In the previous two articles of the series, we’ve explored the real impact lockdown had on fitness operator revenues. Led by insights from roundtable discussions with facility owners across the sector, our main finding is that following an initial surge of pent-up demand, membership rates are already hitting a ceiling. One that’s much lower than pre-lockdown levels and will have a big impact on cash flow.
“By the end of September, most clubs are expecting to see between 10-25% fewer members than March with early feedback this month indicating that losses may be even greater. Potentially as high as 40% attrition. Very few operators we have spoken to expect to fully recover their lost member base before mid 2021.”
“By the end of September, most clubs are expecting to see between 10-25% fewer members than March with early feedback this month indicating that losses may be even greater. Potentially as high as 40% attrition.”
Jamie Owens, our Head of Sales here at Hussle, has been at the centre of these conversations. He’s spent the last month on the virtual road hosting roundtables with key industry players. His previous roles in senior management positions in the largest clubs in the sector including Nuffield Health, Virgin Active, and LA Fitness helps us explore the challenges and potential solutions operators are facing with the right lens.
“It’s going to be really difficult for clubs to strike a balance between generating the footfall needed to acquire new members whilst servicing the existing member base.”
“What’s clear from the roundtable discussions is that fitness operators know they need to be doing things differently. Most have exhausted their cash reserves to give themselves enough of a runway to survive lockdown. A pre-COVID approach of spending lots of money on marketing, running discounts and trials, is not going to work anymore.”
“Most operators have exhausted their cash reserves to give themselves enough of a runway to survive lockdown. A pre-COVID approach of spending lots of money on marketing, running discounts and trials, is not going to work anymore.”
So, here we are. It’s still a turbulent and unpredictable time to be trading in. One that’s going to require new strategies to clear the hurdles COVID has put in the way of business growth.
“One thing we can all agree on is that the fitness industry is a flexible and resilient sector. The overall sentiment from the many operators I have spoken with is that they are willing to try new solutions even if that means changing the way they think about member acquisition.”
“Operators recognise the need to reach new customers and to increase awareness of how their facilities can support a modern fitness routine. One that includes a hybrid of both physical and digital workouts. This is the number one fitness trend for 2021 as recently predicted by Health Club Management.”
“Traditionally, a member acquisition campaign would be led by some sort of price promotion in order to get people through the door and onto the system. It’s a tried and tested technique.”
However, during such an economically turbulent time, this strategy is no longer a realistic option for lots of operators.
“It’s going to be difficult to service discounted customers or trialists in a capacity-constrained environment. On top of this, the cost of the promotion relative to the conversion rates no longer makes sense. One operator we spoke to ran a Facebook campaign which typically generates c.20 new members per club. It only generated 1 new member per club. That’s not economically viable.”
The important question is what can operators do to grow their membership base at low cost? And where can Hussle help out?
“Whilst Hussle’s mission has always been to help the industry, I’ve been part of many conversations about the merit of the service. I’ve experienced this from both sides as an operator myself and now working within the business to support our gym partners. I’d imagine most operators in my position have had similar debates over the last few years.”
“The independently audited whitepaper ‘Aggregation in Fitness’ carried out with Fusion last year revealed two standout things about gym membership that, as a former Head of Membership Sales, really got my attention.”
“Firstly, 71% of Hussle customers used a gym they wouldn’t otherwise have visited. These customers offer a new revenue stream that operators can access without having to spend any of their own marketing money. That cost and risk falls on Hussle.”
“Secondly, 26% of Hussle customers go on to join a gym directly. This is an organic area Hussle haven’t focused on to date. However, the math tells us that the indirect revenue generated by converted members is around x4.5 the direct revenue that we pay gym operators. We want to professionalise the customer journey from Hussle user to direct gym member.”
Driven by this insight, Jamie championed the launch of a new Hussle service: The Member Acquisition Programme (MAP). It’s an algorithm-led tool used to identify customers well suited to a direct gym membership. When these customers walk through the door, they’re flagged to operators as a potential membership lead.
“Our MAP tool is just the first step towards a fully integrated membership conversion service now being piloted with a number of operators. We’ve pencilled it in to launch fully in early 2021 and are looking for operators that want to collaborate on this.”
“Whilst Hussle has always been an excellent service to reach new customers and to monetise those that require multi-club access, we are doing a lot more to support operators in rebuilding their core revenue stream. That means focusing on these high value, direct members.”
“Our scale means we are well placed to reach new customers, identify those that require multi-club access versus those that are better suited to a direct gym membership, and then collaborate with our partners to optimise a seamless flow of new members into their business.”
Fitness operators just face a challenge of how they can efficiently take advantage of this. Diversification is what’s needed. Businesses need to open themselves up to new opportunities, dodge the obstacles that are getting in the way, and find new ways to accelerate their growth out of the post-lockdown landscape. This is exactly where Hussle can help.