The Evolution of A Health Club Member

Strategic solutions for health, fitness, wellness, leisure, sports, and recreation businesses http://accessfit.typepad.
com
Copyright 2009 Access FIT Pty Ltd. All Rights Reserved.
Kym Wimbis owns and operates the Access FIT blog (http://accessfit.typepad.com), an essential resource for health, fitness, wellness, leisure, sports, and recreation businesses. Kym has undergraduate degrees in Exercise Science and Law and a Masters degree in exercise prescription for special populations, combined with over a decade of professional-industry experience in commercial, community, university, and corporate settings. Kyms education, frontline and management experience, practical problem-solving approach, and commitment to innovation and continuous improvement have motivated his important ongoing contributions to strategic business development.
Strategic solutions for health, fitness, wellness, leisure, sports, and recreation businesses http://accessfit.typepad.com
Contents
INTRODUCTION THE HEALTH CLUB MEMBER EXPERTISE CURVE MEMBER EVOLUTION... FROM SURVIVING TO THRIVING
The Beginner Stage (Survival Zone) The Intermediate Stage (Expansion Zone) The Advanced Stage (Consolidation Zone)
4 5 6
6 8 9
THE CONTRIBUTION OF MEMBER EXPERTISE TO BUSINESS VALUE SURVIVAL OF THE FITTEST IS NOT A RETENTION STRATEGY IMPLICATIONS OF THE EXPERTISE CURVE FOR OWNERS AND MANAGERS
Structure the business (physically, organizationally, and culturally) around the members evolutionary process Target health club members higher on the expertise curve for acquisition Implement specific strategies to accelerate beginners up the expertise curve Apply specific strategies to each members stage of evolution Match the customers experience to his or her stage of evolution Employ strategies that enable the identification of, and facilitate access to, at-risk members Allocate resources for maximum returns Evaluate the efficacy of existing strategies in the context of member evolution Develop products, services, and programs that target members evolutionary stages Develop policies, procedures, protocols, and practices that target members evolutionary stages Manage the interactions between beginner, intermediate, and advanced health club members Be strategic about the mix of expertise within the health club
10 13 14
14 15 15 16 16 17 17 17 18 18 19 19
THE MISSING LINK NOW WHAT?
20 21
Introduction
In his seminal 1859 book On the Origin of Species, renowned English naturalist Charles Darwin introduced the world to his highly controversial theory of evolution predicated on the principle of natural selection. Darwins theory later became widely known as Survival of the Fittest (the phrase was actually coined by one of Darwins contemporaries, Herbert Spencer), a term that Darwin adopted as a synonym for natural selection in the fifth edition of On the Origin of Species some ten years later. History tells us that Darwins inclusion of the term Survival of the Fittest hindered rather than helped illuminate the central tenets of natural selection but enough about Mr. Darwin. The term Survival of the Fittest is, however, entirely appropriate to describe the prevailing strategy of health, fitness, and wellness business owners and managers when it comes to member acquisition and retention. Certainly much has been said and done in the name of member retention over the years. Dishmans early examination into exercise adherence revealed that 50% of exercise participants drop out within six months. Subsequent studies confirmed Dishmans findings in a variety of exercise settings (clinical, community, and commercial). In order to further explain the dropout phenomenon, a number of researchers have applied specific psychological and behavioral theories and frameworks to the exercise context. However, despite many decades of effort an enduring solution to the retention problem continues to remain elusive. Of course, industry associations, publications, consultants, and pundits have all proffered their own solutions to the retention problem. Unfortunately, many so-called retention strategies are simply variations of the same old industry platitudes that have been around for years. We need to improve our customer service We need the latest group exercise class We need to make sure this place is spotless We need to be more competitive on price Most conventional retention (and acquisition) strategies are unsuccessful because they fail to account for the significant differences in expertise between members (and prospective members) and the implications of those differences to the members health club experience. The truth is that most retention strategies simply apply generic tactics equally and indiscriminately to all members, regardless of need. Customer service is a prime example. Exemplary customer service for one member can be an unwelcome annoyance for another depending on his or her level of expertise. If we apply Darwins thinking on evolution to member acquisition and retention we can see that not all members are created equal some are more highly evolved than others are. Members needs, expectations, and values vary considerably according to their stage of evolution. And, equally important, some members are more valuable than others are (for a variety of reasons which will be discussed), based on their stage of evolution. 4
The Health Club Member Expertise Curve

When we plot the evolution of a health club member from novice (beginner) to expert (advanced), it resembles Figure 1. The acquisition of expertise over time follows an S-shaped curve (sigmoidal, for the technically minded) starting low, increasing slowly, then suddenly increasing quickly for a defined period until finally leveling off and continuing to increase, but at a more moderate rate once again.
High
Advanced (Consolidation Zone)
High
(Profit)
Business Value
Expertise
Intermediate (Expansion Zone)
Low
Beginner (Survival Zone)
Low
(Cash Flow)
Time
Figure 1.
The Evolution of a Health Club Member
The rate of acquisition of expertise varies depending on a number of factors corresponding to the members stage of evolutionary development. For example, early-stage beginners require consistent, ongoing, positive reinforcement from club staff; without it, they are extremely vulnerable. Early-stage beginners who are deprived of the necessary positive reinforcement progress poorly and are at high risk of dropout. Intermediate and advanced health club members require less positive reinforcement from club staff because they have better developed internal motivation (based on their previous successes) and better access to positive reinforcement from their peers. However, it is typical for health club staff to spend a disproportionate amount of time with intermediate and advanced members who tend to be more comfortable (and social) in the cluba critical misallocation of resources that invariably contributes to member attrition and adversely impacts the clubs bottom line. The ability of the health club to match their members (based on their stage of evolution) with the appropriate experience is essential. Providing beginners with an intermediate experience will lead to dropout. Forcing advanced health club members to suffer through the beginner or intermediate experience will lead to dissatisfaction and defections. Treating intermediates like beginners or advanced health club members is certain to impede their rapid progress. Therefore, understanding a members evolutionary process is imperative to managing member acquisition and retention. 5
Member Evolution... from Surviving to Thriving

