14 Observations For 2014 – Bill McBride, BMC3 / Clubsource
I believe that 2014 will hold a very interesting time for our industry as we are seeing a convergence of many changes in not only our industry, but the world in general. I will hit upon several key areas that I think our worthy of our attention.
- Our world is changing – social communities are enabling consumers to change their purchasing behavior. How consumers identify clubs and make decisions to buy classes and memberships will continue to evolve. Consumers will continue to have a higher demand for “service” and less of a tolerance for “hassles” – this will have major implications on memberships, services, class purchases, pricing transparency, enrollment, account service/billing issues and class/program scheduling. Currently consumers are exposed to 10.4 pieces of information on buying decisions with a vast majority checking online before consideration of a purchase.
- There will be more awareness of “the quantified self” – people using devices to measure their activity and interact with their fitness and activity. Devices like Fitbit, Garmin, Nike+, Mobile Apps, wireless scales, etc. (People engaged with personal data, their own social networks and their own devices). We are about to see the equivalent of “Quicken” and “Mint” with individual fitness and health data aggregation. It will be device and equipment agnostic.
- Social Media – your social footprint is now your “footprint” – there is no difference between your social reputation and your “bricks & mortar” reputation. Before the internet, you had to spend time on your yellow pages ad and we all did – now you have to spend time on your Yelp reviews, your Facebook page, your Twitter account, your YouTube channel (YouTube – second highest search engine behind Google – owned by Google), your website and the various other medium that tell your story online. Consumers have more power than ever and they use it – on purpose and through their normal daily lives online.
- Women are becoming an even more dominant force in our industry. 3 out of 5 new members in 2011 were women. It has been reported that by 2015, 44% of the US population will be women over 40 years of age and that trend will continue to grow for the following 30 years.
- Group Fitness continues and will continue to be on the rise. This is driven by multiple factors – the effectiveness of group classes, the fact that people want to be around similar people in an ever busy life and they have the goal of structured “enjoyment” in exercise and activity. Many people don’t want to think about something else, they want to show up, engage, enjoy and get a great workout. This too is emphasized by the growing female demand in our industry.
- Selectorized equipment is being “attacked” by the functional training apparatus. What compounds this further for manufacturers is the issue of the life span of a typical piece of selectorized equipment – it doesn’t get beat up – upholstery is easy to replace and when it does get scratched and weathered, it’s easy to paint (powder coat)… most clubs are seeing a decrease in traditional plate/pin equipment usage and this equipment purchasing decision is falling further down the priority scale. Many equipment companies are working on “re-inventing” themselves with an even greater focus on the end user of not only today, but tomorrow.
- More and more boutique & franchise models are entering the marketplace in not only high density areas, but where “big box” operators cannot or will not go (at least as of yet) based on population demographics with their current business models. Smaller venues need smaller populations. The plethora of new offerings will continue through the next several years. There is also a high degree of financial equity investment interest in these concepts.
- Traditional “big box” operators are re-thinking their approach to group fitness, functional training and why several of the new models are gaining market share. They will not let this go – they will work to combat the smaller offerings and regain competitiveness. It has been reported that 45% of smaller boutique studio participants belong to a traditional club/gym.
- Functional Training is not a fad and the interesting part of the functional training movement is that it has been led by our club fitness professionals. This has typically been an organic/grass roots grow not a club ownership orchestrated new introduction. Now is the time for club ownership to design their functional training offerings in programming and space allocation. It is also a time for owners & operators to invest time, effort and resources in their fitness programming – those included w/membership and fee based offerings.
- Lifestyle is more important than ever – people want to accomplish multiple goals – workout in an environment with a community of like-minded people, have their kids adequately entertained (without guilt), be able to relax and feel good about their escape while having easy access to WiFi in convenient & comfortable surroundings.
- Big Data – Most clubs have not yet realized the power in trending and big data analytics. Our memberships willingness to give us a treasure trove of information about their goals, wants, desires, interests and needs, coupled with our knowledge of who they are and what their usage and spending is allows for a great opportunity. Also the members retention an member engagement tools now easily available make this a great time to increase our performance with service, results, retention & profitability. Member feedback is now a very valuable management tool that can be managed with clarity improving overall club performance. Very few operators are as of yet capitalizing on the use of data to better serve their membership and prospective membership.
- HIPPA – The Health Information Portability and Accountability Act (HIPAA) governs the collection, usage & storage of bio data. Now that healthcare reform has survived its challenge in the Supreme Court, HIPAA will be most likely be expanding; this may have broad implications for the industry. Data the industry has always held (like BMI, heart rate or even weight) may soon fall under the HIPAA umbrella. This along with changes in nuance such as Obesity being classified as a disease allow for more “bridging” between health care and prevention with health clubs having an opportunity to play a larger role.
- Accountable Care Organizations (ACOs) – A healthcare organization characterized by a payment and care delivery model that seeks to tie provider reimbursements to quality metrics. Currently 75% of healthcare costs go to treating diseases that are largely preventable. The advent of ACOs is creating a paradigm shift in medical care from disease treatment to disease prevention. This will create significant opportunities for health management. The Government is focused on outcomes: congestive heart failure, acute myocardial infarction (heart attack), and pneumonia with mandates in 2014 for providers footing the bill on readmissions on these three diseases. I believe diabetic hospital events will be coming in the near term.
- Simplification will be the order of the day. We must simplify our offerings as people have more choices than ever before. Giving people 2-3 choices will bode well as people have information overload. More options causes “paralysis analysis”.
BMC3 is a full health club consulting agency founded by Bill McBride, former President & COO of Club One, former Chairperson of the IHRSA Board of Directors, current Ex-Officio of the IHRSA’s Board of Directors, Industry Author, International Trainer & Speaker. Bill currently works as a consultant for fitness clubs and is the Co-Founder, CEO & President of Active Sports Clubs. You can reach Bill directly at (415) 299-9482, BillMcBride@BMC3.com or via http://www.linkedin.com/in/billmcbride. BMC3’s website is www.BMC3.com.
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