The Blog of Dr Paul Bedford
With so much new technology that claims to aid retention are we ignoring what’s right under our noses? We explore what’s out there, the challenges operators face in implementing new innovations and how we can overcome them.
The Walled Garden
The infrastructure of our industry's membership management technology is inhibiting our ability to move forward and more often than not it doesn't interact with other technology, behaving like a walled garden, as software companies try to do it all themselves.”
I believes it’s a question of build or buy. Large operators with their own software engineers are in a far better position to develop their own retention technology, such as US-brand Equinox, which has built an AI-led digital coach, that learns customers’ habits to keep them engaged, into its mobile app. Smaller operators can commission projects, but it’s fraught with challenges and there’s massive cost associated with keeping software up to date.
It’s a rock and a hard place situation. To keep customers, membership management software companies (MMSC) create solutions themselves, but many are nowhere nearly as good as the best in class alternatives and it can be a real challenge convincing them to integrate third-party solutions, particularly if they have their own competitor product.”
However world-renowned technology expert, Bryan O’Rourke, says it’s not the software providers’ fault: “There are some great MMSCs out there, but the market is complex, with many different business models. There is no one size fits all and every time someone wants to integrate a new product, money has to be spent on an API.
“Added to that, consumers are exposed to technology in every aspect of their lives, so expectations outpace fitness business delivery models. It’s a natural gap. The ones winning are those that move fast enough to reach consumer desire before others can; the ‘genius’ health club brands that represent just 5% of the market.”
As demand from operators looking for data to better understand their members increases, US beacon technology firm, Gym Farm, might just be the to help them. COO, Matthew Schober, says: “A year ago MMSCs were very closed off, but they’re starting to feel the pressure. Based on the sheer size of our features and the speed we can build them, MMSCs realise they have to integrate with us. It’s almost a requirement to have these features built in; without them they’re behind.”
I agree, beacons are traditionally used for sales, in sports stadiums and shopping centres to get people to buy a hot dog or lure them into a shop, but they offer a ‘right time, right place, right content’ opportunity for fitness providers.
Again, Equinox is ahead of the game, having already deployed beacons across test clubs to track users’ patterns throughout their member journey. “We’re sitting on some fabulous capabilities, but the market’s just not ready for it yet,” claims Schober. “Most clubs are just starting to dabble with beacons, mostly using them as silent monitors to understand members’ movements, but the opportunity is massive.” Insurance companies are a prime example, where incentives and rewards for good behaviour can be based on monitoring of actual activity, not just swiping in at the entrance.
“In many locations across the United States, English is the member’s second language, so there’s an automatic barrier when they walk into a facility,” adds Schober. Gym Farm supports 10 different languages and works as a fitness translator for them. “Members can wave their phone in front of kit and it plays a video on how to use it correctly. The purpose is to educate and inform - it gives members exposure to alternative equipment and the confidence to use it.”
Gym Farm’s technology integrates with equipment manufacturers (Precor and Life Fitness are the first) to automatically log members into their account as they approach the kit. It can be used to send push notifications to members in specific areas of the gym, to add workout data to health insurance records, as a digital personal trainer or even to order lunch as the member enters the cafe.
Artificial Intelligence (Ai) is another technology gearing up to aid retention in the fitness market. It could soon be creating personalised exercise programmes, simply using statistical analysis and the application of machine learning to data.
“Every two days we create as much data as we did from the beginning of time until 2003, but only a third is stored in traditional accounting format such as columns and rows. Ai can unravel the other 70%, quickly computing huge amounts of data from various formats, including images,” says Bedford.
CoachAi is virtual coach using Ai-driven behavioural psychology to help people make exercise into a habit. It is currently being piloted by three health club brands in Israel, including the country’s second largest chain, Space.
“We’ve identified the key psychological, social and logistical problems that cause dropouts and created an Ai solution to address them,” says CEO, Shai Neiger. “CoachAi has been shown to increase members’ attendance by up to 96% by motivating them and reducing friction associated with going to the gym. We’ve tailored fun content, including images and video clips, to drive people through the difficult process of behaviour change. You can ask questions and the chatbot responds; a two-way conversation designed to give tailored advice. Coach Ai continually learns from its interactions and how each individual communicates, so we can create personalised solutions that stack the odds in their favour.”
Schober believes the revenue share provided by companies like Gym Farm will help member management companies open up to the idea of integration. He says: “The industry sees this as a breath of fresh air because everyone is starting to work together; the insurance companies direct customers to clubs with better equipment, which helps our partners sell more connected equipment. This drives members into clubs, boosting the operator’s revenue. It’s a win-win situation as by better understanding the member journey, operators can show a higher level of care, offering a more personalised service to each and every member.”
I would advise those operators with their hands tied, waiting for integration of these space-age capabilities, should look closely at what they already have. Existing CRM technology can be used to make a business more efficient but also more impactful. The membership management software can generally do more than just sales, but operators often aren’t using products to their full potential and retargeting is a good example of that.
A retargeting pixel, which can be embedded into a webpage, can ‘stalk’ customers during internet browsing with banner and bar ads. But it’s rarely used for anything other than sales. It’s really easy to use this tactic to improve the customer experience too, helping the member to feel important. Rather than continually pushing sales messages, ask when they are next coming in or if they need your help. Tell them what other members are doing that they might want to try or ask if they fancy a swim this week. Traditional marketing teams are so used to thinking about selling products and services they often don’t see the retention opportunity.
However O’Rourke believes it isn’t simply a case of ‘what are the best products’ and advises operators to spend time auditing how their business addresses the user experience and how they’re going to compete. “You can't just keep layering on solutions to an existing business model without scrubbing down to the base boards. You can have a great product, but if you're just putting that on top of the original system it won’t work.”
This content also appears in the April 2018 edition of Health Club Managment.