Diversify or Die
By Casey Conrad
In his book “Differentiate or Die,” Jack Trout states that in our ultra-competitive world differentiating yourself by discovering your products uniquely valuable qualities is the only way to succeed in a crowded marketplace. For many in our industry this book was a “must read” back in 2000.
Compare today’s market with that in 2000 and one thing is certain. The health club business has moved past ultra-competitiveness and into commoditization. Commoditization occurs when a marketplace is being driven by price. As an industry we may not be completely commoditized but we’re getting darn close!
Speak to any club owner and 90% of them will say, “I’ve had at least one low-cost competitor come into my market within the last year.” Some have multiple, new, low cost competitors. Whether it is a new facility or a converting model, low cost operators shake up the market and take members and tour traffic away from all other clubs in an area. Even when the hit to members and traffic is short-term (typically 18 months of total effect), it hurts an already lower profit business often creating a cash crunch.
For any club finding themselves in this predicament, it would be great if they had prepared for such an event by following the strategies of Trout, which are clearly understanding how they are substantially different from their competitors, and ensuring that their message and their marketing conveys these differences. The reality, though, is that most clubs offer the same equipment with the same basic programs and the same basic service. Finding themselves in a “do or die” situation doesn’t allow for a lot of brainstorming and internal work on your unique selling proposition or brand (both of which are long-term processes). Do or die situations require an immediate response. Operators simply need to find a way to bring more revenue into their club without being dependent upon selling more memberships.
The immediate response I propose that will instantly bring in additional revenue from existing members is adding a weight loss program to your facility. Certainly I’m biased in making such a statement. I am the President of an international franchise of weight loss centers and have an in-club weight loss product. Quite frankly, however, I’m not writing this as an advertisement for my programs. I don’t care what weight loss program you put into your club—really. What I care about is, as an industry leader, ensuring that health club operators remain vibrant and competitive. With that said, here is the brutal reality:
IF YOU DON’T ADD WEIGHT LOSS AS AN OFFERING IN YOUR CLUB YOU WILL NOT BE ABLE TO COMPETE AS EFFECTIVELY AGAINST THE LOW PRICE FACILITIES—AS WELL AS NEW TO MARKET OPERATORS.
Don’t believe me? Consider these alarming statistics:
- 66% of Americans are either overweight or clinically obese.
- The Center for Disease Control has stated that obesity is now a Pandemic in the US.
- Deaths due to obesity related illnesses will surpass deaths from tobacco use within the next two years, if not sooner.
- For the first time in the history of the United States of American children being born today will not live as long a life as their parents, primarily because of obesity related diseases.
- Our already strained health care (aka “sick care”) system is being overburdened with obesity related expenses. For example, the number of Gastric Bypass type surgeries in 2005 topped 140,000.
Now consider these business market facts:
- The health and fitness industry is reported to be in the range of 24 billion annually, the weight loss industry DOUBLE that at 48 billion.
- According to American Sports Data, 87% of health club members cite either weight maintenance or weight loss as their primary reason for joining.
- Recognizing a gap in the market, more and more doctors and medical professionals are beginning to get involved in the health and fitness industry. For years doctors have been getting more and more involved in physical rehab. However, now these individuals are opening cardiac rehab centers, health clubs and some bariatric docs are getting into the fitness and weight loss center business. This is a HUGE development that will continue if health clubs don’t offer a solution for the current non-member.
- More and more franchises are popping up in the weight loss industry that now also offer exercise AND newer, boutique fitness franchises are offering weight loss services. (My Healthy Inspirations franchise, at 135 worldwide locations now, is just one of many.)
When you take into consideration the entry of numerous low-cost facilities and add these statistical and market conditions, what you get is the creation of “the perfect health club storm.” The result will be a slow but continuous chipping away of member base from traditional clubs that have no differentiation. People who want low price will leave. People who want personal attention will go to a boutique. People who want a weight loss program will go to a facility that offers both fitness and diet under one roof. In the alternative they go join Weight Watchers and spend another $40-60 a month elsewhere. (If you don’t think that is the case take a poll at your club. You will be shocked to learn of how many of YOUR members go to Weight Watchers!)
However, if clubs begin offering a real weight loss solution they will be able to fend off new competitors in both the low-cost and the weight loss categories. For one, most low cost clubs aren’t going to offer any type of weight loss program because that requires additional staff support, which is not in their model. Two, current members would much rather buy a product or service from someone they already know and trust—that’s you! Three, the most valuable asset in today’s society is time. The mere fact that you offer weight loss will make buying from you more appealing to the member.
The bottom line is that clubs need to step up to the plate and begin offering a real weight loss solution for their members—not just saying “exercise and you’ll lose the weight.” That is proven NOT to work for most people. Just take a look at your members. Believing that a club can maintain market share without offering a product that addresses the #1 health concern in this country is simply living in denial!
In closing, consider this. Whether it was due to arrogance or ignorance, many club operators snubbed their nose at the Curves model. Little did they know that by filling an un-served void in the market, these “little hole in the wall fitness places” would become the fastest growing and largest fitness franchise in the world!
Well, THERE IS A GAPPING HOLE IN THE MARKET RIGHT NOW. That hole is a comprehensive weight loss solution. Are you going to fill the hole in your club’s offerings?
If you would like a free audio, “How to create an in-club weight loss program that works,” please visit, www.healthclubweightloss.com