Club Insider

Is Your Marketing Killing Your Business?

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Thomas PlummerThomas Plummer

Marketing in the fitness industry is much like politics; everyone is an expert, but so few really have any idea as to what the hell they are talking about when it comes to how it really works.

The strange thing is that the industry changed, but how we market our businesses really hasn't. The business of fitness segmented into two distinct categories back around 2005: One segment chases the low-end, “value” clients as we called them, but perhaps better known as cheap people. The other segment, less discussed, but in many ways the future of the business, pursues the higher-end client, defined as people with money willing to pay more for help and guidance, the client-centric gym.

Marketing is a practice based upon established principles first honed-in the late 1930s, and while those principles remain true, the delivery systems businesses use to attract new clients and create their brands change almost monthly. For example, twenty years ago, direct mail was one of the strongest ways to get your message to the consumer, but now, sending someone an oversized postcard seems antiquated, right up there with pages and portable phones the size of bricks from that same era.

So, what does still work in marketing and why?

Price Doesn’t Work, But It Does

We make a false assumption in gym marketing that all clients are price-driven, meaning that how much you charge will be the determiner if the client finally decides to join your gym or not. If you have a low-end, value gym, then yes, it is all about price. These clients come because of price but leave because the gym down the street is a dollar cheaper per month.

If your gym is just price, nothing but price, and only price matters, then you have no choice when it comes to marketing. Run a cheap price, run it hard, come up with a few dozen deviations that are all really the same thing. They are vehicles to let every breathing soul within ten miles know you have the cheapest price in town, then hope for rapid turnover to replace the ever-present losses associated with a ten-dollar member. There is a potential market for this gym, and that is centered on those who clip coupons, beat up a salesclerk for a dollar discount and haven’t left a decent tip since Carter was President.

In the real world, this is your Golden Corral customer. He is in that family restaurant because it can consistently deliver a decent meal for ten dollars or so, which if you are in the bottom 60% of the country in affluence, is a big deal when you are trying to feed a family of four with a night out. This chain knows its market, delivers an acceptable product at a low price and is a perfect comparison to the low-end gym chains.

To me, this type of eating establishment is hell on earth. I cannot imagine a worse night out than eating food I had to service myself, without a decent bottle of good wine, surrounded by dozens of happy families, meaning kids, more kids, and too many kids.

But, again, this type of restaurant thrives because they understand the value for price tradeoff and market to the budget conscious family who want to eat in a safe, clean, and one which serves solid, family food at a price they can afford now and then. In this type of business, price is everything because price is what attracts the potential client, the family that makes its decision to go out on whether they can get good meals at a price which doesn’t break their budget.

The adults in this family also want to perhaps join a gym, and they use the same strategy to determine their gym of choice, which is, “Can I afford this and not break the family budget or my individual spending plan?” In this world, price marketing works because it is often the only deciding point between gyms, besides convenience to their homes. “This place is $10 and five minutes from my house. This is the place for me.”

We can extend this analogy further. One eats at a family restaurant because they want nothing but the meal, and maybe a beer, but they are not looking for any services beyond the simple feeding of the family. If this buyer goes to a gym, they apply the same thought process. “I just want to walk on a treadmill, at a price I can afford, and want nothing more from this gym, meaning extras such as personal training, nutritional services and massage or meaningless.” In essence, they are renting a treadmill for $10 per month and want nothing else.

This has been proven for twenty years in most of the major chains, which seldom, if ever, get more than about 6% of their clients involved in paying for personal training. The client is simply there to use his favorite piece of equipment, at a cheap price, and due to his nature of being a price conscious client, again read cheap here, has no interest in paying for upsell services.

Then, there is the Capital Grille clientele. This diner seeks a high-end restaurant, not for the food, but for all that is wrapped around the dining experience. Most of the high-end chains have good food, especially the upper scale steak houses, so it is not just the food as to why the consumer eats there. It is because of the total experience of the restaurant he is buying. The good food is a basic expectation, now surprise me with a delightful experience.

This client does not care about the cost. He is there because they have an expectation of service, quality, delivery systems and choices. One can buy a beer or have a $200 bottle of wine. He can add a mouthwatering dessert and don’t really care if it costs an extra $12 dollars. Eating in this place is not a price decision, and advertising price to these clients does not work. In fact, a high-end eatery could damage its reputation it if used prices specials to drive in the crowd.

The equivalent in the gym world is that modern, smaller gym or larger, full-service high-ender where the client is more sophisticated, wants more additional services and will pay for them. He is there not because of price but because of the expectation of what this gym can do for him. In fact, if he pays more, he sees more value in it, because like his house, his car, his kids in good schools and his last vacation to Europe, you get what you pay for. So, if what he wants to buy is the same price or cheaper than the competition, then it must be an inferior product to that competition.

