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16 September 2022

SGPT: Will you & your gym survive the purge?

Unlike the single catastrophic event that killed out the dinosaurs, most extinction incidents are gradual and occur over a period of time.

A mass extinction event (or “purge”) is already under way in the SGPT fitness market and, as with the precedence set by history, it will be the dinosaurs that fail to make the cut.

The industry is amidst a “perfect storm” - but too many good, decent gym owners are failing to realise and adapt. Of those that have noticed the “big ball of fire” heading in their direction, some are simply sitting & staring, whilst others have already dealt themselves a fatal blow through poorly considered, panic-induced decisions.

The imminent recession and spiralling costs are already bringing an increase in membership cancellations. Having emerged from COVID, and with the industry’s long relationship & love of the “race to the bottom”, many facilities simply do not have the financial buffer to survive. Many gyms are operating full time out of their overdrafts. Financial collapse can result from the loss of just one more member.

To further compound these challenges is the entry of the big box chains into the small group market. In recent years, most of these chains have identified that small group is where the bulk of the market is heading, and where the money is to be made. These chains are coming with big budgets & big ideas yet, amazingly, instead of capitalising upon their unique strengths, some small, kamikaze independents are setting up camp directly in the path of these juggernauts!

Sadly, the first victims have already fallen. Others have already been dealt the blow of the Five-Point-Palm Exploding-Heart-Technique. They stand mortally wounded, but are yet to realise the fatality of their predicament. Instead, they continue their final steps before their inevitable (and already determined) collapse.

However, there is salvation for those who have the foresight to seek it. As in nature, survival can be extended through the ability to adapt to the changing environment. It is those that embrace the 3rd generation of small group training (#Gen3SGPT) that will not only emerge, but will emerge stronger.

Whether it be through ignorance or defiance, the 2nd gen diehards may manage to lumber on for a few more years, but fate will have its way.

The purge now underway has been delayed due to COVID. After lockdown, it was hard for any gym (however bad) to not attract new members and turn some revenue. However, the “excitement of freedom” has now subsided and members are returning to their previous thought patterns.

Most gyms tend to target the same 15% of the population – those who are already inclined or motivated to train and stay fit. However, with many within this demographic being younger, the same group is experiencing greater financial pressures. Whilst health & fitness shouldn’t be considered a luxury, it is naturally one of the first expenses to get culled during hard times.

The desire amongst the general public to get fit is ever-increasing. With obesity and health issues off-the-chart, there is a clear market. However, people want more. They deserve more. The Gen 2 approach to small group with a cursory, box-ticking attitude towards broader wellness and “off premise” wellbeing simply doesn’t make the grade. We’re not in 2015 anymore.

The small independent operator cannot compete toe-to-toe against the financial might of the big box chains. But what these operators do have in their arsenal is the “magic bullet”… service. This is the elixir of life that will see the small independent, David, triumph against the big box, Goliath.

It is here that in lies the next secret… people are prepared to pay a premium for service. During the imminent tough times, it will be those that charge a premium; perhaps securing fewer, but more profitable members that will build the strongest models. Whilst many gyms are setting themselves up for “death by a-thousand cuts” by cutting costs and absorbing overhead increases, the more savvy operator is putting their prices up. But they are doing so through intelligent delivery models, deeply founded upon human psychology, and with upsell and cross-sell intrinsic to every element.

The full implementation of a Gen 3 SGPT service model is more than can be covered in this brief article. However, there are a number of salient concepts that cover perhaps 80% of the operation guidelines:

Service above everything

This absolutely fundamental, conceptual hurdle is where many of existing Gen 2 operators fall at the first fence.

#Gen3SGPT is rooted in the provision of the absolute highest-quality of service to the clients, spanning every element of their wellbeing product consumption – and not just for the few hours a week that they spend at the gym.

Many reading this will be thinking “but it always has been”. Yes, it always should have been. But, if we’re honest, it seldom has been.

As a small group gym owner, ask yourself this question: “What tends to be paramount in my considerations… my brand and image, or the service that I provide to my customers.” If it’s the former, then think some more. Keep thinking until you finally reach the correct answer.

