Competing with the budget clubs

Rafi Mohammed, PhD

Club owners, like most businesspeople, are intimidated by things they don’t understand. So they spend their time on marketing, membership and programming. But if they’d invest half a day, or perhaps a day, to create one or more intelligent pricing strategies, and then implement them, they could reap a huge return.

For example, most clubs recognise only two pricing levers: one to push prices up, and one to push them down. However, in my book, The 1% Windfall: How Successful Companies Use Price to Profit and Grow, I offer more than 50 different ways to think about pricing. Club owners just need to become proactive and creative.

Price is the compensation for the hard work companies do and the financial risks they take. You can create a foundation for better pricing by bringing price and value into alignment.

Keep in mind that value doesn’t mean the lowest price. In fact, club owners are too quick to discount memberships because, while many offer great value, they tend to underrate themselves. Instead of trying to lure new members with low prices, they should consider offering different membership options. I’m a big fan of good, better and best versions of a membership – a pricing strategy that allows customers to self-select and make value choices.

We see this in other service industries. Alongside their regular dinner menus, restaurants have long offered ‘early bird’ specials, which are great value for price-sensitive diners. The ‘chef’s table’ offers equally great value for high rollers who want to splurge and interact with the chef.

Why, then, do clubs feel obligated to offer all-inclusive memberships? Why not break out group classes and other special offerings? This would, for instance, permit clubs to set prices a little lower for customers who don’t sign up for classes.

It’s important to recognise that a discount today hardly guarantees a pay-off tomorrow – it often simply devalues the club. That said, the proliferation of budget clubs is a hot topic because it’s a real challenge. Unfortunately, if budget clubs offer the same equipment and services as yours, then you’re commoditised and you’ll probably have to lower your prices.

But it’s rare that any two clubs are identical, so you need to identify what sets yours apart that justifies charging a premium. If a US$11-a-month club just opened down the street, you should ask yourself: why should people choose my club over that low-priced club?

To answer that question, you need to create a value statement, and this isn’t the time to be modest. This is designed, in part, to boost the confidence of your staff, so take the time to understand what sets your business apart and communicate those defining differences to your staff, your members and potential members.

Then you can focus on ways to increase value, from offering health and workout tips to expanding your menu of social activities. You have to be proactive, but when you really think about what your club has to offer, you’ll be surprised at what you’ll find.

Rafi Mohammed, PhD, is a pricing strategy consultant who spoke at a recent IHRSA event.

Consider offering good, better and best versions of your membership / Photo: shutterstock.com/racorn

European Congress speakers named

The general sessions speakers for the 14th Annual IHRSA European Congress have been announced: Jonas Kjellberg, one of the creators of Skype, and Annemarie van Gaal, a financial columnist in the Netherlands.

Kjellberg will speak on entrepreneurship and creating a winning sales culture.

In addition to being one of the creators of Skype, Kjellberg was the founder of Player.io, which was sold to Yahoo, and chair of iCloud, sold to Apple. He lectures on entrepreneurship and creating a winning sales culture at Stanford University and the Stockholm School of Economics. He is also an avid investor and coaches entrepreneurs.

Meanwhile, van Gaal will speak in a session entitled ‘Doing Unconventional Business’.

In 1990, van Gaal co-founded the media company Independent Media in Russia. Due to its unconventional approach to the market, Independent Media rapidly grew from a company with a turnover of US$1.5m and 15 employees in 1992, to become the leading publishing house in Russia by 1998, with a turnover of $80m and 700 employees.

Since 1998, Independent Media has been the leading publishing house in Russia and the Ukraine in the field of consumer magazines, newspapers and trade publications. Consumer titles include the Russian editions of Cosmopolitan, Good Housekeeping, Harper’s Bazaar and Men’s Health, as well as a number of newspapers including English language daily The Moscow Times, The St Petersburg Times and Vedomosti – a Russian language daily produced in a joint venture with Financial Times and The Wall Street Journal.

