Uberization of the Fitness Industry
One of our clients that owns a CrossFit Box brand is currently facing a challenge that seems to be increasingly impacting a considerable number of small businesses, including theirs.
A bit of History
Back in 1974, Greg Glassman revolutionized his gymnastics training by incorporating weights, resulting in remarkable performance improvements. Recognizing the potential of his approach, Glassman established the first gym, trademarked as "CrossFit," and introduced a functional training certification program for coaches in 2000. Since then, CrossFit has gained tremendous popularity, especially with endorsements from elite military and police forces, leading to the global proliferation of CrossFit facilities known as "Boxes." This rapid expansion has attracted individuals away from traditional gyms and toward the CrossFit movement.
The Modern Society Culture of Wellness and Self-care
This organic trend has been greatly propelled by the increasing emphasis placed by successive generations on wellness and self-care, recognizing the critical interplay between physical and mental health. Moreover, the pervasive influence of social media and the rise of influencer culture have effectively amplified the promotion of fitness and the cultivation of healthy lifestyles. These factors have coalesced to create an overarching and inspiring trend, underpinning the importance of holistic well-being in our modern society.
Disruptive power of technology leading to transformative solutions
Simultaneously, advancements in technology have disrupted traditional consumption models, enabling on-demand and personalized experiences. Uber, Netflix and Spotify have revolutionized the consumption of their industries services by leveraging technology and prioritizing convenience and personalization. These pioneering companies have successfully demonstrated the power of technology-driven platforms, personalized experiences, and the convenience of on-demand services. They have reshaped consumer behavior and created a mindset that embraces the accessibility and flexibility of services tailored to individual preferences.
Corporate Gym passes reshape engagement and consumption in the Fitness Industry
It is within the intersection of these two dynamic forces, the evolving health trends, and technology's disruptive influence, that corporate gym passes have emerged as a transformative solution. By aligning with the changing expectations of individuals, corporate gym passes have reshaped the way individuals engage with fitness, empowering employees to prioritize their well-being while embracing the convenience and personalization that has become the norm in today's digital age. Gympass, established in 2008, was among the first brands to introduce this concept, paving the way for subsequent brands that cater not only to companies' desire to promote a healthier work-life balance but also to the evolving needs of individuals seeking a holistic approach to their well-being.
But what is the impact of the increasing prevalence of these passes on smaller gyms and specialized fitness communities like CrossFit boxes?
The Bright Side
Affiliating with a corporate gym pass platform provides CrossFit boxes with increased exposure to a wider audience, additional income stream, and convenient access for potential new members. It opens doors to market expansion, networking opportunities, and diversification of revenue streams, enabling CrossFit boxes to tap into new markets, collaborate with other fitness facilities, and foster long-term growth in an ever-evolving fitness landscape.
The main opportunities for CrossFit Boxes that affiliate to this kind of platforms are:
1- Market Expansion: Affiliation with a corporate gym pass program can help CrossFit boxes tap into a new market segment, particularly individuals who have access to these passes through their employers but may not have considered CrossFit before.
2- Networking and Partnerships: Collaborating with other fitness facilities within the corporate gym pass program can create networking opportunities and potential partnerships, leading to cross-promotion and shared resources.
3- Diversification of Revenue Streams: Corporate gym pass programs provide an additional revenue stream for CrossFit boxes, diversifying their income sources and potentially reducing reliance on traditional membership models. But bear in mind that those passes require a minimum number of check-ins in the same establishment within a month to surpass their fees for the fitness facilities.
The Downsides
Affiliating with a corporate gym pass platform may dilute the unique identity and community aspect of CrossFit boxes, potentially leading to a loss of exclusivity. Revenue sharing with the program can impact profitability, and relinquishing control over pricing and scheduling may limit autonomy. Competition from other fitness facilities within the program, the potential overshadowing of the CrossFit brand, and the risk of member retention challenges are additional downsides to consider.
