Freemium: a combination of the words free and premium. What exactly is a freemium? Take for example the software Skype or Spotify. You can sign up for free and get the basic elements. However, if you want extended features, you have to pay for them.
Gyms can use freemiums too, according to Blair McHaney, the owner of Gold’s Gyms of Wenatchee Valley and vice president of strategic initiatives at Medallia, Inc. “If you take the same principle, what they’re saying is how can we get as many customers as possible and then start to convert them to paying customers?” he explained.
McHaney said a gym has to look at its radius and then ask the same question: How do I turn my entire community into non-paying customers and be able to then up them to paying customers? What a gym can offer as a freemium can vary, but can include spa services and discounts, a pool party twice a year, etc. McHaney said there are a lot of services a gym can access in terms of potential freemiums.
For McHaney and his Gold’s Gym, a freemium is incorporated into membership cancellation. He calls it the alumni creation process. “How do we maintain some sort of a linkage to that person even though they’re not paying us any more?” he said. “Then you start thinking what other value pieces can we add. So that’s really the notion of freemium, is keeping them as a customer. Just think of it this way: You’re keeping them as a customer, they’re just not paying you right now, and if you do that, they’ll circle back and pay you again.”
When a member leaves, they are given guest passes to come back and use the club. They are also sent e-mails about various exercise information. “But there’s really something to maintaining that alumni relationship when they leave,” said McHaney. “What that also does is it forces you to redesign your cancellation process in such a way that somebody really wants to be your alumni. I mean, you can’t do damage to that relationship during that cancellation. You’ll also find out at that point just how good a relationship you had with them during the cycle of their membership … because if they had a poor experience, they don’t want to be your alumni either.”
McHaney said his Gold’s Gyms track when people join and ask key questions, such as if they have been a health club member before, and if yes, were they a health club member with his gym? Looking at the numbers over the past twelve months, McHaney said 54 percent of all the memberships at the gym were sold to people who used to be members there. On average, 75 to 80 percent of people joining health clubs have had health club memberships before.
“If you do this right, then when they re-enter the fitness space, they re-enter with you,” said McHaney.
By Heather Hartmann
