This month's Vlog is asking - is the "Equipment Availability Service" gyms offer their customers the Holy Grail of the gym industry?
Whilst many operators do not view supplying equipment to their gym floor customers as a service, in fact, by definition, if customers are paying to use equipment, that they themselves do not own, this is a service.
This is a service level metric that can in fact now be measured, and therefore managed, and our evidence, supported by others, is that it is the single most important 'service' gym customers are buying, directly affecting customers satisfaction, retention and growth - and is possibly the Holy Grail of the gym industry.
This Month's Vlog is dealing with an interesting fact GYMetrix has discovered, that each gym has a unique demand pattern and therefore a unique equipment requirement. It dispels two commonly held myths in the industry:
1) That demographics determine the equipment requirement
2) That there is a one size fits all golden equipment ratio.
Last month's Video Blog created a bit of controversy with one of the criticisms leveled at the 'Pull' Model being that it would stifle innovation and new products, as customers would be unable to 'Pull' new products onto the gym floor.
Indeed innovations would need to be 'Pushed'. However this does not lessen the need for measurement and review.
This month's Video Blog is on how operators can use a new methodology aimed at helping innovators innovate more effectively by a fellow called Eric Reis in his book 'The Lean Start Up'.
Over the next decade Gym Operators are going to switch from an "Operator / Supplier Push" equipment model, where they "Push" equipment into gyms with no understanding of customers demand levels for the kit, to a "Customer Pull" Equipment model, where they will buy equipment focusing on the customers demand levels for it. This will result in gym operators providing a better service with lower costs.
Jack Welsh the legendary former CEO of GE said - "Show me a company's compensation plans and I'll tell you how its people behave". Sales Reps make money selling high margin cardio kit and not selling low margin kit like benches, dumbells and Soft stretching Mats which has resulted in an oversupply of expensive kit and an undersupply of cheap kit into gyms ... this will change and cost suppliers millions .. but make operators millions!
Many gym operators are confusing equipment 'buying' trends with customer 'usage' trends, and buying equipment that does not get used - Functional Equipment being a prime example.
Now that we are measuring customers' usage of equipment, operators can respond to customer 'demand' trends for the first time - A huge increase in Free Weights usage, and a huge increase in Females using Free Weights being examples of this.
GYMetrix has introduced a new metric to help its clients better understand the true costs involved with providing their customers with gym equipment and to help them become more profitable.
It's called the Cost per Hour Used for gym equipment, and while it may not sound very exciting, the insight this metric provides will certainly make operators sit up and think. For the first time, we are able to give owners and operators a true picture of how efficiently they are buying equipment for their customers. It goes beyond simply looking at how much equipment costs but makes this relative to how much has been supplied and how much customers are using it. It enables us to quantify the cost of operators buying more equipment than they need, and shows how this reduces their profitability.
After analysing hundreds of gyms across the country, GYMetrix has made a profound discovery that has farreaching implications for operators.
It is the direct relationship between customer growth and the amount of equipment on the gym floor. Using all of our data accumulated over the last few years, we have been able to plot this relationship on a graph, which we've called the GYMetrix Curve.
Free weights are one of the most popular types of gym equipment today. In our equipment rankings, compiled from surveys with +25,000 gym goers, free weights are men's most popular, but they are also in the top 10 for women. In fact, our studies show that of all the complaints that people have with gyms, the lack of free weights is the most common.
One of the early, surprising, discoveries that GYMetrix made, was that each gym we measured the equipment usage, the customers demand pattern was different, and therefore the equipment requirement was different.
We did not expect this, and it was particularly surprising with gyms that had identical demographics and were geographically very close to each other. We expected these gyms to have very similar demand patterns, but in fact each gym we measured was different.
One of the biggest opportunities operators have to vastly improve their customer offering is when they are going to spend a lot of money buying new equipment for their gym.
This presents the opportunity to make huge gains in the value offered to customers, but the lack of 'Measurement' of customer demand and equipment usage prevents operators scientifically and systematically being able choose the correct equipment, in the correct quantities, with the correct layout to maximise their return on investment.
GYMetrix has now proved, with hard data, 7 Assumptions many operators use when refurbishing gyms are False! - 'Not Fit For Purpose'.
Analysing approximately 15,000 gym floor surveys that GYMetrix has done, across all sectors, reveals that men are generally more frustrated than women because there is not enough of the gym equipment they want to use. This translates to men being generally less satisfied with their gyms overall, with lower Net Promoter Scores (customer satisfaction scores).
GYMetrix not only attaches sensors to gym equipment to measure its usage, we also conduct face to face gym floor surveys asking customers what are their favourite 3 types of gym equipment. It enables us to see the different equipment choices that men and women make in a gym. Here are the results!
Following the last case study that we sent out, proving the link that exists between the service operators offer customers for 'Equipment Availability' and their satisfaction with the gym, as measured by their Net Promoter Scores (NPS), we received a number of enquiries as to what impact these increases in NPS had on revenue, if anything.
I got back in touch with Mark Tokeley from Renfrewshire Leisure and asked if he would mind sharing his revenue figures from The Lagoon - please see the Case Study - Higher Net Promoter Score Impact on Revenue Growth.
Once again we have been surprised! The revenue increases are massive. One of the advantages of NPS over other customer satisfaction metrics is that it has proven links with growth, and for Renfrewshire leisure this was most certainly the case, with revenue increasing from a stagnant base line by up to an extra £25,000 per month! That is an annualised increase in revenue for the gym of £300,000! And revenue growth is still rising!
Setting up gyms is no longer guesswork, art work, and gut feel, it is now a science.
The results speak for themselves.
In the Case Study - The Importance of Equipment Availability to Gym Customers are the results of over 14,000 customer surveys, and it also shows how one of our clients increased their Net Promoter Score by 181%, from 27 to 47 and now to 76, one of the highest Net Promoter Scores (customer satisfaction) measured in our industry!
If you are not familiar with 'Lean Thinking' it has been around since the late eighties and is highly revered at identifying value from the customers perspective, focusing on increasing it, whilst at the same time removing 'waste' that adds no value to customers, but reduces costs for the operator.
Its methodology is Globally well established, used across many industries and used by the worlds most admired companies, although I could not find any evidence of its application in the Health and Fitness Industry.
Here is some very interesting results of over 2,500 gym floor customer surveys, asking customers to rank, from a list, what is most important to them when choosing a gym. I have not met an operator yet who has guessed the top 3 correctly, and yet the top 3 are the top 3 for almost every gym we have surveyed at!
Please see the Case Study - What is important to customers - this is the first time we have consolidated all of the surveys we have done for our public sector clients.
GYMetrix is the first company in the fitness industry to focus on measuring precisely what service level 'equipment availability' is (the inverse of equipment usage) for customers while simultaneously doing questionnaires and measuring customer satisfaction.
I thought I would share the results from Renfrewshire leisure, who followed our advice about what equipment to buy, and we then went back in to test the equipment availability, and measure the customer satisfaction.
The extent of the positive impact surprised even us, a jump in the Net Promoter Score (Customer satisfaction) from 27 to 47! You can find out more by reading the Case Study - Increasing Customer Satisfaction.
A jump in customer satisfaction to that extent is simply astounding, and highlights the simple truth, customers join gyms primarily to use the gyms equipment. If equipment 'availability' is low and they cannot use it, the value to them of the gym drops sharply as does their satisfaction with the gym. Solving the problem of bad service through low equipment availability makes a massive impact on how happy customers are.