Presentation for ACE Personal Training Symposium West - San Diego May 2013

ACE SYMPOSIUM WEST- SAN DIEGO MAY 2013

THE FUTURE OF FITNESS – INTEGRATED FITNESS UNLEASHED

THE FUTURE OF FITNESS THE TRENDS THAT WILL SHAPE HUMAN FITNESS AND ACTIVITY

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1960 1970 1980 1990 2000 2010 2020 2030 2040

US ADULT FITNESS CLUB PARTICIPATION

STAGNATION: SEGMENTATION RATHER THAN INNOVATION, WHILE COMPETITIVE INDUSTRIES ARE EVOLVING E.G. • ONLINE EXERCISE • FITNESS GAMES • NEW SPORTS • NUTRITION AND MEDICINE

FITNESS CLUBS ARE AT RISK

BUDGET CLUBS

MICRO-GYMS

• CROSSFIT – 5,000 clubs – $200 per month • ORANGE THEORY – $23 per class/$159 per month • SOUL CYCLE – $32 per class + $30 to reserve a bike! • PURE YOGA (US) – $145-$165 per month • KOSAMA, OMNI, FITNESS TOGETHER, TITLE BOXING, UFC

ETC

INSIGHT: PEOPLE ARE PREPARED TO PAY MORE TO ATTEND MICROS THAN TRADITIONAL CLUBS

• EXERTAINMENT – Make exercise more fun

• COMMUNITY – Make clubs more social

• HEALTH – Make clubs more holistic

THREE AREAS OF OPPORTUNITY:

WE CAN GROUP THESE UNDER ONE HEADING…

When we ask people why they want to join a fitness club they say things like weight loss, toning up, getting fitter, feeling better, improving their health. These all come under the heading of “results”. But people can get these results in their living room, at the local park, or by running around the block.

SO WHY DO THEY JOIN OUR CLUBS?

Because they lack

MOTIVATION We are in the motivation business.

Whether they know it or not, the world’s best clubs are masters of meeting

this need.

HOW CAN WE MANAGE MOTIVATION? First we have to be able to measure it - if you can’t measure something you can’t manage it. So how do we measure motivation? How do we know if we’re doing a great job of motivating people?

People who attend the club more often will refer more friends, stay longer and pay more. Attendance is the most important metric in our industry.

IT’S SIMPLE, THEY ATTEND MORE OFTEN.

Now let’s talk about motivation using the three areas of opportunity identified in the Future of Fitness research: exertainment, community and health.

EXERTAINMENT MORE MOTIVATING EXERCISE ENVIRONMENTS

GX STUDIOS CHECK OUT LES MILLS WORLD CLASS STUDIO SEARCH AT WWW.LESMILLS.COM

SMALL GROUP TEAM TRAINING SPACE

“Most of us aren’t really health clubs, we’re not even clubs. We’re just places where people come to lift weights and run on a treadmill” – Michael Scott Scudder

SOCIAL MOTIVATION/ COMMUNITY

SELL THE LONG-TERM RELATIONSHIP    

MAKE EXERCISE SOCIAL    

Group Fitness Small Group /Team Training Personal Training Event Training

GROUP TRAINING Many full service clubs are being hurt by low-budget competitors. At the same time, there are successful new club models evolving: •  Crossfit – 4,600 clubs - $200 per month •  Orange Theory - $23 per class /$159 per month •  Soul Cycle and Flywheel (US) - $32 per class •  Pure Yoga (Asia and US) – $145-$165 per month •  Kosama, Omni, Fitness Together, Title Boxing, UFC etc etc

Example: Evolution of the Exercycle

1980 Old-fashioned stationary bike 1985 Computerized bike 1990 Cardio theatre 1995  Spinning class Now Standardized, quality-assured classes

MOTIVATION: GROUP TRAINING

GF is the most effective way of creating motivation for the average fitness member

WHAT ABOUT PERSONAL TRAINING AND SMALL GROUP TRAINING – DON’T THEY ACHIEVE THE SAME THINGS?

Yes absolutely. These are wonderful innovations that have revolutionized parts of our industry. And facility operators love them because they can charge for them. However even the world’s best only engage around 10% of their attendances in PT and 3-4% in Small Group Training. Group Exercise attracts and motivates the masses. Some of the world’s most successful facilities have over 50% of their attendances in Group Exercise. “Group Exercise members attend more regularly, remain members longer, make more referrals, perceive greater value in their memberships (i.e. will pay more) and do not leave when a budget gym opens nearby!”

GROUP FITNESS 2.0

REFERRAL Most loyal members

ACQUISITION Potential guest driver

RETENTION High usage

MEMBER LIFE CYCLE

Isolat

ion Generic basic programming

Instructor driven programs

Primary certifications required Required business silo managed by “GX instructor made manager”

Value Program driven scheduling with

sports conditioning to dance to mind body Rise of studio space for CF, MMA, Yoga, Barre, etc.. Hybrid instructors on the rise – PT and GX

Offen

se Use benefits of Group Fitness as a primary selling focus in clubs Key is differentiation on execution – service & experience more than product Programming by segment – youth, senior, baby boomer, athletes

YESTERDAY, TODAY AND TOMMOROW

Future Present Past

Rise of specialized studio space

FROM CROSSFIT TO HITT TO GRIT

CLUB WITHIN A CLUB

CLUB WITHIN A CLUB FOR MILLENIALS

Is it Group X or is it Training?

