My gym concept(s)

spaceboyted

Hey guys. I would appreciate your feedback on these ideas for a gym.

1) Instead of a fixed monthly contract that means you pay for the gym whether you go or not, I thought about offering a points system instead. How it would work is that you buy a set number of points in advance like 100, 500 or 1000 with ten points equalling a days use in the gym. Members would buy them in advance and then use them as they wish, that way they aren't penalised for the one month they don't really go, offering more flexibility. Different price points will be offered with more points being allocated per £1 spent the more you pay up in advance.

2) Another approach I had was to have no sign up fee or contract like the above. However people go on a pay as you go basis. Now, I know this isn't new. The twist is that the price you pay for each day decreases incrementally the more days you go during the month (for e.g. day 1 £4, day 2 £3.60...). The best part about this concept is that you can give out loads of free cards to people who would officially be members and they can go when they choose (without committing to a months use or any other type of contract).

3) A third idea which isn't mine, I read about it somewhere on Google was to offer a monthly membership that started out at the maximum monthly fee. The more the person used the gym that month, the less they pay on a monthly basis. The idea behind this is that it generates customer loyalty in that your members will only be those that use the gym reguarly (which will reduce the 40% new customers a gym has to generate year on year). I am a little sceptical about this idea working in real life because the ratio of members use to gym capacity may make it unviable (typically it is 10:1 on memebers to capacity). Also there should be better ways to retain customers than harming your main revenue stream.

I look forward to your feedback and feel free to be critical

Thanks

steve1980

I like the points system rather than the other 2 options.

Would the points have an expiry or do they last forever? What if the member sustains an injury and is unable to continue in the gym? Would they get their money back?

DCodd

I like the idea of top up membership cards (as in idea 1) and my local council run gym did do that type of membership about 10 years ago, I stopped going when they stopped doing it. However the reason they stopped doing it could impact on your Business plan.

They ran this payment option along side the yearly contract option, which led them to be unable to estimate the potential users on any one day. this led to overcrowding of the facilities at peak times and a much reduced user experience, causing the contract members to start to move to other contract only gyms once they had met their minimum contract periods.

spaceboyted

The 1st idea is my favourite and I think it is the most viable. Answering your question about the expiry dates, I am yet to decide really. For the lesser credit packages, the expiry date would be a year from the day they were bought. This might seem to go against the idea of giving people more flexibility but the line has to be drawn somewhere. As for injury, I don't think I could refund the remaining hours - this just isn't viable really as everyone who wants to leave will fake injury. I guess people take the risk in paying up front and the legnth of contracts and discounts offered reflects this. But there may be a way for people to give there remaining points back in exchange for cash as long as it is profitable for the business. This may seem harsh but its just how it is.

spaceboyted

DCodd wrote: »

I like the idea of top up membership cards (as in idea 1) and my local council run gym did do that type of membership about 10 years ago, I stopped going when they stopped doing it. However the reason they stopped doing it could impact on your Business plan.

They ran this payment option along side the yearly contract option, which led them to be unable to estimate the potential users on any one day. this led to overcrowding of the facilities at peak times and a much reduced user experience, causing the contract members to start to move to other contract only gyms once they had met their minimum contract periods.

Thanks a lot for this. Very good critique and I realise this could be a real issue. I think there are ways around this buy adding a peak/off peak pricing model on top of the existing system, but my fear is that it would take away the simplicity of the original price model. Keep the constructive criticisms coming people!!

Acc72

I like all of your ideas as a consumer, but not as a business idea.

Every segment of this market is pretty much covered already - from Fitness First, DW, Bannetynes, David Lloyd etc.

There is also a new breed of low cost gyms emerging - eg Pure gyms are well kitted out and open 24/7 and only cost £14.99 per month !

paddyrg

Remember as a gym you have peak and off-peak times, so maybe you can arrange your points redemption rate accordingly, to try to even out demand which would mean better access to the machines people want?

I would try running this scheme in parallel to a regular subscription - you need a regular guaranteed monthly income to cover wages/rent/etc., whereas this scheme may well mean 1000 people all at once, then nothing for a month!

Annisele

I think that your ideal customer is probably somebody who wants to think of themselves as a gym user, but doesn't actually go to the gym - that way you collect money but don't have to provide much in the way of services.

A potential flaw with all of your plans is that, in some gyms, the customers who visit rarely effectively subsidise the people who visit often. The gyms persuade a bundle of people to sign up to a yearly contract in January, but they'd be utterly stuffed if all those people actually did use the gym regularly; they've nowhere near the capacity for that. The January hopefuls subsidise the gym bunnies - which means that if you don't have any January hopefuls paying over the odds the other people will end up having to pay for your gym, so they'll go somewhere else instead. The January hopefuls will like your gym, because they don't have to commit - but they'll never actually pay you much money.

jexygirl

Whilst I like idea 1 from the POV of only paying for what i use, there is no incentive to go. Often these monthly membership schemes, make people say "Im paying for it, I will **** well go!" Whilst that is kind of the case with 1, it isnt you tied in for a year, you could have someone buy 5000, go once, then 5 years later demand money back for unused time, for whatever reason. Whilst I have over the years bought a course of "sundbeds" or "spa sessions" and they have gone unused, so benefitted the buisness, but not consumer, with current climate, each penny counts more.
Which is why i figure option 3 is better. The incentive to go more, makes it cheaper, like loyalty cards give rewards.
Monthly membership is monthly membership - I am paying it, and so I should go, but sod it, I cant change that I signed for 6 months and CBA... whereas reducing it, or the ability to, once you show commitment has my interest to a degree... I have to pay it, as I signed it, but if i actually go, least I will pay less! (I am built for comfort, not speed and have free gym membership I never use, so perhaps ignore my comments but if i have to pay, I would rather pay less than more so 3 is a way better incentive! ) I am commenting on an objective consumer POV.
However... to make ANY of this work, you need a well equipped, well serviced gym, with enough facilities to rival the others, on hand support and advice, trainers, assistants, decent receptionist, record keepers, systems in place etc. Is there finance for that part?

Savvy_Sue

Acc72 wrote: »

I like all of your ideas as a consumer, but not as a business idea.

Every segment of this market is pretty much covered already - from Fitness First, DW, Bannetynes, David Lloyd etc.

There is also a new breed of low cost gyms emerging - eg Pure gyms are well kitted out and open 24/7 and only cost £14.99 per month !

And that, I fear, is the killer ... there are just so many gyms out there, including low cost.

Pennywise

I can't actually see much of a difference between signing up to a contract to pay £x monthly for a year as opposed to buying a few thousand points (the more the cheaper per point) which have to be used within a year or forfeited. Either way, the user is signing up and gets nothing back if they don't bother going, get an injury, move away, etc.