Too many gyms are centred around the brand and personal image of the protagonist. Images of trainers sweating with their tops-off are passé and a massive turn-off to the broad majority of the potential training audience.

In #Gen3SGPT it is the client that is first, foremost, and always at the centre of every consideration. Service and dedication to their personal needs are paramount and should never be compromised for self-serving gratification and ego patting.

Beware the guru and “business support group”

There are many genuine, good business advisors out there. But there are sadly a higher number of charlatans. Some are well-intentioned, but inept and out-of-touch; others are just plain scammers taking advantage of those desperate for help in salvaging their businesses.

Never blindly take advice from your ‘guru’. Ask yourself, do they really know what they’re doing? Do they actually understand my business? Are they in touch with where the industry is going, and what the members of today are seeking? Do they practice what they preach? Are they genuinely endorsing the best approaches, or do they personally benefit in some way from their recommendations? Do they actually care, or are they just building their own brand?

The biggest downside with some of the business groups is that they can become insular echo-chambers. A number of gyms in the same situation, all looking at each other and their ‘guru’ for guidance and advice. As such, they miss the bigger picture going on in the outside world and, by the time they realise, it’s all too late.

It is imperative that, if you opt to follow a “Pied Piper”, you are confident in where they will lead you and that they truly know the industry and the nuances of your individual business. If your gym goes bust due to poor or outdated advise, it is you and your family that feels the pain – not your guru. And all for the privilege of having paid them many thousands of pounds for the honour!

Small Group Personal Training

The clues are in the title. “Small group” and “personal training”. That’s it. Simple!

Small Group started out as two or four individuals, before generally setting on four. This is the optimum number, and this is the size of group that #Gen3SGPTs operate at.

In recent years, particularly in the UK, “guru-led” thinking has seen the increase in group sizes to 6 or even 8. This is utter garbage, and has arisen from greed and a poor understanding of lesson 101 supply-and-demand concepts.  The same gurus point to over-simplified justification equations whilst wholly missing the bigger picture.

Next consider the “personal training” element. Personal is the key operator here. You are training four individuals, not four clones. Each has individual goals, targets, needs and challenges. It is your duty as service provider to always deliver against each of their personal needs.

Inclusivity and body positivity

Health and fitness is for all. The stereotypes regarding body positivity are finally starting to fall, and there is an increased recognition that “fit & healthy” does not look the same on everybody.

Modern fitness training is also more broad in its make-up. The last few years has brought about a wealth of supposedly ‘fit’ individuals, who lack the range of movement to even be able to tie their own shoe laces! This is not doing anybody favours for later life, and we are doing these people a disservice.

#Gen3SGPT recognises that wellbeing has to form part of a lifestyle, and not superimpose itself over the top. People have lives. People have kids. People want to have fun. It is wholly possible to have a healthy lifestyle, without needing to compromise the will to live!

Value your product

Nobody wins the “race to the bottom”. Your success will come from delivering a premium product, and delivering it well.

The recent proliferation of the “open gym” within the SGPT world is a massive mistake. Again, guru led, this has been driven by poorly considered economics and the need for instant gratification. A simple sum shows an increase in revenue in x, but no consideration is put upon the de-valuation of the core product.

Your facility should operate akin to the premium lounge in an airport. People want to be in there. They aspire to be able to be part of the jet set that can afford such luxuries.

“Equipment access only” packages massively cheapen your product offering and appeal to those who are seeking a better quality of service. Free periods also de-value your product, and reduce its worth in the minds of your clients.

Resist the urge for cliché “unlimited” type inclusions. Unlimited means that each product is almost worthless, and the value is immediately diminished in the mind of the consumer.

#Gen3SGPT gyms resist the urge to bundle. Instead, they up-sell and cross-sell. Nutrition is a value-add bolt-on. Supplements are a subscription bolt-on. Sold and promoted in the right way, not only does the gym make more revenue, but the member has greater appreciation from the products they have bought – and they benefit from them.

