the health club of 2020
TRANSCRIPT
F I T N E S S
CLUB
The Club of
2020How technology is changing
the fitness industry
FITNESS CLUB
F I T N E S S
CLUB
Earlier this year, Bryan and I wrote about the top 10 trends in technology for health clubs in 2015. The list was
packed with innovations like iBeacons, smart cardio equipment and mobile apps. There is no doubt that as
one walked through the maze of booths at IHRSA in March of 2015, there was an abundance of new technology
o�erings beckoning. There have been huge leaps forward in club technology in the past year alone: social
media is mainstream, mobile is rapidly on the rise and 25% of health club members are sporting a wearable
device. As exciting as it seems, 2015 is barely scratching the surface of the technology revolution that is on its
way for the fitness industry. Make no mistake – technology trends will be game changing for our industry.
New business models will emerge, and operators that are energized to innovate will become big winners.
Let’s fast forward five years to 2020. Five years can bring momentous change; compare 2007, when the iPhone
was first introduced, to 2012 when 20 billion apps were downloaded. As the growth of apps and technology
explodes, classic brick-and-mortar businesses, like health clubs, get increased pressure to evolve or get le�
behind.
This ebook takes you through 5 major changes that fitness clubs will go through in the next 5 years and what
a successful club could look like in the year 2020.
The Club of
by Greg Skloot, Netpulse + Bryan O’Rourke, FIT-C
2020
Netpulse, VP GrowthGREG SKLOOTBRYAN O’ROURKE
FIT-C, President
Contentsone
two
three
four
five
4
7
9
12
14
TheBUSINESS MODEL
ThePERSONALIZATION
TheWEARABLES
TheINTERNET OF THINGS
TheOPTIMIZATION
one
The world’s largest taxi company, Uber, owns no vehicles. The world’s largest accommodations provider, Airbnb, owns no real estate. The world’s largest media company, Facebook, creates no content. We are in the midst of an incredible revolution in business models. Industries that have operated the same way for decades are being wildly disrupted by new startups that are thinking di�erently. Uber didn’t just enter the market as a new taxi company. Instead, they changed the rules of the game and tipped the scale radically in their favor. We must expect that the same type of disruptive innovation can happen in the fitness industry. Let’s consider some of the potential new business models that we may see commercial fitness clubs using in 2020.
By now you have probably heard of ClassPass. The startup out of New York City has raised over $50M from
investors and employs nearly 200 people. Perhaps even more impressively, it partners with thousands of studios
to o�er customers unlimited access to fitness classes for $99 a month, more than double the average health
club membership in 2015. The emergence of ClassPass is a strong reminder that today’s consumer is willing to
pay a premium for convenience and experience. Consumers demand variety and a unique, personalized and
“special” experience. Gaining access to a plethora of di�erent studios and creating a highly personalized work-
out schedule, customized just for them, is the epitome of the new generation of customer requirements.
In 2020, we should expect more traditional health clubs and chains to o�er similar types of packages,
where members can access a larger variety of di�erent services, tailored to them at a premium price.
TheBUSINESS MODEL
PREMIUM CLASS BASED
$
4
When it comes to the younger generation of millennials, car and home purchases are at an all time low.
Meanwhile, ridesharing services like Zipcar and Ly�, along with house sharing services like Airbnb, are growing
exponentially. On top of that, millennials are getting married far later in life than their parents did. It’s no
surprise why: people coming of age today are far more averse to commitment than their parents were. For a
membership-driven industry like health clubs, this creates a mandate for innovation. By 2020, we should
expect more clubs to align with consumer trends by o�ering pay-as-you-go options, where younger
members can opt for di�erent packages of total club visits, classes, etc. Perhaps one membership tier
lets them check-in once per week, while others let them come anytime. Perhaps some members will want to
pay each time they check in with zero commitment. Remember, this could increase revenue per visit as clubs
can charge a premium for members to go “contract free.”
PAY AS YOU GO
DIGITAL AND PHYSICAL HYBRID
We are seeing more brick-and-mortar businesses,
such as clothing stores, hiring a “Chief Digital O�icer”
in their executive team. This leader is tasked with
building that business’ digital presence and finding
innovative ways to drive revenue beyond the tradi-
tional physical location. This responsibility has o�en
fallen on the CIO’s of larger club organizations and
the owners themselves of independent health clubs.
