Originally Posted: 02/13/09
I recently visited an old friend and client, Todd Levine, from Rochester, New York. He is a really good owner when he feels like it, and an average one during golf season, but last year, despite all the negative images about the economy and what is happening financially in the world, Todd had a record year.
He operates a couple of Gold's Gyms. His flagship club his about 25,000 square and represents a lot of forward thinking compared to many other owners in the industry, and especially in that franchise which often bases a new club on the amount of equipment it can hold. Todd's isn't a particularly beautiful club, but it is a very effective business, and I got a fresh perspective after spending a few days with Todd and his young business partner, George.
When I walked into the club on a Wednesday evening, Todd and George had over a 100 members working with a team of trainers doing group functional. It was sold as a weight loss challenge but the reality was that is was functional training in motion. The members were smiling, screaming and having fun all over the club and the energy was as good as it can get on a frigid night in Rochester.
The interesting thing to me as I sat and watched was that the trainers were stuck in holes all around the club. They were using the walkways, the group room, a small, dedicated functional area and just about any other space they could find that was open. The bobbed, weaved and leaped around all the traditional equipment that sat empty in the middle of the club.
This started a discussion about what is called money zones. Money zones are areas in the club that derive the most income over a year's period of time. Todd calls them touch zones in his club. He recently has a couple of owners from another club visit him on a Saturday and he took them through his place at the peak Saturday morning traffic hour.
According to Todd, the group rooms were packed, the functional area was filled, and he admits that this area is currently weak in relationship to the rest of the place, and the free weight area was filled, the cardio was going and members and trainers were using all the rest of the space that was open.
The epiphany moment for the guests was the fact that the fixed equipment was deserted. As Todd described it, the club was running at a high capacity and it seemed that the members were actually working around the fixed equipment.
The working areas that were filled are called the touch zones. These are the areas of the club where members interact with each other and a staff person rather than being on their own just using the equipment. Group exercise is a touch zone because of the group dynamics. Group personal training is a touch zone because of the relationship with the trainer and the group. Even your front counter is a touch zone because that is where you have a chance to demonstrate customer service to every member as they enter and leave your business.
I call these money zones because touches equal member retention. Keep in mind that Todd was one of the original Gold's Gyms in the country and he was showing me that his single joint fixed equipment had that lowest use of anything in his business. The money zones made his business and he credits his success on how well he and George get their members involved in anything besides just sitting on a piece of fixed stuff that is 30 years out of date.
As a result of this discussion, we redesigned his club during my visit. We eliminated about 15% of his fixed stuff, opened up designated areas in the club for functional space, ordered about $4000 worth of new functional tools, which represents a very large number of new toys for your trainers and members, and reset his membership to reflect group personal training.
The lesson to learn here is that during a flat year for many this guy had a record year, and he did it using a simple approach. His focus, and yours should be for this year, was on working toward maximizing your strengths. Most of you will find that you have these money zones in your club, and most of your clubs will have almost the exact same areas that are full as Todd does in his club.
During 2009, exploit your money zones and kill your black holes. If your members and trainers are working around your field of fixed equipment, get rid of some of it and open up some training space. If you don't know what to do in that space, come see me in a seminar this year. We are showing clips and actually doing workouts illustrating what should happen in your businesses. And don't forget that the Perform Better Summits are just beginning for the year and you can experience some of the magic there that you need to take back to your club.
We have come to think over the years of the equipment in the club as our product, and we were wrong. Your staff, the energy in the club and your ability to touch people each day is what people want and is what we should sell. We have become lazy and just buy more and more equipment thinking that our purchases represents service. It doesn't and the member knows that, which is why you lose so many members to fresh competitors. If all you sell is the right to use a giant field of outdated crap, then you deserve to lose your members to a guy with a bigger and better field of crap. If you don't relate and service your members, then they have no reason to stay with you since it is all about the equipment and not the relationship
People involved in relationships don't leave your business. People who are touched stay longer and pay longer, something Todd and his team proved during a tough year. And keep in mind; he did it in Rochester, which is not exactly the club capital of the world.
2009, The Year of the Money Zone
I like it, and I hope you spend the year building your zones and killing those nasty black holes.
What I am reading now: Beyond Bullet Points, by Cliff Atkinson. This is a good book if you have to do any type of presentations in your business. My friend Ernst from Austria recommended it and it is a good read for someone who has to sway an opinion or keep people entertained for a few hours.
We have changed the format of our seminars for 2009. The entire first day is dedicated to changing the culture of your club into a functional driven business and then how to support this change through stronger point-of-sale memberships. We have gotten solid feedback on shifting training to EFT based over 12 months and on the 30-day membership for $19. If you haven't been in awhile, we have a lot new to share with you. We are also only doing two sales gigs this year, which will be based on doing more sales at point-of-sale. We are using a new price structure for those as well based upon training more of your people more cheaply. This year's price will be just $89 per person for the entire two-day seminar with a lot of customer service too.