The New Paradigm for Health Clubs
Those of us working in the Fitness Industry know the marketplace is exceptionally competitive. Most markets have fitness options that run the price and amenity spectrums. At last count in 2018, there were approximately 36,000 fitness centers in the States, and that number is growing! In this saturated market, owning a solid share of the market is not easily achieved or maintained.
So how does a gym, club, or studio in a particular market define and protect its niche?
The days spent spraying and praying are over. Thankfully, data-driven marketing practices have made their way to the fitness industry. Health club operators are finally able to identify and connect with a better-qualified target group, increasing conversion rates.
The right data, when properly analyzed opens up market share between competitors, while simultaneously protecting the most valuable asset a membership-based business owns, its member data.
For a real-world scenario, one of our longest-term clients shares part of their market with a prospect club that has all the indicators of a mutually beneficial working relationship with us. We already know which prospects our current client is attracting, we know where they pull from geographically, we know about these folks demographically, and how long it takes the various targeted populations to convert to membership. We know the same about their former members, too.
Operating with integrity is a principle that guides our business practices and because our processes are rooted in data, we know a lot about our clients’ members, and just as much about their prospects.
We initially thought that because of data sensitivity, we were limited in who we could work with, especially in fitness-laden markets. How can we possibly know what we know about Health Club A and work with Health Club B at the same time?
We put our data chops to the test with the goal of coming up with a consistent methodology that enables us to prove or disprove ethically supporting multiple clubs in overlapping markets—and what's most important—without negatively impacting current clients ability to grow.
The answer is what we call Client Protectionism. First, we debunked the idea that two health clubs sharing a market are automatically direct competitors. Anecdotally this sounds true, but not according to the data. There are myriad more elements that influence a prospects’ decision about which gym to join. Understanding the details about how that choice was made is where the true power is.
Market overlap needs to be respected. Current and Former Members being two of the most obvious areas of concern. These populations need gatekeepers to protect them from each other’s marketing efforts.
Demographic differences often suggest less overlap than geography overlap. Waterfall routines were written to “show” protectionism and gatekeeping in action, and reports were designed and automated to keep an eye on cross-pollination between competitor clubs.
Yet this doesn’t always mean we always give the green light to work with multiple clubs in the same market. During our analysis, if we uncover club offerings and member profiles that have critical overlaps, we will respectfully not engage a new club, with deference for the existing client.
In our experience, nothing like this is currently being done for the fitness industry. It’s likely that clubs who consider themselves competitors are working with the same marketing agency, potentially targeting each other’s members and prospects in each campaign. It’s no wonder club operators often say they aren’t penetrating the market, as much as simply trading members time and again.
Client Protectionism is our practice and it enables local fitness competitors to attract the ideal member base, with the full confidence that as long as their competitors are working with us, they are protected from current and former members being poached. What a concept!
We’d love to hear what you think about Client Protectionism ...