In the beginning, most gyms were pay-as-you-go businesses, competing for customers on the basis of good customer service, great equipment and competitive pricing. But as time went by, some bright spark realised that securing customers on a gym membership meant they wouldn’t have to worry about any of that for the next 12 months!
Gyms have bills to pay just like any other business and the opportunity to secure revenue through a membership for the next 12 months was naturally an attractive thing to do. The problem for gym owners though, was that only a few customers wanted to sign up to such financial commitments whilst there was still the option to just pay for what they actually use. As time went by gym owners began to artificially inflate pay-as-you-go prices in order to make gym membership appear to be the cost effective way of keeping fit.
They developed marketing campaigns so that customers felt they had no choice but to sign a contract if they wanted to get fit, even though many of them knew that their personal circumstances may change such as moving home or changing job which would make their membership completely unpractical.
Having inflated the pay-as-you-go gym prices and forced customers into a corner, gyms were then able to demonstrate their ‘generosity’ by offering to waive the up-front joining fees (yes they slipped these in too), offering a free induction (lucky you) and promoting offers such as ’12 months for the price of 10′ when in fact many customers were uncomfortable signing up for more than a couple of months at a time anyway.
In the space of a few years gyms had managed to shift the risk in their business entirely away from them and on to the customer instead. No longer would the gym have to worry about competing for customers every month once they had secured people onto a gym membership. Standards began to slip as complacency set in, membership management companies carved a niche for themselves by threatening legal action on customers that wanted to leave their contracts early.
Gym sales teams, dizzied by commission, would say and do anything to get people to sign the contract and then wash their hands of it a few months later when the naive customer took them at their word only to have the small print read back to them by an officious gym office manager.
However, the gym industry is now at an evolutionary tipping point which could see the membership dinosaurs wiped out by the meteorite that is heading its way, powered in part by the current financial crisis. A recent High Court case has already landed the first blow by condemning the contracts used by the gym dinosaurs as being ‘unfair and unenforceable’. But it seems that gym customers are increasingly waking up to the trick of the gym industry and are beginning to rebel on their own by looking for more and more flexible options, no longer willing to cough up 12 months of payments regardless of how often they are able to go.
The good news on the horizon though is that some gym dinosaurs are evolving to meet this challenge. Whilst the big clumsy gym dinosaurs will bury their head in the sand and continue to force gym membership onto people until they are wiped out, others are showing some real survival instincts.
The rise of the budget gym with no contract and low prices is a real start, whilst other gyms are becoming more accepting of the original pay-as-you-go gym passes which has started to entice more people back into their gym.
Although much of this article is, admittedly, slightly tongue-in-cheek, there is almost certainly an element of truth in there which many people will recognise (including some gym operators…) but the tide is genuinely turning.