This client also views the gym in a different light. In his world, his doctor, his accountant, his attorney and others personally support him. He pays them well to make life easier, and he views high-end gyms the same way. None of these other professionals in his life offer discounts or price deals. For example, when is the last time your doctor had a two for one summer cancer sale or your accountant advertised tax returns now done for 50% of the regular price? Professional service providers simply do not, ever, discount their services. That is what price deals are, just a form of discounting based on the fact one could not sell enough at full price, so they drop the price to increase the sales volume.

Again, we forget one of the most basic tenets of marketing, and that is tangible versus intangible. If I have a retail store and have a surplus of socks in the storeroom that haven’t been sold (a tangible I can hold in my hand), then it makes sense for this store owner to discount and dump the surplus so he frees his money to buy fresh stock that might sell at full price. But, the fitness business is a business of intangibles, at least for those gyms that have services beyond the basic membership to sell.

The low-price gyms have essen-tially become just price, which in another sense is a commodity, such as coffee, that is sold generically to the end user. Commodity is defined as something that has a lower financial appeal because it is common, sold cheap and is not brand specific. This is why the price wars rage at the lowest end of the fitness spectrum as everyone fights to sell the basic service of renting that treadmill for $10 or less per month. The consumer does not care about the brand, just the price please, and you have price wars as everyone fights to find the bottom.

Full-service mainstream facilities, and especially the new generation training gyms, sell intangibles, defined as something I can’t hold, and the value is determined by the need. In essence, we are selling a service that has not happened yet, similar to a good financial planner who paints the picture of what financial security can look like in your life twenty years from now if you use his services. We sell the future of what you can be, if you just let us help you, and this professional service cannot be successfully sold using price-based marketing.

The Big Marketing Fail for Full Service Fitness Businesses

The nightmare begins when a mainstream, full-service gym, again one defined as offering a variety of upscale services, such as spa, nutrition, personal training, specialty classes and massage, for additional fees, tries and markets this business through price advertising. This actually slowly destroys this gym and its brand over time because pricing is a self-fulfilling prophecy: People attracted because of price specials and low prices never support the services beyond the basic entry fee.

Put more simply, in the language of gym owners everywhere, cheap people never buy your higher-priced stuff because they are... well, cheap. They came in for the deal, which was their motivator, and refuse to spend their money beyond the base entry fee.

This again is why personal training has such a dismal presence, even in multi-million dollar, upper class fitness businesses which still rely on price discounts and special offerings to attract new clients. The dreaded, and dead end, 3 for $99 training introductory special is a perfect example of how not to sell training. You might be chasing $80 per hour, but you just established the price at $33 per hour and also proved no one buys this service, so we have to drop the price to even get anyone interested.

Over time, through price market-ing, this gym becomes filled with clients who are there for the deal of the week and are always reluctant to spend more for anything, eventually crushing the owner’s ability to upsell these needed, but expensive services, at least to cheap clients unwilling to spend.

Why would we expect a guy who signed up because the membership fee was 50% off in July to buy training for $100 per hour? This would be like expecting the dad at Golden Corral to order a full $10 meal, including dessert and soft drink, to now ask for the wine list and select a $100 bottle of Prisoner wine. He is a price guy, not an “I have money and deserve this,” guy.

If we think of your market as a giant pyramid, divided into a top 40% and a bottom 60%, then price marketing works for the bottom sixty but does not work for the top forty, the more affluent, often more educated and more sophisticated money client.

If your gym is dependent on the top 40%, then traditional price marketing actually deters this crowd from your gym instead of attracting them into your business. Again, professional services that support my life, such as working with a skilled personal trainer, can’t be sold on a price driven basis because everyone in the top 40% understands the best is always the most expensive.

For example, if you are a money person, which is the best accountant? The one at $100 per hour, or the established accountant charging $400 per hour? If you have money, would you not use the higher priced person to handle your money because obviously the most expensive is always the best... like good wine, cars, houses, restaurant experiences, and occasionally spouses, but that might be another article later.

So, what does work in marketing to attract that higher end client?

The Old Tools

The old tools are still the foun-dational elements of good marketing. If you want to attract a higher end client to a higher end gym, we replace price driven ads with testimonials and trial memberships.

Testimonials

You should never talk about your own business. If you run a successful high-end business of any kind, then let your clients do the talking for you. In the money crowd, referrals are much more important than slick advertising. For example, a travel agent can try to sell a river cruise in Europe for a year, but a couple finally decides to do it only when friends they met at a cocktail party rave about their experience there.

Testimonials done correctly are nothing more than referrals, meaning you have a real person from the gym telling a story about his success and experience with that business. This is far more powerful than any price ad ever could be for the top 40%.

The biggest mistake we make here is not going for target specific advertising. If I want to promote one-on-one personal training, for example, I would use a woman over forty who raves about the privacy of training. Results do not sell; they are just a base expectation. Of course, I got into shape; I paid a trainer to get it done. This isn’t why people buy this service in a gym.