In 2001, Independent Media was sold to Finnish company Sanoma Media and van Gaal left Russia for the Netherlands, where she now manages her own companies, is active as a private equity investor and is a columnist for the leading financial newspaper Financieel Dagblad. She’s also the author of several bestsellers on financial subjects and was one of the ‘dragons’ in the Dutch version of Dragons’ Den. Many of her activities and much of her time and profits go towards projects that help eliminate poverty in the Netherlands.

The European Congress is set for 16–19 October at the Beurs van Berlage in Amsterdam. Visit www.ihrsa.org/congress for more information and to register.

Keynotes: Media entrepreneur Annemarie van Gaal

Keynotes: Skype creator Jonas Kjellberg

This year’s European Congress will be held in the lively Dutch city of Amsterdam

About IHRSA

Founded in 1981, the International Health, Racquet & Sportsclub Association is the only global trade association, representing more than 10,000 health and fitness facilities and suppliers worldwide.

To learn how IHRSA can help your business thrive, visit www.ihrsa.org
Locate a quality IHRSA club at www.healthclubs.com

The activity alphabet

IHRSA has published a new A–Z book that’s designed to educate children about physical activity from an early age

When Jay Ablondi, IHRSA’s executive vice president of global products, was reading to his daughter Elle, now aged 3½, he noticed there were plenty of alphabet books on the market – but not many that had an exercise-focused message.

That gave him an idea. Rather, it sparked an old idea that had been shelved for more than five years. Ablondi and Stan Tran, IHRSA’s association management systems administrator, had started work on a children’s book in the late 2000s, but put it on hold due to time restraints and the recession. With his new revelation, Ablondi went to Tran and set a deadline for the two of them to finish and publish the book.

A first for IHRSA
Active from A to Z, IHRSA’s first foray into children’s publishing, became available for purchase in May. The 56-page publication is full of bright illustrations by Tran that complement Ablondi’s rhymes about animals being active and accompanying fun facts.

“I feel I have good editorial instincts, but I never thought myself as a writer or author,” says Ablondi, who oversees IHRSA’s magazines and reports. “But this idea took on a life of its own. It became easy to do because I immersed myself in children’s early education books. It just flowed.”

Tran is the man behind IHRSA’s
CBI magazine cartoon, Out of Shape. IHRSA dipping into the children’s book pool shouldn’t be too surprising. Part of its mission is to help provide solutions for the growing obesity epidemic and dearth of activity among both adults and children; a book that IHRSA hopes will get kids interested in exercise, with their parents’ participation, fits perfectly.

“Kids and parents need to understand that exercise should be an important part of their lives,” says Ablondi. “The idea of the book is to help parents teach children that not everything is about sitting in front of a computer screen and watching TV.”

With bears playing baseball, cheetahs on cycles and elephants on ellipticals, children will be introduced to new animals, physical activities and exercise equipment.

“This book will introduce children to new sports,” adds Ablondi. “They can try things like racquetball or skateboarding over time, but why not expose them when they’re first learning? It’s never too early to instill healthy exercise habits.”

Getting kids active
Conveniently, another part of IHRSA’s mission is to help grow the industry and its member clubs – and those reading the book now could easily become members of IHRSA clubs in the future.

“Many health clubs don’t cater to children, but they can still convey the message to parents that they should be instilling exercise habits and making it fun to exercise at an early age,” explains Ablondi. “Parents want their children to live healthy lives. What better way than to have exercise as part of their daily routine?”

IHRSA associate member Helix, creator of the lateral trainer, sponsored the book. President Lenny Snyderman says the book struck a chord with him: “Today, we see fewer and fewer kids exercising, with limited freedom due to safety concerns as well as the growing dependence on electronic activities.

“I was very pleased to see someone taking the time to write about children and fitness, while using the power of IHRSA to raise a subject that really needs more focus in our country.”
Jim Schmaltz, editor of IHRSA’s Get Active! magazine, and Samantha Cuozzo, designer for CBI magazine, also contributed to the book.

Priced at US$13.95, Active from A to Z is for anyone who wants to illustrate the virtues of physical activity to kids in an entertaining way. It’s available in either print or PDF formats at www.ihrsa.org/active-a-to-z, and through online retailers including Amazon.

A-Z brings the notion of exercise into learning the alphabet