Lawrence King joined Hussle in March 2019 as the Head of Commercial Partnerships, with one simple remit – to get marketing agencies thinking about fitness collaborations for their clients, rather than yet more half price pizza, coffee and cinema tickets.
The Side Hussle caught up with Lawrence to find out more about why commercial partnerships are so effective, why the fitness industry has largely missed out to date, and what advice he has for gym operators looking to grow their member base through similar channels…
So, Lawrence, the basics…how exactly do commercial partnerships work?
Every business is looking to either acquire new customers or reward the loyalty of existing ones. An effective commercial partnership is where two or more companies collaborate to help each other with one, or both, of these goals through the exchange of customer value.
A ‘contra’ agreement is the most cost-efficient way of delivering these deals. No cash changes hands – instead the collaborating companies both provide products or services of comparable value to each other’s customer base.
A successful contra deal typically requires there to be a fair degree of ‘balance’ … so the brand value, geographic reach, customer volumes and product value are comparable.
If the balance is heavily weighted, for example where one partner has significantly more to gain, a classic contra deal won’t work and the imbalance is typically offset through cost, with one party paying the other for the collaboration.
Why should gym operators be seeking commercial marketing partners?
It’s one of the best ways to grow your business – that’s why we see so many partnerships in nearly every other business sector.
Commercial marketing partnerships are cost-effective way for two companies to expose their products or services to a new audience, or add value for existing customers in the form of rewards. This has the double benefit of reducing your new customer acquisition cost (CAC) while increasing the lifetime value (LTV) of existing customers through rewards.
Why don’t we see more commercial partnerships in fitness?
The fitness sector is a fragmented market; no individual operator is able to provide more than c.300 physical locations. This presents a geographic constraint on the types of brands you can work with and impacts the structure of the potential partnerships that can be delivered.
Firstly, the logistics. A lack of physical locations will make any collaboration less efficient as a customer that discovers a fitness operator through a commercial partnership needs a venue nearby to act on the promotion they have received. If the fitness operator doesn’t have a location nearby, the outreach is wasted.
This issue limits the number of commercial partners willing to work with a single gym operator, especially if they themselves are a national or global brand. The balance of the relationship rarely stacks up, as one side has far more to gain than the other, and this imbalance usually adds cost for the smaller organisation.
What advice would you give gyms looking to acquire customers through marketing partnerships?
Like any serious marketing channel, there are certain skills required to build effective marketing partnerships, so first decide if you want to tackle this individually or collaborate with experts in this area.
If you opt to build partnerships without outside support, you must establish real clarity around what your goals are. Are you looking to acquire new customers through a low CAC channel? Or do you want to retain existing customers and improve your LTV? Only when you know your objectives can you begin to think about the types of products or services that might appeal to your target audience and shortlisting companies that could provide your customers with these.
Next think about what you might be willing to offer in return, so it’s a worthwhile exercise for the commercial partner, too. What might their customers be interested in? How could you help them with their goals?
Only with all of the above in mind can you dedicate time and energy to the outreach, contacting companies, pitching your idea and negotiating a deal. Then, once ‘heads of terms’, timelines and deliverables have been agreed, and everything is signed off, it comes down to each party delivering what they promised. Most crucial of all is tracking performance. Only then can you make a post-campaign assessment on whether it worked and if a further collaboration is worthwhile.
Should fitness operators focus on brands with similar audiences?
It’s a tricky question. You might assume the answer to be ‘yes’ on the basis that, for example, if you do a deal with a protein powder business you could reasonably expect their audience is likely to benefit from a gym promotion. But you must balance these deals with a bit of innovation.
If, as a sector, we keep promoting the same services to the same audience in the same way, how will we ever reach new people and increase overall participation in fitness?
While there’s always a place for increased customer engagement through commercial partnerships, find a brand that has a very different audience to your own and you’re more likely to reach new customers.
The ‘brand fit’ might not be obvious, it might even make some people uncomfortable, but how do we ever reach new people if we don’t try a new way of reaching them?
How can Hussle help operators with commercial partnerships?
Hussle can help fitness operators benefit from commercial partnerships in three ways.
Firstly – by collaborating with thousands of gyms and health clubs across the UK, Hussle can bring scale, variety and geographic reach to the negotiating table – factors that immediately get the attention of huge brands. This leverage is something that no single operator can provide.
Secondly, Hussle can standardise the user journey of the promotion, making it easy for the commercial partner to communicate with customers rather than having to explain lots of different scenarios.
And finally, investment in terms of both cash and resource. Hussle has a team dedicated to seeking out these deals – so you don’t need to commit your own resource – and the deals are funded by Hussle and the commercial partner which means operators are paid in full for the customers they receive even if the partnership involves an incentive for the customer.
In addition to these factors, the launch of our new Membership Conversion Service also means Hussle can use exciting, national commercial partnerships to drive new leads into partner gyms and then help convert these customers into direct members of the gyms they visit. It’s an efficient, low CAC way to grow your membership base.
I have huge belief in the value of commercial partnerships to the fitness industry. Watch this space for some very exciting new collaborations coming up in the next few months!”
To find out more about how Hussle could provide you with a low-cost, new member joining channel, click here.