Beware of shiny things

Your average gym member (and certainly most of those that should be your target audience) won’t have a clue about equipment manufacturers. They will likely have not even heard of Wolverson; BLK BOX; or Eleiko. They are not signing up to train with you because you have your logo laser etched into the ends of your dumbbells.

Yes, your gym needs quality equipment. But be sensible. It is going to take a beating, and won’t be looking shiny and new for very long. A cheaper 10kg dumbbell has the same benefit to the member as a top-end 10kg dumbbell. Typically most gym owners overspend on equipment, using valuable financial resources and for little-to-no benefit to their members. Put your ego and desire to impress your peers to one side, and buy sensibly.

If your guru encourages you down a particular supplier route, ask yourself is there anything in it for them? Not all gurus are altruistic, and kick-backs are commonplace.

Know everything about your members

A critical part of operating a successful Gen 3 SGPT gym is knowing everything about your members. And not just you… all of your team need to know everything about your members if you’re going to be able to provide a consistently high level of service.

Too many gyms don’t even operate the absolute basics of recording their clients’ attendance. If you don’t know when your members have attended, how would you know when they’re at risk of dropping off?

For a #Gen3SGPT gym to be able to deliver against its promises, it is imperative that it be built around a system designed specifically for small group training gyms. Generic marketing apps; CRMs; home-grown efforts; and a hodgepodge of disparate, poorly integrated systems simply don’t hit the mark. They are ineffective, and often wasteful both in terms of time & money.

As a service provider, think about the manner in which your members have to consume your product. How many apps; logins; and websites do they need to access their core membership content? Personal brand ego too often leads to gyms commissioning cheap, nasty branded apps – simply because they have their logo on them. It is your role to be a fitness service provider, not a software company. Who knows what naughty code has been added to that app, and where your personal details are being stored. Chances are that the commissioning gym has no idea either, and has never even thought to look into it.

Full, 24x7 wellness delivery

Your delivery of your wellness product should be both proactive and reactive.

You should be constantly nurturing and drip-feeding content to your members, and not only during their first 30-days. Why should loyal, long term members get a lesser service than your new sign-ups?

Within the #Gen3SGPT model, simply “box ticking” is no longer acceptable. The days of downloading a $20 set of recipes off the Internet and chucking it out as a 60Mb email attachment are long gone. Your members never appreciated such an approach, and it certainly didn’t benefit them in any way.

Your members should receive a multitude of touch points. Typical Gen 3 gyms have over 50 different touch points in place, ensuring they engage with every aspect of their member’s health & fitness progress.

For any gym, delivering such a high level of service delivery is only viable through use of smart automations – which again comes back to having a central, cohesive system that is designed specifically for the needs of the modern SGPT gym.

Performance tracking tools, such as Myzone, are being re-employed to much greater effect by #Gen3SGPT gyms. With them having been massively under used through lack of understanding in many Gen 2 gyms, they form an integral part of many modern gyms – with belts often now being included with memberships.

The modern wellness facility delivers content that extends far beyond standard training sessions. Increasingly gyms are starting to offer mindfulness classes, thinking outside the box by providing painting & modelling classes and the like. As well as being good for mental health, these are also great fun and superb for building a genuine community.

Loyalty through want & desire

Whilst locking clients into long term memberships have financial benefits for the gym, our industry is pretty much alone in this approach to customer service.

Your members should be returning to your facility because they want to and because they benefit from it, not because they’re locked into an onerous membership contract.

Longer term commitments can be traded on a win-win basis through “special commitment deals” but, as a general rule, your members should be free to leave when they want. Life happens, and part of #Gen3SGPT is understanding that people need flexibility in their lives.

There is an emergence of memberships gradually being replaced by fixed length packages, each with a purpose and focus. These can often be sold at a premium, with members happily paying more for the ultimate service and focus that they receive as a result.

Fix the leaky bucket

We are an industry obsessed with bringing in new leads. Often a spray and pray approach is employed, with little science or consideration of the target audience.

Many guru groups are predominantly sales led. This is the norm. This is what we are taught as being important and, consequently, it continues generation to generation.

