A few weekends ago, I was at a fundraising and networking event in Toronto put on by my friend Sol. Most of the folks participating run online businesses – and I’ve been struck by the differences between operating a brick and mortar gym and operating an online business built largely on selling either information products or coaching.
At SLSC, we’ve been prioritizing reinvesting in our operations heavily for the past year and a half or so.
There are a bunch of things that we do that were surprising to some of the folks who operate online businesses.
And, while I’ve thought about this extensively, I don’t know that I ever realized how different other folks’ perspective is on what it takes to operate a facility.
Unlike an online business or a software business, the marginal cost of each additional user of a gym is not zero. There are “operational thresholds” past which not having very tight systems and management structure erode the quality of the product being offered enough that retention starts to suffer.
There are also social dynamics at play that result in fracturing of the larger community into cliques and factions.
Once these things start to happen, you need to invest heavily in developing staff, systemizing retention practices, and constantly elevating the customer experience.
So, there’s almost business “plateaus” where the reinvestment necessary to push you to the next level (by increasing conversion and decreasing churn) are just at or outside of the amount of cash flow that the business is currently able to generate.
Here’s a few of the things that we’ve done over the last year or so that are a significant cost to SLSC in terms of payroll, but that we believe improve the quality of the product that we offer – both by having internal management structure as well as by having employees for whom SLSC is a “real job” so that they are more invested.
•The front desk is staffed whenever we are open. This is why there are towels, why the gym is clean, and why people don’t come into the gym and awkwardly stand around for awhile before anyone talks to them.
•All of our front desk staff and regular class coaches have one-on-one meetings with a “manager.” Increasing the engagement and communication across the organization is one of the best things we’ve done to improve adherence to systems and policies, and also create an environment where people feel like they’re on the same team.
•We have weekly staff meetings and monthly front desk meetings. Honestly, we need to have more consistent front desk meetings than this, but it hasn’t been top priority in the budget.
These are the types of things that a lot of coaches think are unnecessary when they’re opening a gym – and they probably are until you reach a certain number of members or a certain number of staff.
These are also things that are easy to put off doing or things that are easy to try and fail to remain consistent with. However, these things only “work” if they are consistently executed on for 6-12 months.
As someone who doesn’t love meetings, I would have never imagined that I would voluntarily spend so much of my time in them. However, this has clearly been one of the most effective things we’ve done to improve the quality of the coaching and the customer experience at SLSC.
And, in terms of actual dollars and cents, I’m not sure that it makes sense to spend so much reinvesting in the quality of the product that we offer.
Having been at a lot of different gyms and seen the difference in quality between some gyms with 200 members, 300 members and 400 members, I don’t think that the quality of the product is the main determinant of the number of members that a facility has.
I think it has a lot more to do with total population density, amount of competition (not just from CrossFit gyms, but from bootcamps, Equinox, spinning, Peloton, etc.), how often people move in and out of the area, and how flexible the population is in terms of scheduling (ie we are limited in membership since almost everyone in downtown Chicago wants to train right before or right after work – whereas gyms in LA can have full classes from 5am-10am).
Once you are the “winner” in your local market, really reinvesting in the business for improvement in product quality may result in a few additional members on the margins, but it is probably not actually “worth it” in terms of the return on that investment.
Instead, we do it because we care about the quality of what we are offering and we have a vision for what it means to operate the gym at a certain level – and we are going to keep pushing and funneling money back into it in order to achieve that level of quality.