It is generally understood that there is a range of expertise within any given membership base. In fact, the range of expertise has actually expanded quite significantly, given the industrys more recent efforts to broaden its markets. The gap between the least and the most expert members within a health club is greater today than ever before. Most owners, managers, and staff can, fairly intuitively, identify beginner, intermediate, and advanced health club members. Typically, these determinations are based on a number of indicia, including a members physicality, technical proficiency, understanding and use of jargon, and the quality, frequency, and type of interactions with others (members and staff). In an attempt to accommodate the increasing range of expertise, many businesses do offer some, albeit ad hoc, beginner, intermediate, and advanced options to their members. However, because owners and managers dont fully comprehend the critical importance of their members evolutionary process, most attempts to appeal to the full range of expertise within the club are typically unsuccessful. Beginner, intermediate, and advanced health club members are fundamentally different. Their needs, expectations, and values are fundamentally different. Their health club experience is fundamentally different. Only by understanding a members evolutionary process can businesses effectively manage these fundamental differences.
The Beginner Stage (Survival Zone)

Initially, the early-stage beginner has very low expertise. In evolutionary terms, the early-stage beginner is equivalent to an amoebaan unsophisticated, fragile, extremely vulnerable life form that requires constant encouragement, support, and a highly stable environment to survive. Early-stage beginners require ongoing attention if they are going to survive long enough to successfully evolve to the next stage of development. The early-stage beginner is extremely emotion-driven (fear, anxiety, apprehension); he or she is most interested in surviving, not thriving. Beginners care more about avoiding the mirrors, not looking too stupid, keeping out of the way of the real members, and trying to fit in than they do about the latest equipment, programs, and classes. Beginners are inadaptable. Their health club experience is something that happens to them and they feel like they have very little control over it. Consequently, to a beginner, failure is seen not as a personal failure, but as a failure of the health club. Beginners take a passive role in their own experience because they lack the requisite expertise to modify their health club experience 6
in any meaningful way. For example, if a piece of exercise equipment is out of order, they cannot reliably substitute another for it. It provides them with one more reason to feel incompetent and out of place. Beginners require consistency, simplicity, continuity, and stability to overcome their lack of adaptability. Beginners are extremely self-focused, hyper-aware, and hypersensitive. As a result, beginners can find a hundred reasons to leave. I am not sure what I am doing I feel like everyone is looking at me No one helps me Everyone else is so much better than me I am not making any progress No one cares about me Its always crowded and confusing No one is very friendly Beginners will not survive in a hostile environment. Moreover, beginners will rarely, if ever, articulate their concerns. Therefore, it is up to the health club to understand and anticipate their various fears, anxieties, and apprehensions and put strategies in place to overcome them before they arise. Beginners tend to focus on what they dont know and what they cant do, especially in comparison to others. As a result, they are likely to feel inferior, isolated, and incompetent. Understandably, they will not tolerate feeling inferior, isolated, incompetent, vulnerable, out of place, exposed, abandoned, intimidated, overwhelmed, or unwanted indefinitely (even if they have paid good money for the privilege). Beginners have a lot to learn and a relatively short time to do it if they are going to be retained as members. Most health club attrition occurs at the beginner stage, particularly the early-beginner stage. In fact, some research indicates that as many as 42% of new members drop out within the first 30 days of joining. Beginners are low on the food chain and they know it. Their expertise improves slowly, from the early stage to the late stage of development, as they become increasingly familiar with the technical (understanding proper technique, using equipment, sets, reps, rest periods, program splits, warm-up, cool-down), social (confidence in interacting with others, spotting others, working in, respecting personal space), psychological (feelings of belonging, self-confidence, self-esteem, self-efficacy), and cultural (understanding formal and informal codes of conduct, dress standards, jargon, etiquette, and other club norms) aspects of the club. Despite their best (albeit limited) efforts, most businesses are far from beginner friendly. Owners and managers simply do not fully understand the beginner experience (because of their own high expertise). It should not be too surprising, therefore, that most attrition occurs during the beginner stage of the evolutionary process. However, very few owners and managers have adapted their businesses to the needs, expectations, and values of the low-expertise member, preferring instead to try and fit (or, more accurately, force) their low-expertise members into their existing model which is heavily geared to their high-expertise members. It should be clear that the beginners journey is a particularly perilous one; therefore, any serious retention strategy requires a direct focus on moving members efficiently and effectively from the early-stage beginner to the intermediate stage of evolution.
The Intermediate Stage (Expansion Zone)