Regardless of who takes it on, the responsibility for
creating a hybrid product that o�ers physical,
real-world experiences (i.e. visiting a club) and
digital experiences (i.e. virtual training and
coaching in a mobile app) will become critical for
a club in 2020 to be successful. Consumers will
have options to purchase services on an “a la carte”
basis, perhaps maintaining their ability to go workout
in a club but receiving personal training virtually
through the club’s mobile app.
REG
ISTER FOR CLASSES
TRACK FITNESS GOALS
REDEEM DEALS
MYFITNESSPAL
MOVES FITBIT
CLUB FITNESS
5
In 2013, 1-in-5 Americans worked from home. Over the last few years, that number has continued to increase
as technology has broken down the barriers that required people to commute to a physical o�ice daily. The
result is a consumer movement that prefers the convenience and greater comfort of operating from one’s
own home. We see the rise of services like Postmates (food delivery) and TaskRabbit (on-demand personal
help) as further evidence of this trend. We should consider that by 2020, the fitness industry could follow suit.
From virtual training and coaching to on-demand trainers being dispatched to customer’s houses regularly,
more and more of the fitness journey will likely happen outside the club’s walls. This adds pressure for
modern health clubs to o�er a variety of customizable services, delivered in person and via mobile devices, to
be able to satisfy the wide variety of consumers that will be interested in fitness in 2020.
ALL AT HOME
Finally in 2020, it is likely that we’ll see health clubs introducing even more novel business models, like
paying adjusted rates for using facilities at certain times of the day. For example, accessing the club between
7am and 9am may be o�ered at a premium, while accessing the club in the mid a�ernoon could be o�ered at
a discount. This idea of capacity utilization is far from new in other industries. Consider the airline industry,
where the prices of seats change drastically depending on demand and date of the flight. Again, this type of
flexible membership option gives consumers a greater variety of choices to personalize their experience with
a club in the way that works best for them.
TIMEBASED PAY
KIMI IS
THE BEST
6
two ThePERSONALIZATION
Chopt is a chain of 30+ fast-casual restaurants that o�er highly customized, made-to-order salads. Imagine the ultimate salad bar: every type of lettuce, dressing and possible combination of fresh veggies and garnishments that one could dream of. There is a reason why Chopt has grown so fast: it’s because we are in the age of personalization. More than ever, consumers want to create their own items as opposed to being bound by restrictive menus and someone else’s rules. It’s not just salads that we crave to make our own -- it’s every experience from vacations to fitness. This trend is going to become exceptionally important for high performing health clubs by 2020.
The key to enhanced personalization is the availability
of data. As we use more smart devices (wearables,
apps, etc), we are producing a tremendous volume of
data. This data can be used by clubs to create highly
personalized experiences, tailored to the specific
tastes and preferences of a member. Consider the
evolution from the basic member profile in today’s
billing system (gender, age, etc) to the member profile
that includes data generated from a club’s referral
program, mobile app, CRM, social media, etc. The
growth of wearables piles even more data into the
equation. By 2020, we should expect new tools that
give club operators easy access to this mountain of
data, making it actionable for better business
decisions and customized member experiences.
DATA EVERYWHERE
7
FI T N E S S
CLUB
The smartwatch is just scratching the surface of new
devices that can use data to o�er a more personalized
experience. We’ve seen the cardio machine quickly
evolve from a “dumb” treadmill into an internet
connected workout experience, complete with access
to virtual scenery, music videos and data syncing to
the Club Mobile App. By 2020, expect that these
machines are going to be able to do a lot more,
especially when it comes to driving revenue.
Members will be able to make one-tap purchases
from the cardio screen, giving them access to
impulse buys (e.g. discounted personal training) and
regular purchases (e.g. their favorite smoothie), all
while completing a workout.
SMART DEVICES
The availability of data and new methods of providing
it in a useful manner will empower sta� to understand
club members in a much deeper way than they do
today. By 2020, sta� will be able to access simple and
colorful dashboards that provide them with nuggets
of real-time information about who is in the club,
enabling them to cater the member experience to
match their needs best. More personalized greetings,
o�ers, equipment access, class recommendations
and more will all be results of the wider availability of
member data.
