This document summarizes a presentation on trends in the fitness industry and strategies for growth. It finds that while membership grew steadily for many years, more recently growth has slowed or declined. People are motivated to join by health and wellness goals but cite cost as the top reason for leaving. The presentation recommends differentiating one's value proposition, serving both internal and external customers well, and focusing on retention through quality service and consistency to appeal to members and potential members.

1. Taking It To The Next Level
Squash Ontario
Annual General Meeting
Saturday June 14, 2014
Presented by:
John Frittenburg
The JF Group

2. General Physical Activity Environment
• Activity recognized as a
positive health factor
• Clear link between fitness or
sport activity and weight
management
• There is now a defined health
care cost reduction linked to
an active population
• A healthy lifestyle is admirable
– even “cool”

3. Consider Societal and Leisure Trends
• Aging population
• Lack of free time
• Move toward unstructured
activities
• Diversity – ethnic, multi-
generational, etc.
• Competing priorities for
disposable income

4. Where the Industry is Going
• Self scheduled programs
• Focus on individual or small group activities
• Self directed learning
• Holistic wellness into fitness programs
• Home or outdoor focus
• Be environmentally friendly
• Offer a quality experience every time
• Must provide valued benefits

5. Thoughts from Milner re: 50+ Market
CEO - International Council of Active Aging
• Functional solutions to stave off physical
deterioration
• Health and lifestyle coaching
• Medical and alternative therapies
• Outreach – take your services to them
• Fall prevention
• Engagement and fun – not sweat and burn

6. A combination of US and Canadian IHRSA Data

7. A Decade of Steady Member Growth
1999 2000 2001 2002 2003 2004 2005 2006

8. But Now - More Turbulent Times
2007 2008 2009 2010 2011 2012
-3%
10%
0%
11%
2%
-3%

9. People have Choices and Sectoral
Lines are Blurred
0%
5%
10%
15%
20%
25%
30%
35%
Multi-Purpose Fitness Only YMCA Munic/N-F-P Corporate
25% 32% 22% 29%
7%
Market Share by Sector 2012

10. Year Over Year Club Usage is Fluid
2007 2008 2009 2010 2011 2012
90
101 102 98
104 99
Average Attendance - Days per Year

11. More than 4 of 10 Members are Core
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2007 2008 2009 2010 2011 2012
39% 45% 42% 44% 47% 44%
Core Members (100+ Days per Year)

12. Longer Term Members = More Club Use
0
20
40
60
80
100
120
140
2011 2012
70
79
108
104
140
115
137
123
104
99
Average Attendance - Days per Year
1 Yr
2 - 5 Yrs
6 - 9 Yrs
10 Yrs
Average

13. Motivation to Join a Club
0% 10% 20% 30% 40% 50% 60%
Get/stay healthy
Overall well being
Convenient location
Equipment variety
Reach fitness goals
Fun environment
Exercise classes
Financial obligation
Friends
Access fitness prof.
Socialize
57%
57%
53%
47%
40%
30%
20%
19%
18%
16%
12%
Why People Join and Stay

14. Motivation to Leave a Club
0% 5% 10% 15% 20% 25% 30% 35% 40%
Too expensive
Not using facility
Free alternative
Not convenient
Too crowded
Felt out of place
Injury
Interests changed
Job loss
Goals changed
No instruction
Too intimidating
No friends at facility
Met goals
37%
33%
23%
17%
12%
10%
8%
8%
7%
5%
5%
4%
4%
3%
Why People Quit

15. Data from the Canadian Health Club Report

16. Club Membership Levels 2011 - 2012
All Fitness Only Multi-purpose Multi-club Independent
-1.3%
-2.2%
0.8%
-2.5% -1.8%

17. Retention Rates - 2011 to 2012
All Fitness Only Multi-purpose Multi-club Independent
71.6%
65.6%
73.6% 74.3%
70.0%

18. Source of Revenue - 2012
Dues
68%
Personal
Training
10%
Other
22%

19. Cost Structure – as % of Revenue
Payroll
45%
Other
35%
Net Income
20%

20. Payroll as % of Revenue
All Fitness Only Multi-purpose Multi-club Independent
45% 35% 48% 44% 46%

21. • Differentiating your value proposition;
• Serving internal customers; and
• Appealing to external customers

22. What Makes You Different
• Remember why people join and stay
• Affirm your niche
 family friendly, adults, older audience
 junior programming and instruction
 competitive, social
 multi-faceted facility and programs
• Focus on being the best in your “club class”

23. What’s Your
Growth Strategy
Increase market penetration –
attract a larger proportion of
current participants
Market expansion – cultivate
new participants (non-players
or the inactive market)
Product expansion – create
new products or services (new
program types)
Diversification – develop
different delivery mechanisms
(outreach for example)

24. Internal and External Customers
• Internal – existing members and staff
 focus on meeting members’ expectations
 make staff part of the solution
 create a sense of community
• External – non members and potential partners
 marketing vs. advertising
 become part of the community
 become the go-to place for your specialty

25. It’s All About
RETENTION
Top quality customer
service is now a must
Consistency is expected
Strive to delight –
preplan small surprises
Always deliver what
you promise

26. Questions or what ever else is important to you!!!

27. It’s been a pleasure