The CEO of David Lloyd Leisure believes the foundations are now in place on which to dramatically grow the estate. He talks to HCM editor Kate Cracknell

David Lloyd Leisure has a formula for building clubs from new for a really, really good price. Ours are large, complex facilities and we can build them for about £10m. I think that’s one of our core strengths,” says CEO Glenn Earlam, who joined the company from visitor attractions giant Merlin Entertainment in June 2015.

And it’s clear Earlam – who during his time at Merlin doubled the size of the Midway Attractions division, which includes famous brands such as Madame Tussauds and Sealife, from 45 to 90 locations – is excited by the growth potential this price tag affords.

“We open our 83rd club in the UK this month, in Colchester, and historically we’ve spoken about the potential for another 10, but I’d like to do a bit more work on this as I feel there might be more opportunity. Really it depends on the aspirations of the team and the owners – how big does the company want to become?

“I’m not talking about another 100 UK clubs, but whether the number is 10 or 20 or 30 is perhaps something that needs further exploration.”

Earlam also has his sights set on Europe, where DLL already has 11 clubs, with a 12th opening in Madrid at the beginning of next year. “The opportunity in Europe could well be 100 or 150 or 200 clubs,” he says. “Why not? Germany is a bigger country than the UK, and Spain a similar size. And I think our model, with its sheer breadth of offer, also has significant potential in France and Holland.

“But it’s very, very early days for such speculation. We don’t yet have much experience of those markets. When I look back to my time at Merlin, I had a sense of how different brands would perform in different parts of the world based on history. At DLL we have too little history to have a clear sense of the roll-out potential. However, my instinct is that there could be a really big opportunity.

“We’ll have to monitor how our new clubs perform though. We know our older clubs in Dublin, Brussels and Barcelona are successful, but we need to see how Antwerp does – that club opened in May this year – as well as Madrid when it opens, because those really are examples of how our core product will look going forward.

“We also need to see if we can roll out multiple clubs in cities like Hamburg, Berlin or Munich. If it works there, then there are a lot of similar sized cities we can look at.

“So the strategy is certainly a European one – and there could even be an opportunity globally, although that isn’t the primary strategy. But as a starting point, we’ve been in discussions in India for some time now for a jointly branded David Lloyd-style offering. It isn’t absolutely a done deal, but I would expect it to go ahead.”

Culture change
Ambitious plans then – but Earlam certainly seems to think it’s achievable having steered the company towards a point where, he says: “We’re the best we’ve ever been.”

To get to that point, there’s been a huge amount of work behind the scenes, as Earlam explains: “TDR Capital [the private equity owners of David Lloyd Leisure] felt there was a lot of unlocked potential in DLL, because it was very centrally led. When I met them, what most interested them from my time at Merlin were my thoughts on culture change, and how such change can positively impact the service provided to customers. That’s what TDR felt DLL needed, and I believe they were right.

“When I joined DLL, we spent six months going through what we now call the transformation programme – a hugely collaborative culture change project involving all 7,000 company employees. Together we’ve built new values, a new vision and new strategies – and thanks to the way we’ve done it, they’ve been bought into by everybody. Our employees feel ownership because every single one of them had a chance to input their ideas and comment on the various drafts along the way. We let people pull things apart, improve it and come back to us.

“Then, at the end of the process, we wrote to everyone and said: ‘This is the new direction – I hope you enjoyed being part of it.’ And now everyone has a personal objective based around each one of the new strategies.”

Decentralising the business
Central to this transformation programme is a new value dubbed ‘freedom to succeed’. Essentially a move towards decentralisation, ‘freedom to succeed’ empowers individual general managers to make their own decisions and implement ideas they feel will work in their specific location, albeit within set brand parameters.

“We have 93 clubs, so we have 93 separate businesses which all have to meet slightly different needs,” explains Earlam. “We’re therefore allowing people to try things locally rather than issuing edicts from HQ. It may not always work – you can’t give people freedom to succeed, to run their business as an individual unit, without accepting the fact they will get some things wrong. But that’s part of the transition. We don’t all have to do the same things, as long as we’re all aiming towards the same end goals.”

