How To Prevail in Competitive Markets TODAY

Posted April 22, 2011 9:18 pm by

Health Club News: …. Brought to you by courtesy of http://fitnesslifemarketing.com/

IHRSA’s executive director emeritus updates his take on the club industry

Fact No 1, with which I doubt there’s any disagreement, is that supply and demand in the health club industry are profoundly out of synch. There’s far too much supply (fitness centers) for the current amount of demand (club members).

In addition to the proliferating, and potent, low-cost providers (e.g., Planet Fitness, LA Fitness, 24 Hour Fitness), there are also thousands of mini-clubs (e.g., Snap Fitness, Fitness Together, Anytime Fitness), as well as countless exercise venues of every conceivable sort. The latter include, among others, JCCs and YMCAs; municipal, corporate, collegiate, and hospital-based centers; yoga and personal-training studios; and homes and residential complexes. Some of these facilities are small, and some are large. Some are low-cost, and some are expensive. But each of them consumes another slice of the potential market.

Fact No. 2 dominates anything, and everything, that anyone might say about prevailing in competitive markets. The fact is simply this: the U.S., Europe, and the rest of the developed world are continuing to experience the deepest recession since the Great Depression.
If past history is any guide to future developments, the club industry will again—as it has in all recessions past—trail the general recovery. That means it won’t begin to rally until 18-24 months after the economy, as a whole, has begin to grow. It’s therefore reasonable, and responsible, to expect that 2011 and 2012 will be lean years for many clubs.
Excess supply and the recession’s lingering effects have many implications, but, surely, one of them is that, today, there’s no longer such a thing as an expendable member. Each client has become more important, valuable, and difficult to replace than ever before. As a result, the cost of losing a single member, or of replacing them, has never been higher.

Member-centrism
Because of the combined impact of these two factors—oversupply and the recession—we’re beginning to witness a significant shift in this and many other retail industries. Businesses are evolving to become more member- or customer-centric than ever before. This development, I submit, is relevant to every health club, no matter how big or how small, and no matter whether they charge $10 or $200 per month.Let me share an example of how this change is affecting a retail business that, in some respects, is similar to our own.
I live in a small town where I’m equidistant from two hardware stores. One is the Home Depot, and the other is Ogilvie’s, a family-owned operation that’s been in business for 80 years. I shop regularly at both of them.
At Ogilvie’s, I’ve come to expect personalized, caring, efficient, and well-informed service, and I’ve never been disappointed. On the other hand, I never expected that level of customer care at Home Depot, but the recession has changed that.Today, in every aisle of my Home Depot, there’s an employee who knows the whereabouts and availability of every single item in that aisle. This friendly, helpful, and well-trained employee is there for one purpose only: to help people like me find what they want, and to do it in the most efficient, pleasant, and rewarding manner possible.Home Depot is no longer the careless, carefree, low-cost megastore that it once appeared, to me, to be. Rather, contrary to all expectations, it’s become a warm, friendly, caring, high-touch, high-service business. Home Depot, as big as it is, has realized that it can no longer afford to simply “burn” through the market. It recognizes that, now, it needs to play the game by the same rules that family-owned businesses have employed for generations. In short: Home Depot is now playing a more customer-centric game. From an operational perspective, this evolution has three implications. The first, having to do with hospitality, is familiar to everyone. The second requires a deeper understanding of what it means to be a great salesperson. And the third involves a system of management accountability that hasn’t yet been implemented widely.

The first involves a club’s service staff—its front desk, fitness and sports personnel, childcare and café staff, and even its maintenance personnel. The second involves only the sales personnel. The third points directly and specifically to the general manager. Taken together, these three implications involve every single person on a club’s staff.

Implication No. 1:

Hospitality First, Last, and Always

Implication No. 1 is simply this: The industry needs to redefine itself as a “hospitality business” and, then, explore and eventually embrace all of the implications of that notion.

Everyone recognizes that spas, restaurants, and hotels are hospitality operations, but far fewer—including practitioners in our sector—appreciate that clubs, first and foremost, are a hospitality business. And if, in fact, that’s the case, that means they need to be oriented toward, and orchestrated around, one overarching principle: namely, making the experience of every member as enjoyable, uplifting, supportive, helpful, and rewarding as possible—every time they enter the premises. Hospitality needs to be considered a centering value and controlling virtue of every club and every person they employ. Once this is acknowledged, the management challenge becomes to spell out, as specifically and fully as possible, exactly what it means to be hospitable at the front desk, or as a fitness director, or as group-exercise instructor, etc. Each of these positions clearly offers countless opportunities to express hospitality and to leverage it to the max, but, less obviously, the same requirement also applies, especially and specifically, to the general manager (GM). Today, the GM of every retail business needs to become a living, walking, breathing model of the hospitality skills they wish to instill in their staff. This presages the demise of something that’s long been the bane of this and many other businesses—that industry dinosaur, the “back office” GM, the individual who spends most of their time perusing studies, preparing reports, writing memos, drafting schedules, etc. Whenever my thoughts turns to this topic, I’m reminded of a practice of the late Robert Dedman, Sr., the founder of ClubCorp, one of the most successful club companies in the world. Dedman had one principle on which he brooked no compromise: if he ever found a manager in their back office during “prime time,” he knew that person shouldn’t be, and wouldn’t soon be, a GM for any ClubCorp operation. Dedman was convinced that the GM had to be the living, breathing role model of the behaviors that had to be a part of the performance of every employee. He understood that nothing was more important than the time spent greeting and welcoming members, and being approachable and accessible to them. This, Dedman believed, was the heart and soul of great club management.