INFORMED STAFF
C L U B
HEALTH
fitness club
Back
REFER A FRIEND
REFER FRIEND
FIRST NAME
LAST NAME
PHONE #
CLUB FITNESS
F I T N E S S
CLUB
8
three TheWEARABLES
Wearables are now growing at a 35% annual compounding rate. That means by 2020, nearly 200 million units will be shipped. The smartest club operators have already begun integrating wearables into their programs, leveraging their Club Mobile App to connect the tracked workouts that happen outside of the club back to the club through fitness challenges and rewards programs. As wearables continue on the path to be as ubiquitous as smartphones are today, there are several ways that they’ll become more deeply woven into the health club experience in 2020.
The concept of a “game layer” – o�ering points and
rewards for every action that consumers take – has
been growing in popularity over the last decade. New
technology has made it even easier to track consumer
spending and automatically deliver personalized
rewards to loyal customers. Today, a minority of
health clubs o�er a rewards program to encourage
desired member behaviors. By 2020, it’s quite possible
that the majority of successful clubs will o�er some
sort of rewards program. To keep things simple, it
will be tightly integrated with the club’s mobile app
and calculate members’ points automatically.
GAMIFICATION
9
It’s not just smartwatches and fitness bands that are
going to be purchased on the wearables market by
2020. The emergence of smart clothing, from shirts to
shoes, will become increasingly popular. Athos is a
San Francisco-based company that is already o�ering
“smart” full-body suits that are retrofitted with
sensors, tracking all of the physiological data from
one’s body and sending it via bluetooth to a mobile
app. Today, this product costs over $500. By 2020, like
other technology, prices will drop and such clothing
will become more mainstream among health club
members.
SMART CLOTHING
The sensors in the Athos smart clothing will be used in many other devices as well. Already, companies like
Focus Motion are building products that connect with the Pebble smartwatch to automatically track motion
and give real time feedback on an exerciser’s form, pace, etc. Considering that this is something we have
historically relied on personal trainers for, a product like this is going to advance business models that deliver
training digitally, not just from people. In 2020, as these devices become more mainstream, we should expect
to see them used to support hybrid training models where consumers workout on their own time in their own
locations, but trainers and coaches can access their workout data from anywhere, providing quick feedback
and tips to guide them along their fitness journey.
SENSORS EVERYWHERE
FI T N E S S
CLUB
You just did 6 reps!
five... six...... ...
10
Along with much of the other technology discussed here, mobile devices will continue to be a requirement for
delivery and consumption. Every wearable has an app to go along with it. Every sensor will be sending data
to an app via a wireless bluetooth connection. By 2020, an even greater majority of consumers will have a
smartphone (today in 2015, it’s about 66% of Americans). In 5 years, nearly every successful club will have
its own app that integrates with the variety of other technologies that members and sta� utilize on a
daily basis. This will be as common as websites have become today – a requirement to do business in an
increasingly technology-driven industry.
SEAMLESS CONNECTION TO MOBILE
CLUB FITNESS
CLUB FITNESS
11
four TheINTERNET OF THINGS
Over the next 5 years, more devices that have historically been static (e.g. toasters) will become dynamic by connecting to the Internet. This is what is o�en referred to as the Internet of Things (IoT) – a network of billions of common devices that suddenly can be far more interactive because of their connection to the Internet. This has big implications for the “smart home”; imagine a refrigerator that knows when you will run out of milk and automatically places an online order for a grocery delivery service to restock it at the right time. The fitness industry will be impacted by the Internetof Things as well.
We’re all familiar with the o�en tedious process of
regularly replacing cardio equipment, dealing with
malfunctions and replacing parts. O�en, these
issues bubble up when the machine actually stops
working, resulting in the club having to put an “out
of order” sign on it, annoying members and reducing
the availability of machines on the floor. With
these machines joining the Internet of Things with
online connections, they can begin to automatically
communicate with club management and the
manufacturer, identifying opportunities for asset
optimization as well as preventative maintenance.
