Why 24 Hour Fitness is the Salesforce.com of Health Clubs
I firmly believe that if fitness clubs modernized their systems for recruiting and keeping members, they would grow dramatically.
After all, whether we like gyms or not, we all would like to have the option to exercise from time to time and fitness clubs provide a fast and easy way to get in a quick workout.
Like many other people in New Year’s resolution mode, I recently spent time researching local fitness club options. In San Francisco, there are many, from the lux Sports Club LA and NY transplant Equinox to the Starbucks of gyms, 24 Hour Fitness .
What struck me in my research is that the process of joining a gym is much the same as it was 10 years ago . I can’t help but think that the industry is like the enterprise software space was 10 years ago, only the latter has experienced a tectonic change, spawned by the Software-as-a-Service phenomenon which led to new pricing and delivery models and fundamentally reshaped how businesses use software.
At the heart of this stagnation is an overly high-touch, time intensive process and complicated contract structure that acts as more of a barrier than an aid to helping new members join.
Like old school enterprise software, most gyms have a longer than necessary sales cycles, seek high upfront initiation fees and make ending the relationship costly and overly punitive. Ultimately, they are designed to drive most of their revenue from new user fees and penalties that make it hard to leave.
Salesforce.com revolutionized the software industry by offering a new way for customers to try, buy and deploy software. Through its Software-as-a-Service model, Salesforce used the web to both sell and deliver its software, ending complex sales cycles, costly implementations and licensing schemes that effectively lock customers into long-term commitments.
With Salesforce.com and other SaaS innovators like LaunchSquad clients SuccessFactors, Daptiv, ShareMethods and InsideView you can be up and running quickly with minimal interaction with sales organizations, you pay as you go and its easy to use software can deliver value from day one. As Trident Capital’s Evangelos Simoudis points out, if you’re not getting value, you can quickly and easily move on.
Shouldn’t joining a gym be that easy?
Fortunately, 24-Hour Fitness has modernized its membership systems and to me is the Salesforce.com of the fitness industry.
Here’s how it works:
· Like many other software-as-a-service companies, 24 Hour makes it dead simple to try their facilities. Via their website, you can sign up for and print out a 7-day pass to any one of its hundreds of clubs.
· Once you’ve evaluated the gym, many of the club’s deals and packages are posted on the site and can be purchased immediately without a sales pitch. In my case, I got a great promotional rate of $29/month with $29 initiation. What’s more, there’s no penalty for cancellation.
· Also, like SaaS, the switching cost is low. If I’m not happy with the experience, I can cancel at no cost and move on.
The beauty of the 24 Hour model is that its predicated on delivering the basic services that most customers want. You don’t pay for bells and whistles you don’t need. And, because customers pay for value, not frills, on a monthly basis, it forces 24 Hour to focus on delivering a quality product day in and day out.
Other companies in the fitness industry should look to 24 Hour as a model for how to model their membership programs. Sure, 24 Hour is not without its challenges, but with all the new members they’ll be signing up thanks to their progressive sales model, they’ll have the cash to do something about them. Which is more than the other gyms can say in this economy.
-
jeff
-
John