Over time, the beginner is able to aggregate, consolidate, and understand the fundamental technical, social, psychological, and cultural aspects necessary to survive in the health club environment. Once this occurs, their accumulated expertise moves them from the late-stage beginner (past the first critical inflection point) to the early-stage intermediate. In evolutionary terms, early-stage intermediates are equivalent to lungfish; they have found their feet and are willing, and able, to explore new territory. It is no longer simply about survival for the intermediate health club member; its about expansion, exploration, experimentation, and expediting progress. Intermediates experience a period of rapid progress (physical, psychological, and social). Their intrinsic motivation begins to develop as their expertise increases. They no longer require the close attention or supervision from staff that they did as a beginner. They are increasingly autonomous, preferring to modify and develop their own training programs (often informed by their peers). It is typical for intermediates to abandon their exercise program cards because they associate them with less-experienced beginners. Intermediates begin to get increasing recognition in the club (from staff and other health club members) because of their consistent attendance, increasing confidence, and highly conspicuous progress. Based on initial successes, intermediates will begin to explore additional means to expedite their progress, such as trying new equipment/exercises/classes, purchasing training aides (e.g., gloves, straps, belts, apparel), and taking nutrition supplements. As a result of their newly acquired status and training progress, intermediates are increasingly confident (very often overconfident). They begin to explore more advanced techniques, increase their training intensity, increase their training volume, increase their training frequency, and often become vulnerable to overtraining and injury. Obviously, intermediate members who do experience extended periods of overtraining or injury become disenchanted, de-motivated, and very dissatisfied. Intermediates need an experienced instructor they respect who can temper their enthusiasm with common sense and sound scientific training principles. Intermediates are in the sweet spot of their training experience. They are making progress, they are enjoying their newly acquired status, they have begun to assume responsibility for their own training experience, they want to be in the health club, and they are willing to spend on ancillaries to expedite their progress. See no evil, speak no evil, hear no evil.
The Advanced Stage (Consolidation Zone)