SMARTER EQUIPMENT SUPPLY CHAINS
F I T N E S S
CLUB
12
The automations achieved from the Internet of Things aren’t limited to cardio equipment. Clubs can gain
benefits from simpler devices like free weights, cleaning supplies, etc. all being able to communicate online to
automate replenishment. This type of automation enables sta� to be less focused on the mundane and more
focused on looking at data to personalize the member experience.
AUTOMATED REPLACEMENT ORDERING
Even today with the popularity of Club Mobile Apps, members check into a club by showing a barcode (now
o�en digital within the app) and scanning it with a 2-D scanner. Prior to mobile apps, members had to carry a
plastic barcode on a keychain and scan it, adding an extra expense for clubs to provide them and an extra
annoyance for members to bring them. By 2020, many more sophisticated clubs will o�er touchless
check-in, leveraging iBeacon technology to communicate with the club’s mobile app and automate the
check-in process when members walk in the door. This “touchless luxury” is the frictionless experience for
which we must strive.
NO MORE CLUB CHECKIN
C L U B
FITNESS
CLUB FITNESS
F I T N E S S
CLUB
13
five TheOPTIMIZATION
All of the new technology and data available gives club operators an exciting opportunity: fine tune and optimize our businesses. Other industries have become maniacally focused on this, such as restaurants. From tweaking marketing messaging to determining the exact right menu design to positioning tables in a way that delivers an ideal flow, the restaurant industry has always been focused on optimization. The same trend continues to grow in the fitness industry, and new technology is going to accelerate it.
It may be the most important secret of the hotel
industry: behind the scenes, so�ware is analyzing
huge sets of data and changing the prices of hotel
rooms to ensure that as few rooms as possible are
empty. Without doing this, hotels would be highly
ine�icient, o�en going nights with significant portions
of their inventory underutilized. Moving towards 2020,
it’s possible that similar strategies will be used for
health clubs. Sensor technology can deliver precise,
real-time metrics on how many members are in the
club at once, using which machines, attending which
classes, etc. This can be combined with innovative
business models like pay-as-you-go pricing to market
unique o�ers that fill the right classes at the right
times to maximize revenue. This of course will rely on
new so�ware and technology to work e�ectively.
CAPACITY UTILIZATION
This class is full!
!This class has 5 spots
!Your club is only 60% full
Send out a push alertto get people in
14
More so than ever by 2020, the data available will not
just be used create more personalized member
experiences, but it will also give health club operators
access to deeper “business intelligence” – actionable
data that can be used to make better business
decisions. From purchasing certain equipment to
running marketing promotions, the owner and
general manager of 2020 will be making decisions
not by guessing or gut instinct but by hard numbers
and data. As in many other industries, this will lead to
improving club operations.
DATADRIVEN MANAGEMENT
Did you know that when you visit an ecommerce
website, the price you see might be completely
di�erent than the price your friend might see at a
di�erent time of day? Ecommerce pricing is dynamic
and can be altered in real-time based on many
variables. This enables the retailer to increase profit
margins. The very same trend could evolve to the
fitness industry by 2020. Pricing that is o�ered as
either membership, pay-as-you-go or a la carte can
be dynamic and customized based on the data we
have about the consumer or other variables like
month or season.
DYNAMIC PRICING
EQUIPMENT SUPPLIEREQUIPMENT SUPPLIER
$
$
$$$
$
$$
$
$
$ $$
$
15
If there is one word to sum up the club of 2020 it's sophistication. Health clubs and the
fitness industry overall are going to become far more sophisticated over the next 5 years.
Ironically, this is happening in parallel with the barrier to entering the industry lowering, as it
becomes cheaper and easier to start by opening a small studio and using technology to grow
the business. For operators that wish to thrive over the next 5 years and into 2020, the biggest
takeaway is to embrace technology. Encourage wearables, promote your Club Mobile App
and be active on social media. As technology naturally evolves, successful operators will
become more comfortable introducing the latest and greatest trends to engage members,
increase revenue and enhance the overall club experience.
The Club of
2020
16
WWW.NETPULSE.COM • [email protected] • 877.NETPULSE
Customers include:
At Netpulse, we create branded Club
Mobile Apps for the fitness industry.
Launch your Club Mobile App at
NETPULSE.COM
®
CLUB FITNESS
17