Why working out reminds me of banking

I’m presently using a guest membership for a Gym close to where I am staying in Australia. The location is Sydney, and the area is one with a particularly high socio-economic demographic. The gym itself is a rather well known global chain, and whilst I was working out this morning, I was struck by how many marketing messages and sales opportunities the chain is able to shove into the eyes of its members.

Because this was so interesting, I found out from the local manager the number of members through the door every day: 2000. You’d be hard pressed, I think, to get that many through the door of a branch, no matter its size, but that is not the point.

The point is that the chain has realised that it has a captive audience (members on long term plans), and that it has the opportunity to squeeze lots of revenue out of them as a result.

There is lots for us to learn about what not to do here. Our customers are also relatively long term, and we have similar motivations to maximise revenue. But my gym experience is illustrative of how to do this by abusing the customer relationship.

The sign up experience, for example, has similarities to a financial services one. I was able to buy a prepaid card from the local branch of the Australian Post Office, which entitled me to use the gym. Anyone can get these, and the activation process happens the first time you use the card. Activation includes a “consultation” with a sales person, who attempts to get you to sign a longer term commitment, with, of course,a bunch of sweeteners thrown in.

Here, as in banking, the success of the sales pitch is dependent entirely on the finesse of the salesman. The upsell was so obvious that it immediately made me decline the sweeteners.

In order to get through the door, there are tiered levels of membership. A platinum membership (better features and fittings), represents a price barrier to those who attend the normal clubs, and normal members pay an additional fee per visit. There is a also a “Black Label” version, embedded in the Platinum club, to tantalise members to upgrade even further. Black Label, I think comes with a range of personal services including laundry. Whether you are blue, gold, platinum or  black, every opportunity is used to upsell the next level.

An additional – and clever touch – is the card (with associated colour) is also the locker key. And it comes with a convenient clip that you use to attach it to your clothing during the workout. The consequence? Everyone can see how “important” a member you are.

I wonder if, having exhausted the upsell opportunity in “black”, this chain will now turn to other premium colours as we have done in financial services?  The status sell is obviously dependent on the product being exclusive. Too many sales? Need a new status product.

Inside the gym there is extensive use made of wall space, with digital signage and screens. The screens, of course, are playing video clips and rock tracks, typical for a gym. But these screens also carry tickers along the bottom,  and they, and the digital signage, are advertising complimentary products like energy drinks, lifestyle experiences, and health services. All of these are paid advertisements from advertisers.

Then, too, there are a range of “special interest” programmes, targetted at particular demographics amongst the members. Boot Camp for example, (“the hardest workout you’ll love to love”) is specifically aimed at those who want a group exercise programme that will enhance their existing exercise experience. Of course, available for an additional top up of the subscription fee, and the sales pitch is extremely evident.

The sum of all these sales and marketing approaches is that one is left wondering why it is necessary to pay for a membership. Revenue maximisation is so clearly the goal of the gym. Although the experience is perfectly acceptable from an exercise perspective, you don’t come away feeling as if your fitness goals are the priority. Every cent extra I’ve spent in that gym beyond membership I’ve resented.

In financial services, I wonder whether maxisation of our sales opportunities in channels might have a similar effect to this. Could it be, in fact, that not selling directly might result in greater customer profitability?

Subtlety sells more than selling.

2 Responses to“Why working out reminds me of banking”

  1. January 22, 2008 at 6:54 am #

    This is an interesting perspective regarding digital signage in a gym enviroment.
    Would be so resentful in another enviroment where you did not pay to be a member but where you were just waiting or walking around waiting for entertainment?
    Just curious? I like what you write about and your blog is very well organized. Have a great one!
    Lisa

  2. January 24, 2008 at 5:34 am #

    Hi James,
    That chain of gym’s is known as ‘Devils Empire’, it took me 3 months to quit my membership!
    Anyhow, I’m from Aus and work for Deloitte Consulting, focussing on technology and financial services.
    Do you want to catch up for a beer?

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