One key goal for Earlam is driving engagement in the gym, both between members and staff and among members. “Gym engagement is a weakness in nearly in all health and fitness organisations – it isn’t unique to us. But we’re looking at this from top to bottom, because I’m adamant that one of the ways David Lloyd should differentiate itself is that we should engage our members in a way that’s better than anyone else.”

Some of that will involve fun initiatives devised locally – one club Earlam refers to had set up an Olympic challenge to tie in with Rio 2016, while another had launched short stretching classes because members weren’t stretching enough before their workouts. Other programmes are estate-wide, such as the functional Synrgy classes which take place on the gym floor to create interaction and buzz.

But staff attitude is also key, and is something DLL is giving a lot of attention. “We have an initiative called SEE 5, which for our staff means: whenever you’re within 5ft of a member, smile and acknowledge them. We don’t want to be prescriptive in how you interact with them, but don’t walk past without acknowledging them in some way.”

Learning to interact
Acknowledging that many staff find it hard to approach people mid-workout to engage with them, Earlam led by example and challenged the exec team, himself included, and all regional managers to attend a two-day course – a course all general managers have also now attended.

“I was astonished how much I learned. I thought I knew quite a bit about these things, but it appears I didn’t,” Earlam says. “After the course we all went out separately, to different clubs across the country, for a day of gym engagement.”

So what were his tactics for starting conversations when he was on the gym floor? “Sometimes I’d offer people water. I’d ask if they’d had a programme refresh recently, or it they’d tried Boditrax body composition analysis, which is a free service at our clubs – that’s the one I found most useful.

“In the end people found out who I was, so as my cover was blown anyway I’d go up to people and say: ‘Hi, I’m the CEO of David Lloyd – could you tell me what it’s like?’ It was my own version of gym engagement, which is just about being honest.

“The whole idea was that we wanted to send a signal to every member of staff in the organisation that this really matters. We want people working for us who are good at talking, good at trying to understand what members want and who genuinely want to help.

“We desperately try and encourage even the personal trainers, most of whom are employed by DLL, to just talk to people on the gym floor. Try and help members and your business will flow from that. Don’t hard sell.”

He continues: “I believe gym engagement has to be as important a measure as PT revenue, which has traditionally been our primary focus in the gym. So now we’re actively measuring it. We have iPads on the way out of all our clubs, with short surveys for members to feed back on various aspects of their experience that day. We’re getting about 150 responses per club per week, which is real-time data we can act on – and that’s key. If you want to improve customer satisfaction, you have to actively listen, and then you have to act on it.”

National awareness
Alongside this programme of cultural change, DLL has also been spending £76m on refurbishing all existing clubs. This project was completed by mid-August of this year, with the whole overhaul – physical and cultural – delivered in time for a first for DLL: a national TV campaign, which broke on 22 August.

The TV ad focuses on the breadth of offering at DLL, its inclusive family approach, the quality of its facilities and its true sense of club, all pulled together under the new vision: ‘My club for my life’ – the idea that DLL is the place for you, whatever your interests and whether you’re a two-year-old or an 80-year-old.

“There are too many people in our target market who don’t know who we are or what we do,” says Earlam, by way of explaining the decision to take the plunge into TV advertising. “In research we conducted, there was only a 59 per cent prompted brand awareness and a 44 per cent brand understanding.

“We’re good at sales – at impressing people with our facilities and converting them into members if they visit – but we’re not very good at getting them there in the first place. Just as a sample of one, before I first met with TDR I looked up David Lloyd. I was surprised to find my nearest club was only 5 miles away. It’s perfect for me and my family – we’re all into health and fitness and DLL gives an opportunity for us to do things together. But I didn’t even know it was there.

“And that’s replicated hundreds of thousands of times all over the country, to the point that a large proportion of our core target audience – people in the right mosaic groups, and who live within 15 minutes’ travel time of our clubs – don’t even know our name.

“But now we’re ready for them. We’ve brought a number of things together to meet at this moment in time, and we’re ready to go out to the market and say: ‘This is us, and we’re here for you. My club for my life. Please come and see us’.”