Implication No. 2:


The Sales Process Perfected

Implication No. 2 is this: The industry needs to develop a deeper understanding of what it means to be “world class” in terms of sales.
To illustrate this point, let me invoke the example of Joe Girard, who’s been designated the “world’s greatest salesperson” by the Guinness Book of Records. He’s also the author of three legendary sales books: How to Sell Anything to Anybody, How to Sell Yourself, and How to Close Every Sale. The son of Italian immigrants, Girard was born in East Detroit, Michigan, and began his working career at the age of nine as a shoeshine boy who also sold newspapers. He quit school at the age of 16, joined the Army, and, after his military service, bounced around at a variety of jobs before, eventually, returning to sales in a serious way.

At the age of 35, he begged a friend for a job selling cars. On his first day, he sold his first car, and in his first month, he sold 18. Girard spent the next 15 years selling automobiles, and, during that time, he averaged six cars a day, six days every week. His best day ever was 18; his best month, 174; his best year, 1,425 cars. His total sales for that period were 13,001 cars. That included no used cars or fleet sales. Every sale was a new car to a single customer. After those 15 years, he was hired by General Motors to teach its sales personnel around the world how to sell more effectively. If you were to ask him to tell you what his sales “secret” was, he’d explain it to you in two short sentences: “When you bought a car from Joe Girard, you didn’t just buy a car. You also bought Joe Girard.”What he meant was that, if you bought a car from him, he was going to take care of you for as long as you owned that car. Let me give you an example: Girard knew who the best mechanics at the dealership were, and he’d “spiff” each of them to make sure they gave his customers the best and quickest service possible. He called each of his customers regularly to make sure everything was okay and that they knew he was there for them whenever they might need him. The secret to Girard’s success was what I call the “In Touch” system. He stayed in touch with every customer. He protected them. He guided them. He worked for them. As he put it, when they bought a car from Joe Girard, they also “bought” something else—they bought Joe Girard. That’s what made him the world’s greatest salesperson.
By serving his customers so well, he transformed them into his greatest promoters, his “partners” in selling even more cars. His clients told their friends and family members that, if they ever bought a car, they had to buy it from Girard.Is that the way the sales process works today in the club industry? Sometimes. But rarely. Too often, it’s simply, “Slam, bam, thank you, ma’m,” and onto the next customer.
The In Touch system, however, doesn’t treat the sale of a membership as the end of a process, but rather, as the beginning of the after-sale. From the day a brand-new member walks out of the club, the salesperson remains in touch with them, making sure that everything is working out well for them, advising them, helping them, guiding them, encouraging them, etc.By doing so, the sales rep maximizes future referral sales, plays an important role in the member-retention process, and also makes their own job more enjoyable and satisfying.The In Touch sales methodology isn’t simply a matter of intuition, although intuition is certainly involved. It is, in fact, a system. The system begins with a 90-day relationship-building program. Over the first three months of the membership, the salesperson calls the new member six times, or approximately once every two weeks, to make sure that everything’s okay and to assist in any way they can. The purpose is to develop a helpful, ongoing relationship with the customer, and make them feel as though they have a friend, as it were, at “city hall.”

Implication No. 3:

Accountability, The Missing Link


Implication No. 3 can be stated in one simple word: accountability. Controlling and compressing the number of monthly member cancellations has to become the first and foremost responsibility of every GM at every club in the industry.
This particular form of accountability is, I contend, the “missing link” in the job description of most club managers, as well as in the member-retention strategy employed by most clubs.For just as the membership director is directly and specifically accountable for constantly increasing the number of new members who join, so, too, the GM needs to be made specifically and directly accountable for reducing the number of members who cancel their membership each week, month, quarter, and year. For example, if, in March of last year, a club had 105 cancellations, this year, the GM would be charged with trimming the March cancellations to 90. The membership director’s performance is evaluated on the basis of whether they achieve or exceed the number of new memberships budgeted, but, today, at most clubs, no such system of accountability applies with respect to cancellations.
Why?

There’s no simple answer—which is why I call it the missing link—but it may be because of an industry-wide sense that everyone is responsible for cancellations. But to say that everyone is responsible is simply another way of saying that no one is responsible.
This simply can’t continue.

Because the monthly cancellation number is so central and crucial to the business’ overall financial success, who else but the GM should be responsible for monitoring and managing that number? Who else could be responsible for it?
Once the GM is made accountable for monthly cancellations, all of their other responsibilities become subordinate to this, their main responsibility. Eventually, as a result, an entirely new dynamic begins to emerge. For example, at staff meetings, the controlling questions become ones such as: What can we do to ensure that every new member gets off to the strongest possible start? How can we make every customer’s experience more rewarding on a day-to-day basis? What can we do to get more new members involved in group exercise and personal training? How can we better express our appreciation to everyone who uses the club? All of a sudden, the attention and the efforts of the GM and every person working in the facility become more focused on the experience of each and every member. The club culture becomes, in a word, more customer-centric. In times such as these—marked by oversupply, lagging demand, and a lingering recession—that’s exactly what our industry demands.

John McCarthy is the executive director emeritus of IHRSA.

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