§  Segregated fitness teams 

§  Trainers don’t utilize Group X

§  Group X instructors don’t support PT

§  Members align based on experience

Programming determines best “coach” in the club

WHO OWNS THE SMALL GROUP SPACE?

WHAT ARE YOU SOLVING FOR?

•  Active client growth?

•  Frequency of client interactions?

•  Margin growth

Programming determines best “coach” in the club

WATCH OUTS

•  Active client cannibalization

•  Flat rate versus session burn

•  Programmed or free style?

•  How to entice new people

START AT THE BEGINNING

§  FROM: §  ABC’s of Sales

§  Service secondary

§  One size fits all

§  Traditional advertising

§  Word of mouth referrals 1 to 1

Vendors sell for today, partners sell for tomorrow

§  TO: §  Sales plus service

§  Education matters

§  Differentiated offerings

§  Social media impact

§  Word of mouth referral 1 to

10/100/1000

EVOLUTION - VENDORSHIP TO PARTNERSHIP

CLUBS WITHIN CLUBS

Products created as specific event training programs. Designed around an organised event (eg marathon, cycle challenge, triathlon). Training organised in 8 or 12 week blocks with an emphasis on guidance, support and motivation. Clear sense of purpose culminating in the event itself and the personal satisfaction of completing it. Participants pay the club direct, prices vary. Available to both members and non-members.

LES MILLS RIDE™ LES MILLS RUN™ LES MILLS TRI™        

SOCIAL MEDIA IS REVOLUTIONIZING OUR ABILITY TO COMMUNICATE

BUT… IT’S NOT AS EASY AS IT LOOKS. ENGAGEMENT, INTEREST AND AUTHENTICITY ARE KEY. OTHERWISE IT’S MEANINGLESS

EDUCATION = MOTIVATION Between 2006-2016 the cost of the American health system will almost double to $4.1 trillion per year*. It seems that our health is deteriorating at almost as quickly as these costs are increasing. The current system clearly isn’t working - there’s got to be a better way! *2006 US Treasury Report

THE HEALTH OPPORTUNITY

EDUCATION: BECOME TRUE ‘HEALTH CLUBS’

Health clubs need to become more than just places where people go to use exercise machines! We need to become true providers of holistic health. Education changes lives and your members will love you for it. A few places to start: • Mercola.com • Younger Next Year – Crowley/Lodges • The Omnivore’s Dilemma – Michael Pollan • You: The Owner’s Manual – Roizen/Oz

TALK TO YOUR MEMBERS CREATE A PERSONAL RELATIONSHIP WITH YOUR MEMBERS CHOOSE THE RIGHT MEDIUM FOR THEM: ONE WAY COMMUNICATION? TWO WAY? SOCIAL MEDIA?

“CREATE A CAUSE, NOT A BUSINESS”

- Tom Peters

STAND FOR SOMETHING

People don’t come to work to increase shareholder value, they want to make a difference!  

THE MOST SUCCESSFUL BUSINESSES IN THE WORLD CARE ABOUT MORE THAN JUST MAKING MONEY  

STAND FOR SOMETHING    

We are the exact opposite of the cigarette and junk food companies and we have an intimate relationship with a large percentage of the world’s wealthiest people.

LET’S CREATE A FITTER PLANET The world is facing a great holistic health challenge and our industry is perfectly positioned to play a big part in the solution.

• Reduce facility costs • Attract more members •  Improve member health •  Increase staff engagement •  Improve environment • Mitigate global risk

REASONS TO BECOME A GREEN FACILITY

WE CAN CHANGE OUR HEALTH AND THAT OF THE PLANET BY ONE SIMPLE MEANS:

WHAT WE PUT IN OUR MOUTHS

FITTER FOOD

Individuals and businesses cannot be allowed to destroy our greatest communal assets. Our leaders need to lead on these issues! Fitness industry initiatives : • Physical education back in schools, junk food out • Better urban design • Tax incentives to be slim and fit • Encourage healthy eating (tax junk food!) • Healthier environment

FITTER GOVERNMENT

There are hundreds of great ideas, from low energy lighting and appliances, to low-flow shower heads and toilets, to signing with a renewable energy provider or even installing solar energy. Have a professional green audit done on your business. There are incredible savings to be made in resource use and your own money.

FITTER FACILITIES

EXERTAINMENT, COMMUNITY, EDUCATION Health club attendance has become the biggest adult “sport” in the Western World. Bigger than football, tennis and golf combined. But we have traditionally lacked the excitement and social engagement of sports, and behaved more as gyms than as true health clubs. The faster we can change that, the bigger our future!

MOTIVATION: THE BIG OPPORTUNITY

ACE SYMPOSIUM WEST- SAN DIEGO MAY 2013

THE FUTURE OF FITNESS – INTEGRATED FITNESS UNLEASHED