Motivation and Inspiration

Studying Fitness Club Loyalty

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-By Aleisha Parr

David Lowe, CEO of Genesis Fitness Clubs, spoke with us this month about his Doctoral research project exploring the factors at play in client attraction, retention and loyalty within the Australian fitness club industry.

“The fitness club model operates on a paradigm of ‘what happens in the USA eventually happens here.’ This paradigm has never been questioned and this is epitomised by the current rapid progression of small footprint, low service, low cost 24/7 clubs. This was the pattern in the USA several years ago; it is repeating itself here and most of the players in that niche are the same brands as did it in the USA.

“My research project is a Doctoral academic project and seeks to identify clearly the true factors that cause Australians to firstly join a gym and then secondly maintain (or abandon) that membership.”

Though Mr Lowe would not reveal the confidential aspects of his discoveries through the project, he did comment that “preliminary results indicate the paradigm may be an incorrect philosophy for the industry to operate under.

“Obviously my findings will be kept somewhat privy to Genesis for strategic advantage purposes,” he explained, “however my research to date validates the full service, large footprint model of gym for the longer term advantage in the market. It demonstrates that the low cost, low service, small footprint model is probably only commercially sustainable on a broad scale in the short to medium term and this is now showing up in the USA. The problem for the market is that it seems some damage can be done to the target audience by this model by effectively ‘burning’ them through bad experience.”

While Mr Lowe’s study is still underway, he has been applying those principles of service which have driven his studies to the work at hand with Genesis Fitness. At present, the company is Australia’s second largest full service large footprint health club chain, offering fifty-one outlets nationally and with growth plans to achieve sixty clubs by the end of 2013. At the same time, Genesis is “taking the small 24/7 clubs head on” by offering a hybrid model of service. The company has launched a new brand called GenX 24/7 which will enable clients to enjoy fitness services at all hours, either under the same roof as the full service club or in a nearby satellite location. Says Mr Lowe, “We will have five of these [clubs] operating by 30 June, with plans to continue adding them where appropriate. Under this model members can have the ‘best of both worlds.’”

The company prides itself on a commitment to supporting its members and their goals through a variety of offerings – including: group fitness with a strong affiliation to Les Mills; an extensive range of personal training options; and large numbers of a wide range of exercise equipment. Boasts the company website: “A local activist within the local community, Genesis aims to be the catalyst that unites and inspires our local community to be fitter and healthier than ever before.”

“Apart from personal improvement,” says Mr Lowe, “in my previous role I serviced the industry and I saw many players struggling in business and felt as a service provider to the industry the research project I identified could add value to my customers in focussing their businesses.”

Mr Lowe stepped up into the role of CEO just twenty-two months ago, joining the fitness giant at the cusp of its new plan for development under a rapid growth model. Although the company itself has been in Australia for nearly twenty years, the first three quarters of this time was spent building the company slowly from one to eight locations, under a company owned and operated model. Just six years ago, the business changed hands, resulting in an extraordinary shift in the company’s operational focus, launching the small company into national notoriety overnight.

“The current owner wanted to embark on a rapid growth plan to see the brand form part of Australasia’s largest and best health services provider and that remains the vision today. Growth recently has been rapid to the point that we now have fifty-one clubs and plans for sixty by December 2013. We have added thirteen clubs in the twenty-two months I have been CEO.”

This shift, while stemming from the promotion of the company’s Mission Statement (which states: ‘We are the motivation and inspiration for all Australians to participate in regular physical activity.’) as well as its extensive set of systems and procedures, is likely more a response to the reenergised company’s focus on building strong relationships based on its Values: ‘passionate, involved, integrity, fun, vibrant.’

Mr Lowe is quick to agree. “It is true to say that it is the people and their attitude along with our owner/operator model that best underlines our success. This model makes us more engaged with the local community and best able to deliver on the unique needs that the demographic demands of our product. A one-model-fits-all approach does not necessarily work in this industry, so our system is a framework that local flavour can be incorporated into through empowerment of local ownership.”

This local ownership is enabled through the company’s development of its franchise model – enabling Australians the opportunity to take ownership of their health as well as their wealth. “We differentiate ourselves in the market through service,” states Mr Lowe, “and our franchise model places us in a very strong position to do this.”

While the model itself is indeed quite strong, especially with the backing of Mr Lowe’s own Doctoral academic research, certainly too the enthusiasm of Genesis Fitness Club franchisees is driving the company’s growth faster and with more stability than anyone could have expected.

“It is my firm belief that many of our staff epitomise our values,” states Mr Lowe, “and certainly these are the types of people we seek out when employing. Typically many of our staff are Gen Y so much of this comes somewhat naturally to them.”

In recognition of the dedication and hard work of these entrepreneurs and their employees, the company promotes an award programme, in place for staff and clubs as a whole, and aims to reinforce the company values in all of its in-house training programmes.

“We aim to ensure our staff know all their members by first name and one thing that sets us apart from our main competition is that we operate the overwhelming majority of our outlets under a franchised model, so our members can rely on the fact that service standards will be higher because the ‘man who owns the store runs the store’ and has a vested interest in service delivery.

“The other thing that we openly promote in Genesis is that we are a ‘family’ and extol family values not only within the group but also attempt to extend this to our membership as well. Genesis is part of the Belgravia Group of companies and as such has the strength and backing of that group.”

Genesis is truly the “fitness club for everybody” as its slogan states. Concludes Mr Lowe, “We can only achieve this through our family values, community focus, local ownership, and full service model that offers plenty of variety whilst maintaining a personal approach. No other player in the market can boast this unique blend and it underpins our success. It also is the reason why members at a Genesis club can expect a superior experience overall.”

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

July 20, 2018, 9:00 AM AEST