Eventually, the intermediates rapid progression begins to plateau and the late-stage intermediate moves (past the second critical inflection point) into the early-stage advanced phase of development. Progress slows to a more modest rate, but by now the health club members evolution is almost complete. In evolutionary terms, the early-stage advanced health club member is equivalent to early manhe or she has the confidence, competence, and expertise to control their health club experience. They are the masters of their domain and they are looking to consolidate their position at the top of the food chain.
Advanced health club members have taken full responsibility for, and have complete control over, their training experience. They are highly evolved and have all the necessary skills and knowledge to continue their progress with minimal investment from the heath club. In fact, advanced health club members often share their expertise (e.g., offering advice on technique, programming, nutrition, supplements, injury prevention, and management) with other health club members and staff. Their collective contributions actually increase the overall expertise of the club. Advanced health club members also play an inspirational/aspirational role to other members, particularly intermediate members. Many intermediates will try to emulate the feats of their more accomplished peers, seek their counsel, and benefit from their experience. Advanced health club members are willing to spend on ancillaries, but unlike intermediates, they have developed strong preferences based on personal experience. Therefore, they are more likely to remain loyal to their brand preferences over the health club in the event that the health club doesnt have their brand at the right price. The advanced health club member is more interested in function over form; old equipment that still does the job is preferable to shiny new equipment that does not. These members approach their workouts in a very workman-like fashion. They like to be as efficient and effective as possible. They become frustrated with having to wait for equipment tied up with intermediates doing endless trisets, supersets, and dropsets, or oblivious beginners chatting while sitting on equipment. This frustration can manifest as irritation, impatience, annoyance, or intolerance. These negative feelings can be interpreted by beginners (who are self-focused, hypersensitive, and hyper-aware) and intermediates (who often are seeking the approval of advanced members) as aggression and can create a negative, even hostile, training environment. Interestingly, advanced health club members are much more forgiving of other advanced health club members monopolizing equipment because they recognize that they are just doing their job too. Advanced health club members are all about getting the job done and anyone, or anything, that gets in their way is not well tolerated. 9
The Contribution of Member Expertise to Business Value
It should be obvious by now that not all members are created equal. The corollary of that is that not all members contribute equal value to a business. If we accept the fundamental proposition that, for customers, Value = Benefits/Price, we can examine the differential value that beginner, intermediate, and advanced health club members deliver to a business. A high-value member is one who pays more (doesnt seek discounts, spends on ancillaries, renews their membership), consumes fewer resources, and contributes positively to the clubs culture/brand. A low-value member is one who pays less (seeks discounts or buys primarily on price, doesnt spend on ancillaries, doesnt renew their membership), consumes more resources, and doesnt contributeor contributes negativelyto the clubs culture/brand. Almost without exception, beginners are the lowest-value members for any health club (they want more benefits at lower prices, which represents high value for them but low value for the health club). They are the least financially committed, consume the most resources, and contribute the least to the clubs culture/brand. Beginners are hoping for the best, but expecting the worst. Despite how they present at the health club (e.g., excited, enthusiastic, motivated, willing), they almost certainly have a risk-mitigation mindset in place. It is understandable, of course, no one wants to waste their valuable time, effort, and money. Therefore, beginners will employ one, or more, risk-mitigation tactics to hedge against their anticipated failure. These risk-mitigation tactics invariably make beginners less valuable to the health club than intermediate or advanced members. Beginners are extremely price sensitive. They dont know exactly what they are looking for in a health club so they focus on price as the key differentiator. Thus, beginners will wait for discounted prices, negotiate discounted prices, or shop around for the cheapest prices before committing to join up (they are anticipating failure so why pay top dollar?). In the alternative, beginners are most likely to purchase low-commitment memberships (i.e., short-term or monthto-month contracts). Moreover, beginners are most likely to drop out (for a variety of reasons). In fact, many will drop out long before they are even profitable for the club (when staff, administration, marketing, and other acquisition costs are taken into consideration). Beginners consume the most resources. They require more staff time and attention in terms of instruction, assessments, programming, ongoing positive reinforcement, and explanation of policy/procedures (e.g., time freeze, cancellation policy, class sign-in procedures). Beginners even consume more physical resources, including program cards, pens, pencils, and erasers.
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Beginners contribute the least to the clubs culture/brand. Beginners are far too focused on themselves to contribute significantly to the club. Their lack of expertise means that beginners have very little to contribute. They cannot assist other members competently, they spend a lot of time looking dazed and confused, they often appear uncomfortable and out of place, and they tend to get frustrated and complain more than other members (although frequently with good reason). Because beginners rely so heavily on the health club for their success, any perceived failure (small or large) is generally attributed not as a personal failure, but as a failure of the club. Therefore, dissatisfied beginners can generate significant negative word of mouth both inside and outside of the club. From a business-value perspective, think of beginners primarily as Cash Flow members. They contribute to the top line (revenues), but not necessarily to the bottom line (profits). In general, beginners pay less, spend less on ancillaries, consume the most resources, contribute the least to the clubs culture/brand, and are most likely to drop out. They are a high-risk, low-reward propositionunless and until they can be evolved up the expertise curve into intermediate and advanced members. Intermediates have acquired sufficient expertise to begin to exert control over their health club experience and take responsibility for their own successes and failures. Increased expertise also allows intermediates to reduce their consumption of club resources and begin to contribute positively to the clubs culture/brand. Based on their initial successes (physical, psychological, and social), intermediates are increasingly likely to purchase ancillary goods (supplements, gloves, belts, apparel) and services (personal training, boot camp). Intermediates also have a more complete understanding of what they want in a health club and are therefore less likely to focus on price as the key differentiator, commit to longer-term (more profitable) membership options, and are less likely than beginners to dropoutat least as long as they keep progressing. However, as previously discussed, intermediate health club members present their own unique set of challenges (and opportunities). For example, intermediates require instructors who are higher in expertise than they are. Even though intermediates require less direct supervision, only expert instructors are able to successfully manage their potential for overtraining and injury, which invariably impedes their progress. Advanced health club members know exactly why they join a particular health club (its a highly considered decision that is not based primarily on price) and they have years invested in their training. Therefore, they are far less likely to drop out than beginners or intermediatesunless you give them a reason. Think of advanced health club members as high-value, Profit members. The more you have and the longer you can keep them, the more profitable youll be. Consider the differential value of high-expertise and low-expertise members in the context of Member Lifetime Value (MLV). MLV is the total profit generated by a member over his or her entire, aggregate, membership term. Effectively, the longer the member stays and the more a member spends, the greater the MLV. We know that low-expertise members cost more to acquire, consume more resources, contribute less to the clubs culture/brand, and are the most susceptible to early dropout. Low-expertise members represent a low MLV. High-expertise members cost less to acquire, consume fewer resources, contribute positively to the clubs culture/brand, and are most likely to continue their membership. High-expertise members represent a high MLV. Therefore, all things being equal, the higher the expertise of a member, the higher his or her MLV. In fact, MLV is significantly higher for high-expertise members in comparison to low-expertise members. Consider the following example, of a typical highexpertise and a typical low-expertise member:
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Member A is an advanced health club member. He has been training at a competitors health club for several years, but has become bored. He walks into the club, looks around on his own (because he knows what hes looking for), has a casual conversation with a couple of members, and within ten minutes has decided to join. He has been doing his own programs for some time and intends to keep doing so; therefore, he is not too concerned about how good the instructors are. He approaches a front desk staff member and asks what a twelve-month term membership costs and, after discovering the price is essentially the same as his old health club, joins up on the spot. Member B is a beginner. He has never been a health club member before but has wanted to lose weight for a while. He received a flyer from a health club promoting a No Joining Fee special on month-to-month contracts (the promotion cost the club $1000 and nets 200 new members for an acquisition cost of $5/new member). So he calls up to book a sales consultation. After the sales tour, he is impressed with the facility, but is concerned that he is the only out-of-shape person he has seen and everyone else seems to know what they are doing. He eventually agrees to the month-to-month special (despite the salespersons best attempts to up-sell him) because he doesnt want to commit to a bigger financial obligation in the event that he stops coming. He returns the next week for his assessment and program and is shown through his exercise program. After a few sessions on his own, he hasnt lost any weight, loses motivation, feels ignored, and when his month has expired, he doesnt renew (42% of new members drop out within the first 30 days).
MEMBER EXPERTISE High MEMBERSHIP TYPE 12 Month Term $480/Year + $99 Joining Fee MEMBER ACQUISITION COSTS Nil (Walk in) OTHER DIRECT COSTS Nil AGGREGATE MEMBERSHIP TERM 36 Months ANCILLARY SPEND Sports drinks, gloves, supplements, apparel $500/Year ($1500) Nil MEMBER LIFETIME VALUE
$3039
Low
Month-to-Month Contract $45/Month
Marketing Assessment cost/new and program member 1.5 hours acquired $5; instructor time Waive @ $15/hour; Joining Fee $99; Program card, Sales tour and pencils, pens consultation 0.5 $1 hours @ $15/hour (-$12.50) (-$23.50)
($1539) 1 Month
$9
($45)
The MLV of the high-expertise member is $3039, whereas the MLV of the low-expertise member is only $9 (when acquisition and other direct costs are taken into account). In other words, the high-expertise member is worth more than 300 low-expertise members based on MLV. And that doesnt take into account the positive contributions the high-expertise member makes (providing referrals, spotting other members, offering advice) and the negative contribution the low-expertise member makes (negative word of mouth). It becomes very obvious very quickly that not all members are created equal and that not all members contribute equal value to a business.
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Survival of the Fittest Is Not a Retention Strategy

