“COVID has flipped everything on its head. Rather than extending gyms’ physical offering into the digital world, we now need to start with the digital home fitness journey and dovetail physical visits into that.”
Wexer CEO Paul Bowman talks to Kate Cracknell, sharing his thoughts on COVID-19’s long-term impact on the fitness sector.
COVID-19 has unquestionably sped up the digitisation of the fitness sector, but can you quantify this?
More and more data is emerging all the time, but here are just a couple of interesting stats for starters.
Among our client base, clubs that had already invested in a digital platform pre-lockdown have grown their databases by upwards of 400% during the crisis, with non-members as well as members accessing their – currently mostly free-to-use, non-paywalled – content.
Meanwhile, research we’ve done with three of our clients shows how online usage during the crisis has almost exactly matched normal club attendance: we compared previous monthly turnstile swipes with online classes attended during lockdown and found the correlation to be 96%.
Online fitness was already growing fast, but it has now boomed as people have prioritised fitness for both their mental and their physical health. In the process – and this is vitally important to the future outlook of the health club sector – consumers now have a far greater understanding not only of the value of fitness, but also of the full breadth of options available to them beyond attendance of physical facilities.
What’s your take on how clubs have handled the pivot to digital?
The rapid pivot to digital is to be applauded in a sector that is often berated for moving at a snail’s pace.
However – and there is a big however – in the race to get online, operators have placed an overly heavy reliance on consumer platforms, directing their members to everything from social media to B2C digital fitness platforms. A quick and easy solution perhaps, but in the process, clubs have given away their databases.
As a club operator, you don’t own the experience provided by the B2C platforms. Using them as a stopgap online solution simply directs your members to a competitor, handing them your member database, the opportunity to gather data and behavioural insights, and the chance to ultimately bypass you to take payment direct from exercisers. You’re handing them the relationship with your (potentially former) member.
The downsides of social media may not be quite as dramatic, but it is a dead end. As a club operator, you’re adding all the value: great content led by amazing instructors. Why give that away to someone else and, in the process, lose connection with your members?
There is absolutely a role for social media, but it needs to be used as a lead tool that directs people to your own white labelled platform – a platform that supports you, rather than vice versa.
So, what can operators do to emerge strongly from lockdown?
First, analyse the whole exerciser journey with a critical eye – both digital and physical – because this crisis has flipped things on its head. Before, operators were looking at how to complement their physical offering with a digital extension of that. Now, I believe we need to start by creating the best possible home fitness journey, then work out how to bring physical clubs into the journey. That will certainly be the case in the short term, but social distancing is likely to go on for so long that it may also be the way of the future.
Second, identify where and how to use technology, because it isn’t the answer all of the time. We know that exercising 2+ times a week drives loyalty to the platform or brand facilitating it, so let’s all start with the objective of getting people to work out three times a week. Then work out where that might mean a digital workout and where it might be in-person.
Third, think about relevance and the customer experience, 24/7, 365°. Are you offering something for everyone, wherever and whenever they want it? From a digital platform perspective, I think the ideal offering moving forward will comprise three prongs: professionally produced live streaming of your top stars; more amateur live streaming by local instructors; and a large on-demand library to ensure variety.
Fourth point, get used to testing small and fast among members, former members and prospects. Priorities are shifting fast and you’ll need to do lots of pilot projects to learn fast.
Finally, use existing solutions; the rapid move to digital means it isn’t viable for operators to develop their own software and hardware. And make sure the platform you choose offers good analytics so you can identify consumer behaviours and trends, as these will shape both your online and your physical products. I’m not going to product pitch, but we’re here if you want to chat about how we can help.
Can you elaborate on what you mean by the flipped perspective – starting with digital and then bringing physical into that?
In essence, it’s about making physical more of a VIP experience.