The main threats for CrossFit Boxes that affiliate to this kind of platforms are:
1- Competition: The presence of other fitness facilities within the corporate gym pass program can intensify competition among CrossFit boxes, as members have more choices and may explore alternative workout options.
2- Brand Dilution: If the corporate gym pass program includes a wide range of fitness facilities, the CrossFit brand may be overshadowed by other more recognizable or mainstream fitness options, potentially leading to a diminished perception of CrossFit's uniqueness and effectiveness.
3- Member Retention: The convenience and flexibility offered by corporate gym passes may lead some members to explore other fitness options, resulting in lower member retention rates for CrossFit boxes.
The Biggest Challenge: Value Perception vs Actual Price
CrossFit boxes and smaller gyms often offer niche training programs, personalized coaching, and a tight-knit community atmosphere that sets them apart. They prioritize quality over quantity and invest heavily in specialized equipment and knowledgeable trainers. While these facilities deliver exceptional value, their pricing structure may not align with the all-inclusive corporate pass model.
Participating in a corporate gym pass program may involve relinquishing some control over pricing and scheduling, as these aspects are often managed by the program. This could restrict the autonomy of CrossFit boxes in running their operations.
CrossFit Boxes owners are facing some obvious problems:
Some kind of pressure to be on the list of available Gyms.
Platforms getting bigger and with more negotiation power are pushing down the price to attract more corporate clients.
Reduced profit due to lower average income per client.
Their own clients are not happy because they are paying more for the same service.
Another big problem is that their client base ownership is diluting as more of their clients are not theirs anymore. They are customers of a third player that was contracted by their employers. So, if they lose or change jobs, they will leave the client base which compromises their attachment to their brand or the sense of being part of a community and therefore… no loyalty. And we know that no loyalty equals to no guaranteed revenue.
What is the path to success?
Achieving success in the evolving fitness landscape requires careful consideration and thorough analysis of the potential impact of affiliating with a corporate gym pass program. CrossFit boxes and small specialized gyms must leverage their strengths, capitalize on opportunities, and mitigate threats to ensure long-term sustainability. While further research and analysis are necessary to address the challenges posed by the "uberization" of the industry, several factors warrant consideration.
1- Value Differentiation: Recognize the unique offerings of CrossFit boxes and smaller gyms, emphasizing the value of their specialized programs, personalized attention, and community support. Highlight the benefits that employees gain from joining these fitness communities, such as individualized training plans, camaraderie, and accountability.
2- Pricing Considerations: Establish a fee structure that reflects the added value of specialized fitness facilities while remaining competitive with corporate passes. This could involve tiered memberships, combining access to larger gyms with supplementary classes at CrossFit boxes or smaller gyms. Strive for a pricing model that accommodates different budgets while ensuring sustainability for these specialized facilities.
3- Partnerships and Collaboration: Explore partnerships with larger gyms or corporate wellness programs to create win-win scenarios. By collaborating, larger gyms can refer members seeking specialized training to CrossFit boxes or smaller gyms, fostering a symbiotic relationship. This allows individuals to enjoy the benefits of both worlds and helps sustain the growth of specialized fitness communities.
4- Education and Awareness: Raise awareness about the distinct advantages of joining a CrossFit box or smaller gym, highlighting the supportive community, tailored workouts, and specialized training methodologies. Educate corporations and employees about the unique value propositions offered by these facilities to encourage informed decisions when selecting gym memberships.
In a few words, it is imperative to differentiate their value proposition, highlighting the specialized programs, personalized attention, and community support they offer. A pricing structure that reflects added value while remaining competitive is also essential. Exploring partnerships and collaborations with larger gyms or corporate wellness programs can create win-win scenarios. Lastly, raising awareness about the unique advantages of joining a CrossFit box or smaller gym helps inform corporate decision-making.
By carefully considering these factors, investing in further quantitative research, and implementing informed strategies, CrossFit boxes and smaller specialized gyms can mitigate the negative effects of industry "uberization" and position themselves for long-term success.
💪 #FitnessIndustry #CorporateWellness #CrossFitCommunity