What does sell is, “my time, my space,” as a theme for this type of testimonial. She says, “I have a stressful business, and I just need to get away a few hours a week. Training here is my time, my space, all about me time. Sure, I haven’t gotten into better shape, but I wouldn’t give up these few hours of privacy for anything else.”

Because of her age, we also know this client lives on Facebook and also relies on Google searches to find a personal trainer near her. Both of these would be delivery systems for concept of testimonial style advertisements.

There are three specific target markets in upscale gyms:

  • The 24 - 36-year-old client who wants the group/team experiences;
  • The 35 - 55-year-old client who might buy small group training, nutritional services and massages;
  • The over forty client who wants everything you have, especially one-on-one training and other expensive support services to make her life easier.

Yes, testimonials are an old tool, but in today’s competitive world, it is interesting to note that both USAA, the veteran’s insurance company, one of the largest and most respected companies in the U.S., as well as Noom, the diet behavior modification site, both use exclusive testimonials to sell their products.

Trial Memberships

So, you think you have a good product I might like? Then why won’t you let me try it before I buy it?

The most important thing here is to remember the upper scale client isn’t that worried about price; he is most worried about discovering if this product or service is something he will want to use over time.

But, price-driven gyms actually force the price discussion. If you use price deals as bait and try to force me to buy a long-term commitment during the first few visits, then it always comes down to price because that is all we have to talk about since I haven’t had time to meet your clients, experience your service or understand if this gym fits who I am as a person.

Give me time to experience you, though, and the conversation changes. It is sort of like getting married. Shouldn’t we at least date first before we decide we need to get married?

Extended trials shift the con-versation away from price to service and the experience of your business. If you have a good business, then charge me for a trial and give me a chance to see for myself how good you are. In the end, if I don’t like you, I walk away.

It is important to note that the client has changed post-virus. Losing a couple of pants sizes, a pre-virus marketing ploy sold as a challenge offered over a few weeks doesn’t sell to a client now more concerned about simply not dying. Keep in mind, higher end gyms have to target market the upper 40% of their market by affluence, so the potential client here has different goals and expectations than a guy on the lower end who is less educated and only motivated by price.

The Six-Week Trial is the Jewel

This trial membership is often sold as a mini membership and is offered in the price range of $199 - 299 depending on the market. This price range prequalifies the clients. If you pay this much money, then you are serious about exploring joining a gym, versus a cheaply priced, short-term trial, such as a 14 days for $14 offering. Most of the training gyms use $299, and a great number of these have surpassed a million in annual revenue with only about 250 clients, since their price per client average usually exceeds $250 per month with a number of them passing $350 per month average per client.

The key with this trial is to not offer a template program but rather advertise that each trial will be designed specifically for you, depending on your experience, current physicality, limitations and goals. Do not offer one of these, two of those and a list of stuff you include for everyone.

For example, if an older person inquires about a trial, then perhaps offer a few extra one-on-one workouts and a few spa services if those apply to your business. But, if a younger person wants a trial, then perhaps give her more small group trainings, team offerings and a few different services. Individualization is the key to make these work.

The key words and phrases for this trial are: We go at your speed, your time and your space, individualized for who you are as a person; we go slow at first to make sure you are comfortable; meet our staff and meet the other members before you make up your mind that we are the gym for you; just a few hours a week, it is all about you.

Most of these trials are closed around the third week by simply buying back the remaining trial time. For example, a woman pays $299 for her trial and is showing interest in a $699 monthly one-on-one training program. Your assessor, a trainer who sells all training for the training team, and who is not afraid to ask for money, might ask the client during a visit to the gym around the third week if she would like to get started today. The woman will say, “No, not yet; I don’t want to lose the remainder of the trial I paid for.” The assessor would counter by saying, “Please let me buy that back from you, meaning I will give you a 13th month free, or in your case, let’s get you signed up for the twelve-month training program at $699 per month, and I will add an extra month at no charge to buy back the rest of your trial.”

The big picture here is that extended trials, sold at a decent price, prequalify the clients, make sense to money people, give cash flow to the gym, and most importantly, make selling upper end products such as personal training much easier over time.

What Does This All Mean?

Price marketing works if your target market is the bottom 60% of the market by affluence, but it does not work if you have a full-service, upscale mainstream gym or a training gym. The clients are different and price marketing actually deters money people from believing in your brand, because if you were any good at what you do, you would not have to discount it to sell it. Besides, no other professional business ever has a price deal, so why are you trying to sell me professional fitness services using a half-price summer sale?

The basic concepts of marketing are still effective, but delivery tools such as social media, have changed dramatically through the last decade. This does not mean those basics no longer work. Testimonials, coupled with extended trial memberships, are still the most effective way over time to attract a more sophisticated client who will use more of the services of your business.

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