Simon Pardoe - Marketing & Business Development

Fitness First is now the largest privately owned health club group in the world with over 540 Fitness First clubs worldwide reaching over 1.4 million members in 19 countries.  Whilst Australia is the brand’s largest market (25%), this is followed by the UK (23%), Germany (20%), rest of Europe (17%) and Asia (15%).

In the UK, there are 160 Fitness First clubs with over 425,000 members with a 60 | 40 male to female ratio.

Partnerships provide new year boost for Fitness First in the UK

Fitness First claims to be off to a flying start in 2011 after joining forces with a number of key brands in the UK for its January campaigns.

Proximity marketing* with O2, on-pack offers with Nestle, promotions with News International and Fitness First’s own  Jump Start scheme are expected to produce a bumper January for the world’s largest privately owned health club group.

Fitness First managing director John Gamble said the group has also launched a high profile advertising campaign in London taking in key publications and London Underground digital sites.

“2011 is set to be a hugely important year for Fitness First and the fitness industry in general and we want to ensure that as many people as possible are aware of what we have to offer,’’ he said.

“The very latest in group exercise classes such as Get Fit with Mel B and Strictly Fit are hugely popular and ongoing investment in the very latest in new fitness equipment and innovations provide our members with an extremely comprehensive fitness offering.’’

He said the company’s successful Jump Start programme offering six week membership and three personal training sessions has also been relaunched for prospective members to really gain an insight into how Fitness First can become an important and integral part of life.

“Experience shows that Jump Start is an extremely effective way for people to kickstart their fitness regimes and with the help of our personal trainers they can find what works for them,’’ said Mr Gamble.

Jump Start costs £49.50 for a 6 week membership and includes 3 personal training sessions.

*Proximity marketing, also known as Bluetooth marketing, is used to send location based messages to the mobile phones of targetted local consumers.  This often highly effective marketing technique can generate an uplift in visitor traffic of around 40% compared with other forms of local marketing.

Following hot on the heels of Pure and FitSpace, a new operator is entering the UK fitness market. Kiss Gyms will be opening their first premises in Milton Keynes in, they hope, January 2011.  With a joining fee of £20 and a monthly subscription of £14.99, Kiss calls itself the high spec / low price option and has plans for numerous more venues over the coming months.

The trick about such companies is to offer a fantastic gym environment with minimal staff.  Access is 24/7 via an entrance PIN code and, as they say on their website at kissgyms.com: “We’ve invested heavily in technology to do away with traditional reception areas and bubble gum chewing reception staff.”  Great!  The gym will utilise Matrix CV and resistence equipment, plus an array of free weights, and – in order to avoid the unpleasant odours that so many gym goers have to put up with, especially at a price as low as £15 per month – will incorporate an air exchange system with the ability to change the entire air within the gym nine times per hour (once every 7 minutes).

So, for current gym users in Milton Keynes, going to the gym – if they switch clubs – is about to get a whole lot cheaper.  And, at such a low price, no doubt many would-be gym goers will be attracted to give membership a try….

More and more companies are devoting time and resources to creating and managing fan pages on facebook.  It costs next to nothing to set up (a bit of time and some creative design) and provides a very powerful mechanism for developing an on-going relationship with those customers who are active on facebook and wish to register their interest (by becoming a fan) of any particular company’s product or service.

Once the facebook fan page has been created, someone needs to be tasked with updating content and distributing news, offers, provacative thoughts etc.  This on-going content management is very important otherwise there’s no two way engagement between the company and its fans.  Those companies that get it right know what a powerful tool a facebook fan page can be.

For example, Nike Golf’s page has 222,884 fans (as of July 2010).  Therefore, whenever Nike Golf wishes to broadcast a message about a new product or a success story relating to an existing product or service, it simply drafts an appropriate message and hits the ‘share’ button.  Instantly, 222,884 fans get to see the story.  But actually it’s considerably more than this as, of course, facebook is primarily a tool for keeping in touch with friends and family all over the world.  So, for arguments sake, let’s say that each of Nike Golf’s fans have 100 friends – each one of these 100 friends multiplied by 222,884 have the possibility of (a) noticing that their friend is a fan of Nike Golf (good brand exposure!) and (b) of reading the Nike Golf messages that hit their fan friends ‘wall’ (i.e. public in-box).  That’s a potential 22 million people.  Of course, the actual number of residual viewings beyond the fans themselves is vastly less than that, but – and nobody knows this for sure – let’s say that half of one percent of the friends of Nike Golf fans notice the brand or the message, that’s still 114,442 people.