Lead attraction is important, but member retention is more so. Many gurus attempt to counter this with off-the-cuff equations focussing on 1-2% differences but, as sadly often the case, they miss the bigger picture with false narratives. Moreover, these arguments are often built to support their own position as the ‘big dog’ and paid orator.

Studies show that those who pay more for their gym memberships will stay longer and be more loyal. Of course, this needs to be supported by the corresponding service, and this is why member retention is paramount. If you can be retaining high ticket members, whilst both balancing & beating natural attrition through acquisition, you are onto a winner.

Respect and Privacy

The Gen 2 gyms paid little attention or respect towards the privacy of their members. Often, data would be sprayed far and wide, with member details being entered in multiple systems with little regard to what it might be used for.

Too many gyms also require their members to join a Facebook group. This prescriptive approach wholly fails to comprehend the way that many people now feel about data privacy, and is it very unlikely that high net worth and private individuals would want to connect en masse through a Facebook group. There are other ways.

With it only being a matter of time before a gym is “made an example of” in an privacy law case, now is the time for gyms to get their houses in order and to operate in a more responsible and respectful manner.

Respect comes in a number of guises. Another is the appreciation and respect of your member/prospect’s demands on their life. Hounding leads with dozens of text messages and phone calls is not a good look. It works for a certain demographic, but it also turns off many. For a broader percentage of the population, a less aggressive but more considered approach will yield better long term results. Think the “hare and the tortoise”.

Maximise your premises

A lot of gym owners are under the misapprehension that “to be considered successful” you need to operate multiple facilities. This isn’t the case.

Many of the better known names within the SGPT industry aren’t even in the top-10 of performers financially. They are known because they talk a good talk, but not all walk the walk.

Before putting the immense pressure upon yourself of opening a new facility, you should firstly make sure that you have maximised the potential of your existing premises. Many have tried to replicate what they view as being a successful model, only to fall flat on their faces.

Achieving a cookie-cutter approach is very hard. Even the biggest franchises have difficulties in doing so, with only a few of them actually getting it right.

Run your business as a business

With many gym owners coming from a sole-trader, PT background, many gyms are not run as professionally as many other commercial businesses.

Shocking, and quite remarkably, many gyms don’t keep day-to-day financial records – with the business owner often treating the company bank account as an extension of their own, transferring money ad hoc at will.

KPIs and metrics are the bedrock to knowing how your business is doing. Whilst cobbled-together stats in an Excel spreadsheet are better than nothing, they are often a work of fiction assembled simply to appease the demands of a business guru.

A modern, SGPT management system (when used properly) will yield a wealth of information about your business and how you can operate more efficiently and profitably.

Don’t cut of your nose to spite your face

In difficult times, too many gym owners panic and make rash decisions. In the current economic climate, many have already started the process of “death by a-thousand cuts”.

By penny-pinching rather than stepping back and looking at a broader picture, they are almost guaranteeing the end of their business. Member services will decline and will result in more losses. This, in turn, will result in more cuts and in a matter of months the businesses will be closed.

Many of the most successful gyms are doubling-down, investing, and raising prices. There is no point in pretending that costs aren’t rising. Everybody knows it, so why absorb the costs?  The mantra “my members won’t pay that” is the sound of a small group training gym dying.

 

The fitness industry has an extremely high percentage of good, decent, hard-working individuals who want to help others. These people deserve to succeed in their quests but, to  survive the challenges of the next few years, smart decisions need to be made.

Those who succeed will be those who can evolve their business models from Gen 2 to Gen 3 SGPT. There is no longer room for egotists and self-publicists, and it is the genuine, selfless operator that will rise above and reap the rewards. In turn, their members will receive the best possible service and go on to both meet and exceed their own, personal fitness goals.

 

Will you survive the purge?
Written by Chris Windram.

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Alchemy provides the system, resources, and the practical advice & support that gym owners need to operate a profitable, "high ticket" membership, small-group training gym. Alchemy is the ultimate "SGPT toolkit".
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