Club Intel, one of the leading research companies in the fitness industry, found that at least 60% of members did not return in 2020. This represented a huge challenge for fitness business owners across the US.
The hesitancy of members was probably down to a number of different factors. With a deadly virus still rampaging across the country, health and safety was probably the main concern.
Class sizes were another big factor. With most gyms and studios cutting their numbers down by nearly 50%, fitness operators struggled to generate the revenues they had previously. On top of that, digital fitness has taken over the industry, with 44% of members using Video On Demand (VOD), according to the same study by Club Intel.
However the tide seems to be turning and things seem to be looking up. The Financial Times has reported recently that the fitness industry is coming back stronger than ever. Investors are confident in making investments into growing boutique brands and fitness operators are reporting that class attendance has returned to pre-pandemic levels.
So while the industry is recovering and hopefully coming back stronger than ever, the fact of the matter is there are key lessons to be learned. The initial shock of lockdown and subsequent adaptation to digital fitness has been tough. In fact IHRSA reported that 17% of gyms, clubs and studios closed by the end of 2020.
The place you don’t want to be as a fitness operator is in that 17%. So in this article we will go through what you need to know about building your business back stronger than ever.
Skip ahead to:
- Identify the issues and take action early
- Take stock of the current situation
- How to rebuild and become a better fitness business
Identify the issues and take action early
In a situation where issues are starting to arise in your business, the worst thing you can do is stick your head in the sand and wait for things to solve themselves. Acknowledge there is an issue and put plans in place to actually try and solve these issues.
Sometimes it can be external forces that can cause issues in your business that are unforeseen. Take for example, the recent growth of digital fitness due to lockdown. Some fitness operators weren’t totally into the idea at the beginning but, by missing this window of opportunity, other businesses were able to jump an acquire more market share.
To avoid this happening, stay on top of industry trends so you can innovate when the time is right. Here are few simple ways to know what is going on in the industry:
- Follow the latest industry happenings via magazine subscriptions, newsletters, or industry specific podcasts.
- Attend fitness conferences, webinars, and workshops to get inspiration for your next big idea.
- Never miss a networking opportunity with industry experts, vendors, and competitors.
As well as external issues there are internal problems that can arise. Here are some common internal issues you should be aware of in your fitness business.
- Poor retention rates is a big issue that is common in many businesses and is usually the first sign of trouble.
- Declining profits month on month can be a sign that growth and retention isn’t healthy.
- A high staff turnover can be a sign that staff are not fulfilled in their roles.
Take stock of the current situation
Before starting to rebuild your fitness business, conduct an extensive analysis of the situation and highlight the areas where you are going wrong. This will help you learn from your mistakes and build a more robust action plan.
Maybe it was an ineffective fitness marketing strategy, poor financial planning, or a less-than-ideal business climate. Whatever the reason may be, it’s important to pinpoint the problem clearly.
There are two main ways you can take stock of where your business is currently at:
- One way is to hire a fitness consultant who can undertake an audit and find troubled areas. Besides business aspects, they can help you address paperwork and other legal issues. However, be wary of the cost of this.
- Another way is to do an analysis of the business yourself. Revisit your fitness business plan and rethink the analysis section. Doing it yourself is more cost effective but you might miss something an expert wouldn’t
How to rebuild and become a better fitness business
Once you have analyzed and identified the urgent issues facing your fitness business, the next step is to take actions to resolve this. Some of these steps can be actioned straight away while others are more long term actions.
1. Revisit the business plan
As we mentioned in the previous section, revisiting your business plan will form a key part of moving forward and becoming a better fitness business.Start with the analysis section of your business plan. Covid-19 has thrown up a few different challenges that fitness operators now need to face. Chief among these is safety protocols and digital fitness.
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- Safety protocols: The safety of your members and staff is highly important. You may need to consider smaller class sizes and investment into cleaning products, physical screens to separate areas and other similar investments
- Digital fitness: It’s now clear a digital offering can help future proof your business. Factor in the investment that needs to be made in camera equipment, digital platforms and staff training.
2. Invest wisely
The timeless phrase of “money doesn’t grow on trees” applies here. The temptation is to go out and throw money at an issue to solve it instantly. But this isn’t always the best option.
A lot of this goes back to the business plan again. The financial planning is just as important as the overall analysis in the plan. Look at the most necessary areas of the business that need investment and plan for how you can finance this.
For example, let’s look at digital fitness. Investing in digital fitness beyond the pandemic means you have to be sure it will improve your acquisition and retention. Research the market and actually ask your members if they feel they will use a digital option regularly.
3. Reorganise your staff to make an impact
A big theme that has emerged during Covid-19 is the way people work. Called “The Great Resignation”, as detailed here in the Harvard Business Review, this new way of thinking about work may have a big impact in a lot of different industries.
In the fitness industry, people have found themselves without work for months on end or have seen their roles changed from an in person role to a digital role. While this may be game-changing for some people, for others it has made them think about their future in the industry.
Alex Hormozi, the founder of Gym Launch, has some essential advice when it comes to reorganising your staff to impact your business effectively. On an episode of our podcast he explained that every member of staff needs to be generating revenue, which will ultimately positively impact your business.
The advice here is to look at the staff you have at the moment and see where they can most impact in terms of revenue, while also making sure they are actually fulfilled in the roles they perform in. By doing this you will have a better chance of keeping them long term.
4. Reconnect with your members
The member experience has changed considerably in the last few years. Members now workout differently and may not see the need for an in-studio experience. It’s up to you to rethink how you bring those members back and this all comes down to what retention strategies you use.
Here are some ideas that might strike a chord with your client base:
- Organize gamified fitness sessions
- Host post-workout social events
- Have bring-a-family-member days
- Send gifts and coupons
- Celebrate anniversaries and fitness milestones
- Introduce unique referral programs
It doesn’t always need to be overly complex. Even the age-old method of cross-selling or push notifications can become your X-factor as long as you’re doing it right and reaping the rewards. More importantly, your outreach efforts should be genuine and not come off as a gimmick.
5. Strategize meticulously
Firstly, finalize the metrics that matter for your gym or fitness studio. Choose them wisely since some indicators might not be relevant for your business. For instance, what good is a metric like ‘early-stage usage’ if you don’t have a plan to onboard new customers?
Optimize your pricing according to a specific market and demography to get more revenue. Offering student or group discounts can definitely work in your favor. Track the sources of your sales and eliminate the underperforming channels to get better ROIs. Have realistic goals that are in tandem with your marketing and sales strategies.
Finally, prepare for uncertainties. The worst may be behind you, but there’s no reason why you shouldn’t be prepared for the next business cycle. Have a plan B, in case you’re unable to meet your goals.
Success depends on your grit and hard work. Those bottom-line figures aren’t going up anytime soon if you don’t put in the hours. By following the pointers we mentioned, you clear your path to becoming a successful fitness business.
If you want to know more about the changing rules of the fitness business, listen to this conversation with Ian Mullane, an author and CEO of the fitness CRM provider – Keepme. He talks about the importance of retention strategies and service consistency for fitness entrepreneurs.