The other way of analysing the brand reach beyond the actual fan base is more of a trickle effect.  If, for example, I sign up to become a fan of Nike Golf, facebook automatically tells all my friends (be it 50 or 500) that I’ve just become a fan of Nike Golf.  And, of course, if any of my friends think that’s a good idea they may choose to become a fan too.  At the very least all my friends have been exposed to the Nike Golf brand / logo.

Whichever way you look at this, the opportunities for reaching an enormous audience are significant and, for the right brands, an opportunity not to be missed.

Health & Fitness Clubs

An analysis of the health and fitness club market indicates that this opportunity is not being grasped at all by the majority of clubs and that those that do have a presence are not keeping it updated, fresh and interesting.  Virgin Active (the Italian clubs) has over 15,000 fans and is obviously doing a great job!  Cloer to home, Pure Gym (in Edinburgh) appears to be doing the best out of all the individual clubs reviewed with 517 fans on a club membership base of around 5,000 (about 10%).  With the right content and more compelling news, offers and information, all clubs could vastly expand their audience reach.  We know people are interested in fitness.  Fitness Magazine has 46,542 fans.  And we know that the age profile of fitness club members corresponds to a core component of the facebook user profile.

Who’s doing it best?

Here’s a couple (not fitness clubs) that are worth reviewing…

One of our favourites is Innocent Drinks with nearly 20,000 fans and an excellent hands on approach to their fans and their fan page.

Lastminute.com, with approx. 70,000 fans, is brilliant at putting out special offers (as you’d expect!) and earlier today, for example, posted this on their fan page:  Thursday morning’s are a bit boring aren’t they? So we’ve teamed up with Disney/Pixar to give you some exclusive tickets to see preview screenings of Toy Story 3! We have 4 tickets to give away for each cinema listed in the Toy Story 3 tab http://bit.ly/cjicfd , first person to enter for each location wins! Just email …

Note

We thought, you might also like some information this time with regards to Facebook Pages. As the number of users continue to grow, so does the interest brands have in Facebook and over the past 12 months the number of Facebook Pages and groups have grown dramatically. There are now more than 1.6 million active Facebook Fan Pages which have over 5.3 billion fans. The average user becomes a fan of two pages per month.

The Consultancy was asked to undertake an assessment of the current membership (of an up-market health club) relative to the size and demographic profile of the local residential population.  The objective being to provide re-assurance that there was (or was not) a strong enough local demographic to allow the club (with its premium priced membership) to increase membership by + / – 1,000 and thereby justify the investment in expanding and enhancing the club’s facilities.

Demographic Profiling – Members

We therefore commissioned an appropriate data profiling agency to analyse the current membership.  It did this courtesy of their postcodes.  We then analysed the mass of data and presented it to the client in an ‘easy to digest’ format.  The results showed that 61% of current members fell into the top flight (classified as ‘Symbols of Success’) and 30% into the next flight (‘Urban Intelligence’).

Demographic Profiling – Local Residents

Once this was undertaken, we moved to the next stage and profiled all residents within (a) a 1 mile radius of the club and (b) a 1.5 mile radius of the club.  Objective: to compare the Membership Profile against these two catchment areas in order to assess the size of the potential untapped market for members, i.e. how many residents were there in these radii who fell into the same demographic categories as existing members. (Naturally, there would have been a great deal more potential members living more than 1.5 miles from the club but we had agreed to make the research as concrete as possible, in the knowledge that penetration rates fall off dramatically – for adult only health & fitness clubs – the further away from the club you go.)

Results

36% of the residents within 1 mile of the club were classified as ‘Symbols of Success’, i.e. 45,000 people.  47% of the residents were classified as ‘Urban Intelligence’ adding a further 59,000 people to the potential market (i.e. individuals with the same demographic profile as current members).  The existing club membership had a percentage penetration into these two groups of just 0.87% and 0.33% respectively.