Survival of the fittest is the default mode of every health clubsmall or large, independent or franchised, local or multinational. If the health club member is good enough (confident enough, knowledgeable enough, experienced enough, expert enough), he or she will survive regardless of the health clubs retention efforts (or lack thereof). Inevitably, the strong do survive. Of course, when only the strong survive a hell of a lot of members are left dead in the water.
Owners and managers, almost universally, underestimate the extent of their members reliance on the survival of the fittest phenomenon in their business. The primary reason for this critical oversight is an excessively optimistic assessment of the efficacy of their existing member acquisition and retention strategies. Remember when all else fails survival of the fittest prevails. It happens a lot more than owners and managers are willing to admit. When specific member acquisition and retention strategies dont perform as well as expected (or sometimes not at all), members are forced to rely on their own survival instincts. Unfortunately, beginners and early intermediates have poorly developed survival instincts. Without appropriate, stage-specific interventions, beginners and early intermediates (who account for the majority of attrition in most health clubs) are at high risk of dropout. Simply stated, beginner and early-intermediate health club members that do not receive adequate support from the club are highly likely to drop out. Late-stage intermediate and advanced health club members have better developed survival instincts. They dont necessarily require specific interventions from the health club to survive. However, because more advanced members have a clear understanding of their own specific requirements, they do require that a business demonstrate a deep understanding of their needs, expectations, and valuesbeyond mere survival. These members are looking for a health club where they can thrive. Understanding the evolutionary process of health club members is essential for their retention. Survival of the fittest simply doesnt work for members low on the expertise curve, and without dedicated strategies and tactics to acquire and retain these low-expertise members, retention will remain a significant and ongoing challenge.
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Implications of the Expertise Curve for Owners and Managers

Most owners and managers understand, at least on some level, that beginner, intermediate, and advanced health club members are fundamentally different. Some even make an attempt, however perfunctory or ad hoc, to cater to differing expertise levels among their members (e.g., beginner group exercise classes, pin-weight machines for new resistance trainers, technique illustrations posted on the wall for new members). However, the unique characteristics of low-expertise and high-expertise members demand that owners and managers develop and implement a broad range of strategies that differentially, and comprehensively, target each segment. Any member acquisition or retention strategy that ignores the members evolutionary process will under-perform (at best), fail completely, or (at worst) actually exchange moreprofitable members for less-profitable members. Businesses that can demonstrate a comprehensive understanding of their members evolutionary process will have a significant competitive advantage over those that cannot. Therefore, owners and managers must strategically leverage their understanding of their members evolutionary process in the following ways:
Structure the business (physically, organizationally, and culturally) around the members evolutionary process
The continued expansion of the health, fitness, and wellness industry has required a significant shift away from well-established markets (strength/physique enthusiasts, athletes, and the already fit) to include newer, less accessible, markets (the deconditioned/overweight, the sporadic/infrequent trainer, the health/wellness trainer, and special needs trainers). The biggest challenge for owners and managers today is to effectively meet the disparate needs, expectations, and values of these markets. However, most businesses have not sufficiently adapted their thinking from servicing their traditional markets (high on the expertise curve) to servicing these newer markets (low on the expertise curve). Most existing strategies to accommodate low-expertise members dont go nearly far enough for three primary reasons: (1) owners and managers dont fully understand low-expertise members because of their own high expertise; (2) traditional, established, markets have been relatively high expertise, and so the industry has been historically geared to the needs, expectations, and values of the high-expertise member; and (3) low-expertise members are, generally, more challenging and more expensive to service. The result is the kind of ad hoc tactics employed by many businesses that ultimately have little or no impact on member acquisition or retention. 14
However, to be successful, owners and managers must acknowledge that beginner, intermediate, and advanced health club members are fundamentally different as fundamentally different as an amoeba wanting survival, a lungfish wanting expansion, and early man wanting consolidation at the top of the food chain. Therefore, the business must be structured physically (layout, design, workflow, adjacencies), organizationally (management/organizational structure, staff functions/roles, incentives/remuneration), and culturally (policies, procedures, processes, formal and informal rules) to support the members evolutionary process.
Target health club members higher on the expertise curve for acquisition
Member retention begins with member acquisition. This is so important it is worth repeating: member retention begins with member acquisition. Indiscriminate take-all-comers acquisition strategies (especially deep discounting) inevitably lead to the disproportionate acquisition of beginner and early-intermediate health club members (who are mitigating their risks). These members are more costly to service, add the least to the club, and are the most likely to drop out. Furthermore, an excess of beginner and early intermediate health club members can be a significant contributor to advanced member dissatisfaction and defections, effectively sacrificing more-profitable members (high MLV) for less-profitable members (low MLV). Health club members higher on the expertise curve have more firmly established needs, expectations, and values and will only join a club that is capable of demonstrating its ability to meet, or exceed, them. Therefore, acquiring these members requires more than indiscriminate discounting. If owners and managers did nothing else but increase the proportion of advanced health club members and, correspondingly, reduce the proportion of beginner and early intermediate health club members, the impact on retention, revenue growth, and profitability would be significant.
Implement specific strategies to accelerate beginners up the expertise curve