Certainly when we first emerge from lockdown, social distancing will mean clubs’ group exercise capacity is massively reduced. Live streaming will come into its own, both to members’ devices out of the club and to overflow zones in-club. But we need to think even more creatively than this. We just did a quick piece of member research via clients in Australia, Germany and the US, and members told us – when clubs re-open and classes can only cater for a fraction of the normal number of people – they would expect their clubs to reward them for being loyal online members. They felt only those who regularly did online classes with a specific instructor should be given the chance to book into a live class with them.
This need for VIP in-person experiences will continue in the long-term too – even once there’s a vaccine. Training at home is just so convenient. Provided the digital experience is good enough, I predict that while people will still go to clubs, they will do so less often.
I believe we’ll see a rationalisation of club portfolios and a growth in VIP pop-up experiences. The baseline – convenient, high-quality, personalised fitness content – will be delivered at home. In-person will have to be more special, with experiential events that take place both in clubs and at other great locations via partnerships.
To what extent can operators be in control of the situation as we emerge from lockdown?
Whatever the re-opening criteria agreed by governments around the world, we know we can do it: our sector is good at operations.
Our biggest challenge isn’t an internal one. It’s that consumers don’t trust each other to do the right thing: to stay a safe distance away, to clean equipment after every use, not to cough on each other. Until there’s a vaccine and/or herd immunity, the question is likely to remain in people’s minds: do I really want to exercise at the gym? People want to be active, but they don’t want to be at risk. It’s why many operators I speak to believe they could be re-opening to 50% fewer members.
And that’s why I believe operators need to look first at their digital home fitness journey, then dovetailing a VIP in-person experience into this. I believe it’s now more important to have a competitive advantage in your home fitness offering than in your club-based offering.
Home fitness is here to stay. People will still be willing to pay for programming, expertise, support. It just needs to be done online now.
How can operators monetise this post-lockdown?
There has to be an understanding that online content can’t be free forever, but underpinning this is an even bigger ask of operators. Because I believe clubs will be forced to review their whole membership model.
If we just look at our current membership packages and try to crowbar digital in as an add-on, we’ll get confused as to how much we can do. What’s needed is a whole new approach that combines digital and physical attendance into tiers: the more you pay, the more personalised it becomes online and the more human elements to the offering.
From a digital perspective, tier one might be on-demand only, tier two might also include local live streaming, tier three the live-streamed superstars. There might be one-to-one virtual PT or one-to-10 online small group training. In-person attendance might switch to be based on number of attendances included within each tier.
That’s certainly elaborating the point, but fundamentally, clubs will need to look at the full journey – at what will be delivered digitally versus physically – and then look at the ROI to determine what can be delivered, at what time, and what this means for membership tiers.
What excites you most about this rapid move to digital?
In recent years, fitness has been all about consolidation, about low-cost and premium operators squeezing the mid-market to the point what we do has become purely price-driven.
All of a sudden, we have a real opportunity to add bucket loads of value. As an industry, we’re being forced to work out a journey that engages more people in fitness – and as a result, this is the time when I believe we can get beyond 12% penetration and shoot up to 20%.
The main obstacle is this: clubs need to get far, far better at analysing the user data that online platforms allow them to gather. We’ve talked about personalisation for years. This – digital fitness – is the way to speed it up. It is both the tool to gather the necessary data, and the channel through which to deliver personalisation. That’s hugely exciting to me.
If we can do all this well, and get people hooked on our content, there will be a far larger base of people interested in fitness when we’re finally back to being able to operate clubs normally. These people are the gym members of the future. That is, unless the B2C providers grab them first. And that – the threat of the other online providers – is why it’s so important for gym and studio operators to own their online experience, starting right now.
A final piece of advice?
Put bluntly, if you don’t have a hybrid digital/physical model, you won’t survive in the New Normal. Think about how disruptive low-cost was for those who didn’t respond quickly enough. Digital will be equally disruptive.
It is no longer a question of ‘do we go digital?’ Now the only question is: do you merge digital into physical, or physical into digital? Which approach will win? I genuinely believe it will now be the latter.
For more information any of the topics mentioned above please contact info@wexer.com