With a career in fitness marketing spanning 25 years in the industry, Andy Kidd has a wealth of experience and knowledge; he is perfectly placed to examine the latest trends and explore how marketing channels have evolved.
Post-pandemic, fitness marketing is perhaps the most challenging it has ever been. The Side Hussle picked Andy’s brains on digital marketing, data and unit economics, and advice on marketing strategies to help your fitness business bounce back and thrive in 2021.
So Andy, let’s cut straight to it. Do you think gym operators really understand how to grow their business in a modern way (i.e. in relation to best practice in other comparable sectors) and do you feel enough attention is paid to understanding unit economics in fitness marketing as they are in other sectors?
I’ve been working as a sales and marketing manager, a marketing director and the owner of a marketing agency specialising in fitness club marketing for quarter of a century. In that time, both fitness trends and marketing channels have evolved massively.
Something that remains consistent with many operators I work with is a lack of understanding of how members become customers, stay customers, or leave. In other words, the Customer Lifecycle for their business.
This can be defined by a few questions, which are easy to ask, but a lot harder to answer:
1. Who are your members (demographics / lifestyle) and how did they hear of your club?
2. What was the trigger for them to get in touch?
3. What persuaded them to join (or not)?
4. Once they’ve joined, what keeps them coming back?
Alongside this sit unit economics questions that will give crucially important commercial information:
1. How much does it cost to reach each potential customer in the target market? (Total Market Size or TMS/£)
2. How much does it cost per lead? (CPL)
3. What is the cost per sale? (CAC)
4. What is the value of each customer over time, or LTV? (Lifetime Value)
In other words, ‘what will it cost my business, per new customer, to improve things?’
Is digital marketing really a silver-bullet?
Digital marketing is undoubtedly essential to the modern marketing mix, but the key is to ask yourself how does the data from digital marketing fit into your wider commercial marketing plan?
As a marketing consultant working across single site operators, small chains, boutique studios and local authority leisure centres, the most common problem I encounter is a disconnect between understanding of the customer, the data and the associated commercial KPI’s.
The silver-bullet everyone is looking for to improve performance is therefore NOT a super-clever Facebook campaign (although those are good too!) but a clear, measurable marketing strategy with KPI’s that model the customer journey.
The key to building business success for operators is understanding the data from digital marketing campaigns, applying it to the customer journey and making business decisions as a consequence.
Clearly, some operators are ahead of the game with digital marketing; often thanks to expertise brought in from other business sectors. The budget chains and many of the boutiques rely almost entirely on digital marketing; they are essentially digital businesses with bricks and mortar facilities attached.
Can you give us an example of how this might work in practice?
Take budget clubs as an example. Broadly speaking, budget clubs have an excellent understanding of their customer personas – they know that generally their customers are young, responsive, mobile and somewhat fickle (they may join and leave the same club two or even three times a year).
It is perhaps understandable, therefore, why leading budget chains are less sensitive to attrition than the rest of the market. Their marketing model is highly effective at acquiring new members at high volumes and monetises the expected behaviour of their members through joining fees (and re-joining fees). This won’t be right for most other operators – you need to find a strategy that works for you.
Understanding the customer journey is certainly ‘textbook’ marketing … we’ve all heard this before. So why do so many club operators still not use a customer journey, informed by data from digital marketing channels and IT systems, to manage KPI’s and make decisions?
In my experience the answer is threefold.
First, for many clubs there is still, often, an urgent need to hit sales and revenue targets, leaving little time or budget to nurture customers. It’s always ‘join now’, leaving the implied message ‘or we’ll hopefully get you to join next time’ unsaid.
It takes time to wean an operator off this short-term ‘sales promotion’ approach, but the industry has come a long way in terms of building brands in the last few years and the benefits are obvious. People buy from brands they already know, understand and trust. It’s not rocket-science but it takes time, planning and investment. Thankfully, this is slowly changing across our sector and many more operators are now playing the longer game.
Second, a significant level of IT proficiency is required across digital platforms such as Facebook, Google (including advertising and analytics), websites, email broadcast software and, often the most challenging, the club’s own CRM membership system. It’s not as easy as many people will have you believe. Often my clients are somewhat embarrassed that they don’t fully understand it, but they shouldn’t be … I don’t fully understand ATP resynthesis! We can’t all be experts in everything.