Few beginners survive the journey to become intermediate and advanced health club members without significant effort from the health club. Remember that as many as 42% of new members drop out within the first 30 days of joining. Even though they are more costly to service, it is in the health clubs best interest to accelerate their members up the expertise curve, because the longer beginners remain low on the curve, the more they will continue to cost the club and the more likely they are to drop out. Despite their best intentions, very few health clubs have the capacity (i.e., products, services, programs, policies, procedures, or protocols) to effectively and efficiently move beginners up the expertise curve. Instead, these members, with few exceptions, are left to flounder at the
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bottom of the curve until they can, eventually, make their own way up the curve or they become disenchanted with their lack of progress, actively seek to cancel their membership, or passively allow their membership to lapse. To compound the problem for owners and managers, departing beginners are typically replaced with newly acquired beginners and the process is repeated ad infinitum.
Apply specific strategies to each members stage of evolution

Beginner, intermediate, and advanced health club members join for different reasons, leave for different reasons, and stay for different reasons. Indiscriminate, untargeted, and ad hoc acquisition and retention strategies yield mixed results at best. Every business needs specific beginner, intermediate, and advanced member strategies. For example, the low-price business model attracts beginners by appealing to their need to mitigate risk. Low prices mean low risk, even if they do ultimately fail. Alternatively, Curves Fitness has developed their value proposition specifically around the beginner (low-expertise females) by providing a lessintimidating experience (no men, no mirrors, uncomplicated equipment, intimate training area, high instructor availability). Therefore, Curves appeals to women who are less concerned about mitigating their financial risk but who are concerned with mitigating their social risk (i.e., feeling intimidated, out of place, ignored, abandoned). Both are legitimate beginner strategies.
Match the customers experience to his or her stage of evolution

The experiences of beginner, intermediate, and advanced health club members are fundamentally different. The beginner experience is filled with apprehension, self-doubt, anxiety, confusion, and intimidation. They want to survive. They are thinking in terms of their own survival. Show beginner health club members how you can help them survive. For example, Curves has no mirrors, which tend to intimidate many beginners. The intermediate experience is filled with exploration, experimentation, and expediting progress. They want to expand. They are thinking in terms of how they can expedite their progress. Show intermediate health club members how you can help them expand. For example, intermediates will only respect the views of those who are demonstrably more accomplished (bigger, stronger, fitter, more coordinated). Inexperienced instructors are generally not viewed by intermediates as being able to expedite their progress. The advanced experience is filled with competence, confidence, and control. They want to consolidate. They know what they are doing and they just want to get it done. Show advanced health club members how you can help them consolidate. For example, advanced health club members get frustrated with having to find enough weights during their session. Beginner, intermediate, and advanced health club members need, expect, and value different experiences. Most businesses provide the facilities and allow their members to create their own experiences. However, member experiences are far too important to be left to chance. Businesses that can best match the customers experience to his or her stage of evolution will have a significant competitive advantage in an increasingly competitive marketplace.
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Employ strategies that enable the identification of, and facilitate access to, at-risk members
Knowing that a specific group of members are at risk of drop out is only useful if they can be easily identified, accessed, and suitable interventions put in place to militate against their susceptibility to drop out. Strategies that identify and provide access to at-risk members include more effectively utilizing physical organization, layout, and design; developing beginner-specific products, services, and programs; aggregating at-risk members; and allocating stageappropriate training materials (e.g., program cards/training diaries) that identify at-risk members to health club staff.
Allocate resources for maximum returns

Once it is understood that beginner, intermediate, and advanced health club members have fundamentally different needs, expectations, and values, resources can be allocated to where they will achieve the highest return. As mentioned earlier, beginners require moreand higher qualityinteractions (instruction, support, positive reinforcement, explanation) with health club staff than intermediate and advanced health club members. However, health club staff typically spend a disproportionate amount of time with more advanced health club members. Similarly, beginners do not require cutting-edge equipment. In fact, complicated equipment can be a significant barrier for overwhelmed beginners. And, intermediate and advanced health club members will not adhere to direction from instructors who cannot demonstrate the requisite expertise (knowledge, attitude, technique, physicality). Therefore, allocating an inexperienced instructor to more advanced health club members adds little value to their experience and may, in fact, create a negative perception of the business. Simply making the necessary resources available is not enough. They must be allocated to where they achieve the best outcomes for members and the maximum returns for the business.
Evaluate the efficacy of existing strategies in the context of member evolution

