March, they were about 90% of the way to converting to single management at the club level, and most of the 24 Hour team was fully on board with the changes.
“Good companies change before they have to.”
Liebert is keeping an eye on the economy as he prepares to launch a 3-year strategic plan with flexibility built in.
“We are going to make the changes we need to make along the way,” he says. “We’re trying to be careful-success now means being willing to make changes to continue that success down the road.
“I think our flexibility is one of our greatest strengths as a company,” says Sheehan.
This time of transformation has been “tough but worthwhile,” says Liebert. The resignation of founder Mark Mastrov in January marked a turning point in the company, but Liebert says it’s more about maturation than metamorphosis.
“Certain companies define the industry,” says Liebert. “We think we’re in the position to be one of those companies.”
One of the best-received changes has been one that many companies would never think to make: Every year, 24 Hour Fitness recognizes the company’s top performers with a great destination getaway. This year, Liebert invited the winners’ spouses and significant others along for the ride for the first time in the history of the company.
“We have meetings where we all hate each other by the end of them.”
Passion is something you’ll hear a lot about if you spend any time talking to Sheehan and Liebert. That passion-along with the aforementioned candor and flexibility-is one of the key ingredients in the successful future for 24 Hour Fitness.
“This is a company where you can get excited,” says Sheehan-and it only takes Liebert about 2 seconds to decide that the tune that would make the best soundtrack to his typical workday would be “Dancing Queen.”
In fact, Liebert and Sheehan encourage their team to voice their opinions, even-and maybe especially-when those opinions run counter to corporate mandates.
“We all get to give our point of view,” says Liebert. “We all participate in the process of making decisions. We are a team, and every voice matters.”
Liebert isn’t the first person to say “No one achieves success through individualism,” but when Sheehan immediately follows Liebert’s comment adding, “It’s s team effort,” you get the sense that 24 Hour Fitness is the business of building relationships with its staff as much as with its members. It feels genuine-and I notice that even the vice president of marketing (who’s since been promoted to chief marketing officer) is nodding, despite the fact that marketing VPs usually avoid committing to any opinion at all costs.
“We are a company built on emotion,” Liebert says. “What’s more fun and fulfilling than that?”
“Our personal trainers are the secret sauce of 24 Hour Fitness.”
24 Hour Fitness has more than 4,000 personal trainers in its clubs-an industry-leading record.
“People join a health club because they want to get results,” says Liebert. “We sometimes lose that focus. But success is what motivates people. They want results. And we’ve seen it proven over and over again that personal trainers are one of the best ways to help them get those results.”
24 Hour’s personal trainers are 24 Hour employees, not independent contractors, and Liebert believes they play a key role in 24 Hour’s member experience. There’s proof: As part of 24 Hour Fitness’s affiliation with the Beijing Olympics, they’re running a contest for the club’s personal trainers to make the trek to China to train some of the Olympic athletes. It’s a pretty fabulous opportunity for the trainers, so it’s no surprise that entries have been pouring in. It’s probably also no surprise that the entries reflect a membership that is passionately grateful to its trainers.
“Some of these entries are just amazing,” Sheehan says.
“They have blown us away,” says Liebert.
That’s one reason 24 Hour Fitness will be continuing to emphasize trainers in the future, offering them substantial incentives, free certifications, paid time off and other perks that they won’t find at many other fitness facilities.
“We see our trainers as some of our most important people,” says Liebert. “They have a unique personal connection with our members.”
“We’re in the business to make money, but the heart of the company is changing people’s lives.”
“Most health clubs are focused on getting more people in, but referrals are one of the best ways to get people in,” says Liebert.
That’s the reason 24 Hour Fitness is making the shift to focusing more efforts on current members than on potential members. In addition to the importance of referrals for growth, retaining members is a whole lot easier than making new ones.
“We want to encourage our team to be member thinking 24/7,” says Sheehan.
Toward that end, 24 Hour Fitness is putting together a member database that will help clubs more effectively track individual member experiences and simplify member interaction. They’ve hired the venerable JD Power and Associates to help measure customer satisfaction in 24 Hour Fitness Clubs. They’re also expending energy to track the cycle time and down time for their equipment so that they know what’s working-and what’s not-and can say that none of their equipment stays down for more than 48 hours.
“It’s time to unleash real stories.”
“As an industry, we tend to focus on the beautiful people,” says Liebert. “Oily, sweaty, gorgeous people in spandex-those are the images we tend to show. It’s glamour shots instead of real people-but we think it’s time to change that.”
Liebert is pushing a commitment to real people-not hardcore fitness types. It’s a bold move, but one that seems to reflect an important recognition that most health clubs aren’t succeeding in reaching these kinds of ordinary people.
“The space and the equipment are definitely important,” says Sheehan. “But we can never stop believing that it’s not about those four walls, it’s about the people inside those walls.”
“You don’t get where you want to go without partnering with the right people.”
Another important trend at 24 Hour Fitness is continuing to expand its affiliations with companies and brands that make the 24 Hour Fitness brand stronger. Recent partnerships with Nike, Apple and Precor are only the latest in a long line of successful joint ventures-and don’t be surprised if you see more alliances in the future.
Liebert’s also a big believer in the power of celebrity.
“We’re proud to surround ourselves with guys like Derek Jeter and Magic Johnson,” he says. “These are significant athletes, and having them on our team isn’t just good for our image outside. It really creates a lot of internal pride for everybody who works with 24 Hour Fitness, from the gym staff to the top level executives.”
“We have a tendency to put brackets around who we are. We shouldn’t put brackets around who we can be.”
“We’re moving away from asking ‘How are we going to get a member out of that?’ and toward asking ‘How does that enhance our brand?'” says Liebert. “Our clubs don’t have to be just places where people exercise-we see the club as the hub of a fitness lifestyle. And that means it’s less important to put a specific dollar value on everything that we do.”
Liebert pushes the importance of being thought leaders-he’s got no intention of following the trends when he could be setting them. And as 24 Hour Fitness moves forward into the future, one thing’s for sure: They’re going to be having a pretty darn good time.