This clearly indicated that there was a very significant untapped membership market within 1 mile.  A percentage penetration rate of just 0.5% in each of the two primary Membership Profiles would achieve a further 1,000 members.  If we added the number of residents residing from 1 mile to 1.5 miles from the club, an additional 53,000 and 45,000 individuals were potentially available.  This further strengthened the opportunity for the club to expand its membership successfully by + / – 1,000.

The investment in new facilities went ahead.  Membership was successfully increased by 1,000.

It’s over 10 years since I last went to Amman, Jordan.  From 1996 to 1998 I visited for a few days almost every month as we worked on developing Amman’s first luxury family resort for Middle East Development Corp.  After we had conducted the initial project research and feasibility, the Consultancy went on to provide project development, design, business systems, as well as supporting all aspects of the sales & marketing campaign.  The US$15m venture was opened on 1 July 1998 by the King’s son.   In excess of US$4m in pre-opening membership sales were achieved.

I am delighted to see, from a photograph I was recently sent by a colleague, that the place still looks fabulous.

Congratulations to Virgin Active, who recently published its figures for year ending 31.12.2009, on achieving an EBITDA in excess of £100m for the first time (up 18% on 2008).  The Group now has 919,000 members across 187 clubs (71 in UK) and total revenues up 15% to £391m.  That’s an average yield of £35.46 per member.

Here’s what Virgin Active say about their current trading and outlook:

“As our performance in 2009 has demonstrated, our business has been resilient to the poor economic environment that has had an impact on consumer spending. The trend that we have seen throughout the recession confirms our opinion that health and fitness has become a core aspect to people’s lives. We have managed to successfully capitalise on this sentiment by offering market leading facilities and excellent value for money.

We have had a strong start to the year with positive like-for-like performance. We expect to benefit from the number of new clubs that we opened during 2009 and are confident of making further progress in the year ahead.”

The UK health and fitness clubs market has hit a sticky patch in the past 18 months, which has seen market growth stall as a result of the combined impact of the banking crisis and associated economic recession. Club openings have slowed to a trickle in all but a few cases as the funding necessary to pursue an aggressive opening programme has dried up and consumers have been cutting back on non-essential items, as their confidence has plummeted amid fears of losing their jobs, mounting debt levels and rounds of pay freezes or pay cuts.

The process of consolidation which was clearly evident prior to the banking crisis has continued, albeit at a much reduced pace. All the data indicates that the market penetration of health clubs has slowed to a standstill and still remains at a level nearly half that of the much more developed US market. Cost remains a major issue for many consumers and for that reason, the emergence of the budget health clubs sector during the past 18 months is a very interesting development which could attract a large tranche of new consumers into the market.  Or, as many of the established operators fear – particularly those in the monthly subscription range of £30 – £60 – a migration to budget offerings.

Pure Gym is an example.  With 9 gyms (open 24/7) and – according to their press release in June 2010 – plans to open another 24 .  With monthly membership from just £9.99 (for new openings, but generally settled at £15.99), and ‘state of the art’ fitness facilities, it’s easy to understand how a budget conscious consumer, who’s not interested in ‘high touch’ service or anything other than gym facilities, would swap to a Pure Gym if one happened to be conveniently located.  The joining fee of £20 is unlikely to put anyone off either!

Pure Gym, described in The Times as ‘no-frills gyms’ is run by Peter Roberts, the former UK managing director of Golden Tulip Hotels.  Roberts has unveiled plans to become a national chain after securing funding of £10 million from Magenta Partners, the private equity firm backed by Tom Singh, the New Look founder.

It will be interesting to get data about visitor timings and how valuable the 24 hour availability actually is.  Generally speaking, gym visitor traffic follows these patterns:

• The weekend is the most popular time to workout, with almost 80% of those who exercise doing so on Saturdays or Sundays. A workout, typically, lasts about an hour.
• Despite the convenience of lunchtime workouts, only a quarter of exercisers take advantage of this time slot. Slightly more popular is the pre-work window, with just over a third of exercisers getting up early to take some form of exercise. However, the majority of these workouts last for half an hour or less.