Unfortunately, most owners and managers will find that their existing strategies are inadequate when evaluated in the context of member evolution. Does your marketing address beginners safety concerns? Does your sales tour demonstrate to advanced health club members how they can be more effective and efficient? Does your layout improve the interactions between beginner, intermediate, and advanced health club members? Are resources being allocated for maximum returns? The industry sacred cow of deep discounting during what has become the critical first sales quarter is a prime example of the failure to account for members evolutionary process. Deep discounting attracts a disproportionate number of beginner and
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early-stage intermediate members who are mitigating their risk. The health club numbers swell with the influx of new members. However, beginner and early-stage intermediate members dont get the attention they require to survive. The health club always seems overcrowded, there are long wait times for equipment, the instructors always seem too busy, and the regular members always seem frustrated and annoyed. More and more out of order signs start appearing because of the overuse and abuse incurred by having too many members, especially ones who dont know what they are doing (low expertise). Malfunctioning equipment means even longer wait times (resulting in even greater angst among members), especially given that every other health club is going through precisely the same thing and repair and maintenance providers are overwhelmed with the additional demand. In this environment, new members invariably begin to feel ignored, overwhelmed, and out of place. Buyers remorse sets in, memberships are allowed to lapse or are cancelled (the negative experience is compounded if the disenchanted member also has difficulties cancelling a membership), and beginners and early-stage intermediates dessert the health club like rats fleeing a sinking ship. Even exceptional sales figures are typically accompanied by poor retention figures, resulting in zero net growth. This sales and attrition cycle is repeated year after year. In fact, as a strategy, deep discounting doesnt scale very well. The bigger the discount the more beginners and early intermediates are acquired. The more beginners and early intermediates, the greater the burden on resources (including time and space). The greater the burden on resources, the more negative the experience. The more negative the experience, the greater the attrition. Unfortunately, for most businesses, this cycle will continue to occur until owners and managers begin to account for the members evolutionary process.
Develop products, services, and programs that target members evolutionary stages
The product/service mix of most businesses does nothing to address the members evolutionary process. Twelve-month, six-month, three-month, one-month, and month-to-month contracts do little to target a members evolutionary stage or manage the transition of members through the evolutionary process. For example, twelve-month memberships are typically purchased by advanced (i.e., high-expertise) health club members. Most twelve-month memberships include all programming (exercise prescription) and fitness assessments, even though advanced health club members are the least likely to use these services. However, many one-month and monthto-month memberships (that appeal to beginners wanting to mitigate their risk) do not include programming and fitness assessments, even though the beginner would benefit enormously (and member retention would improve significantly) from the additional service.
Develop policies, procedures, protocols, and practices that target members evolutionary stages
Beginners want to mitigate their risk. They are hoping for the best, but expecting the worst. Show them that you can mitigate their risk without just dropping your prices. For example, offer extended cooling-off periods, no-questions-asked cancellation policies, and high instructor availability. Intermediates enthusiasm often gets the better of them. They require high-expertise instructors to keep them progressing (expanding) and to avoid overtraining and injury. 18
Businesses whose hiring policies and practices simply involve getting the shift filled will struggle to create the environment necessary for intermediates to truly thrive. Advanced health club members want to get the job done; they dont want to waste time waiting. For example, advanced health club members dont want to wait in line at the front desk to purchase their Gatorade before a workout. Using vending machines adjacent to the lockers or near the workout area allows advanced health club members to avoid unnecessary delays. Furthermore, front desk traffic is reduced, allowing staff to focus on customer service, membership inquiries, and sales.
Manage the interactions between beginner, intermediate, and advanced health club members
Precisely because beginner, intermediate, and advanced health club members have fundamentally different needs, expectations, and values, constituents from these segments can often find themselves at odds with each other. For example, beginners can be intimidated working out in close proximity to advanced health club members. If an advanced health club member asks a beginner if he or she can work in, an insecure beginner can view the request as an act of aggression rather than an innocent enquiry. Similarly, if a few intermediates (who often like to train in packs) monopolize equipment, advanced health club members can become frustrated and annoyed. And, oblivious beginners resting on equipment, chatting to others, wandering around aimlessly, getting in the way, and asking stupid questions can negatively impact the experience of intermediate and advanced health club members.
Be strategic about the mix of expertise within the health club

The majority of health clubs will have a significant range of expertise within their membership. However, the level of expertise is not static. It changes over time in response to specific business practices, industry trends, shifting customer expectations, and broader social mores. For example, industry icons like Golds Gym and World Gym were historically renowned bodybuilder gyms (i.e., high-expertise). However, more recently these businesses have attempted to broaden their membership base to include more low-expertise members (e.g., deconditioned, overweight, families). The challenge is much more than a branding or marketing issue. Its trying to fit low-expertise members into a firmly entrenched, high-expertise culture. Alternatively, Curves Fitness has successfully focused its business entirely on the low-expertise memberyou certainly wont find any aspiring Ms. Olympias at Curves. Of course, the challenge for Curves is to retain members whose expertise eventually exceeds the Curves offering. Over time, the basic circuit format and limited equipment eventually become mundane as a members expertise accumulates. The opportunity for expansion is extremely restricted. In fact, one explanation for the failure of the Cuts Fitness franchise (essentially Curves for men) is that men, unlike women, generally do not want to remain at the bottom of the expertise curve any longer than they have to. Once men had mastered the limited Cuts offering (that appealed to women), there was no opportunity to continue developing their expertise, i.e., once beginners had progressed out of the survival zone, there was little opportunity for continued expansion. 19
The Missing Link