It takes time to learn about digital tools, which bits are needed and which aren’t, and what they tell you about your club’s current and future revenues. It also costs valuable resources to bring in experts. And even then, things change regularly – just when you’ve got to grips with a Facebook algorithm or a Google Analytics dashboard it’s updated.
It’s not an easy task to keep these various systems working in automated harmony to keep moving members along their customer journey, but it IS crucial. For every operator, establishing this funnel with the relevant IT data is something that MUST be done.
Although it is very difficult to establish the accurate ‘funnel’ – precisely because each business is different and needs their own KPIs / metrics – it should not be ignored because its crucial to successful marketing and ultimately a successful business.
Finally, there is almost too much data available, and knowing which is worth plugging into your customer journey KPI’s and which is peripheral takes experience and, often, some trial and error.
I always recommend keeping things simple, aiming for no more than six KPI’s – anymore and it becomes unwieldy and difficult to manage, hard for staff to understand what is important, and almost impossible for management to make decisions based on customer behaviours.
The framework for understanding and scrutinising data and the over-arching strategy with which to test ideas and make decisions MUST be clear.
Can you share an example of good practice?
I worked with a boutique yoga studio client where we measured, on a monthly basis, the following KPI’s:
1. Introductory offer purchases (20 days at £35) per month
2. Total mats sold per month (i.e. number of class spaces sold)
3. No of visits per customer, per month
4. Conversion of intro offer to membership per month (%)
5. Length of membership (months)
6. Lifetime value (LTV)
This information was enough to inform discussion around marketing strategy, set business targets, tweak pricing and, over time, inform the type and frequency of communications to prospects, members and lapsed customers (all via email and push notifications).
Please note… the discussion amongst people who understood the business was crucial! Why? Because decisions on pricing, for example moving to £35 for 20 days as an Intro Offer as opposed to £10 for 10 days, or decisions on how and when to retarget lapsed customers, or whether to to ‘personalise’ the CRM so that a ‘yoga advisor’ makes a call on day 17 of their Intro Offer (rather than an auto email) can all have a HUGE effect on sales. But no one person can make these decisions.
An agency, a senior sales manager, the non-exec finance person and the MD will all being slightly different viewpoints and perspectives, and they all need to be considered before any decision is made.
So, what’s the fix?
Well, if you agree with the premise that a simple customer journey, based on the questions above, will help your business, then the approach is to tackle the issues one, two and three above … in reverse order.
First, the strategy:
- Be clear on overall business strategy. How much money do you need to make? By when? And using what income streams? How many customers do you need to hit these targets?
- With the help of others who have different perspectives on the business, answering those four basic questions will help define the customer journey
- Set a framework (such as monthly meetings) for reviewing the customer journey and the commercial information relevant to your customers. Use good people who know what they’re talking about – it’s not a one person job
- Set KPI’s for only the most important targets.
Second, the logistics:
- Know what data’s required, what IT systems are needed and what offline systems are needed
- Establish how those systems work automatically (APIs? auto-emails?), how they can they be set up and who is responsible for managing them
- Lastly calculate how much this costs the business as an overhead.
Third, the execution:
- Having slotted the data into the strategic customer journey framework, what is it telling you? Will the current performance allow you to hit targets? If not, it’s time to look at making tweaks
- Knowing the commercials, plan and test online – and offline – looking at marketing campaigns that influence the KPI’s. But nothing else; don’t get distracted!
- Ensure these campaigns feed back into the data so you keep learning and improving.
To all small to medium fitness operators, I know coming out of this pandemic will not be at all easy. My advice, for what it’s worth, is keep it simple. Even with 25 years of experience I always come back to the Chartered Institute of Marketing’s definition of marketing:
Find out what your customers want and give it to them at a price they can afford.
To me, this means:
- a defined customer journey
- clear business targets
- KPI’s and IT data to measure your efforts
- A strong digital – and offline – marketing plan to deliver ongoing success.
It’s simple, but not easy. Good luck.
If you would like to speak to Andy about how he can support your fitness business growth, you can contact him on: firstname.lastname@example.org
To find out more about how Hussle could provide you with a low-cost, new member joining channel, click here.