Member acquisition and retention remain the two most significant continuing challenges for most health, fitness, and wellness businesses. Despite the considerable attention from industry associations, various business luminaries, industry publications, consultants, and pundits, surprising little concrete progress has been made towards solving the member acquisition and retention problem. In fact, former executive director of IHRSA John McCarthy recently made the astonishing admission that [I]f a commercial club operation could sustain substantial profitability with attrition rates in the 35 percent to 45 percent range, so be it. The statement reflects the frustration, shared by many within the industry, over the abject failure to ameliorate what can best be described as a systemic and enduring retention crisis. The fatal flaw of member acquisition and retention strategies has been the failure to adequately account for the members evolutionary process. The fundamental differences between beginner, intermediate, and advanced health club members demand that owners and managers differentially (and comprehensively) address the disparate needs, expectations, and values of these customer segments. From a research perspective, member expertise is the confounding variable (i.e., a variable that researchers fail to control or eliminate that compromises their ability to demonstrate a cause and effect relationship) that member acquisition and retention strategies have ignored. For example, it is widely accepted that high membership usage is associated with higher retention. Based on this assertion, owners and managers have been directed to encourage members to use their clubs more often, particularly early in their membership term. However, intermediate and advanced health club members are known to be frequent users (because of their split training routines, established exercise history, high self-efficacy, and superior discipline) and beginners are known to be less-frequent users (because of their full-body workouts, poor exercise history, low self-efficacy, and lack of discipline). And we know that beginners are much more likely to drop out. Therefore, it is entirely possible that the correlation between high usage and retention is an artifact of member expertise and, as a result, a causal relationship between member usage and retention is erroneous. In fact, simply trying to encourage higher membership usage in beginners may have a deleterious effect on retention, because they may decide that they are not willing to meet the more onerous commitment. Without properly accounting for a members evolutionary process, member acquisition and retention strategies will continue producing mixed results at best. It is precisely those mixed results that are responsible for the kind of frustration and sense of resignation that creates acceptance for attrition rates in the 35 percent to 45 percent range....
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Now What?
Understanding the fundamental differences between beginner, intermediate, and advanced health club members is only the start. Leveraging that understanding to create experiences that customers value and that drives member acquisition, retention, and long-term loyalty to create sustainable revenue and profit growth is where the real work begins. Please feel free to contact me at accessfit@iprimus.com.au or through the Access FIT blog with questions, comments, critical analysis, and feedback (positive and negative). The ideas presented here will continue to evolve over time and, as they do, this publication will be periodically updated to reflect those developments.
Coming Soon
Experiential Health Club Design explores the critical, yet often overlooked, contribution of physical organization, layout, and design to managing the customer experience. Health club physical organization, layout, and design create the foundation of customer experiences and are essential to member acquisition and retention. Part One introduces the emerging discipline of Customer Experience Management in the context of the health, fitness, and wellness industry; examines existing industry attitudes to health club design; discusses why so many businesses (even successful ones) continue to get it wrong; and identifies 12 strategic opportunities to improve the bottom line. Part Two details the customer segmentation process; provides valuable insights into understanding customer needs, expectations, and values; discusses the significance of defining customer experiences; deconstructs and reconstructs customer experiences to add superior value; explains the importance of engineering experiences into facility design; defines customer experience zones; and uncovers a powerful new design paradigm that transforms customer experiences. Part Three consolidates the concepts from Parts One and Two into a range of workable solutions to improve customer experiences at every touch-point across the business; discusses how to properly utilize customer experience zones; and provides practical examples for easy implementation/execution into any business. Part Four reveals how experiential health club design creates additional synergies that improve a raft of business issues, including customer service, sales, internal and external marketing, staff productivity, morale, and turnover, and can significantly reduce equipment costs.
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The Evolution of A Health Club Member

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Strategic solutions for health, fitness, wellness, leisure, sports, and recreation businesses http://accessfit.typepad.

THE MISSING LINK NOW WHAT?

The Health Club Member Expertise Curve

Advanced (Consolidation Zone)

Intermediate (Expansion Zone)

Beginner (Survival Zone)

The Evolution of a Health Club Member

Member Evolution... from Surviving to Thriving

The Beginner Stage (Survival Zone)

The Intermediate Stage (Expansion Zone)

The Advanced Stage (Consolidation Zone)

The Contribution of Member Expertise to Business Value

Month-to-Month Contract $45/Month

Survival of the Fittest Is Not a Retention Strategy

Implications of the Expertise Curve for Owners and Managers

Implement specific strategies to accelerate beginners up the expertise curve

Apply specific strategies to each members stage of evolution

Match the customers experience to his or her stage of evolution

Allocate resources for maximum returns

Evaluate the efficacy of existing strategies in the context of member evolution

Be strategic about the mix of expertise within the health club

The Missing Link

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