CHICAGO (Reuters.com) - When some of its affluent Silicon Valley clientele lost their jobs, Fitness 101 quietly paid their monthly fees.
"It's the right thing to do," said Gordon Bliss, president and part owner of the independent health club in Menlo Park, California. "In these times you have to do the right thing."
Bliss has been waiving the $64-per-month individual membership fee for up to three months for a small pool of customers struggling with unemployment; after that time they can opt to renew or cancel their membership.
The 22,000-square-foot club, which Bliss referred to as "middle of the road" in terms of fees and offerings, has focused its efforts on making existing customers happier. Bliss said that entailed maintaining extended hours, providing personal training in small groups as an alternative to costly one-on-one sessions, and investing in new equipment.
"That's one of the things that set us apart from the chains," said Bliss, who added the club doesn't make its members sign an extended contract. "It's a no-risk, heavy reward situation."
This kind of customer service and attention to detail is what is separating independent health clubs, like Fitness 101, from their larger competitors.
According to the International Health, Racquet and Sportsclub Association (IHRSA), a trade group, independent clubs outperformed the median industry retention rate of 72.4 percent in 2008, the most recent full year for which data is available. They also fared better in that area than multi-chain rivals.
Offering customers the ability to get away from it all - even for a little while - seems to be helping the fitness club industry overall; IHRSA said its 2009 survey respondents posted average revenue growth of 2.6 percent in 2008.
"People don't necessarily view their health clubs as a luxury, especially during a recession when they're tired and stressed," said Kara Thompson, an association spokeswoman. While IHRSA respondents reported difficulties in the first quarter of 2009, they saw steady improvement over the first six months of the year. "Despite the recession, the health club sector has achieved impressive growth," Thompson said.
TRICKLE UP EFFECT
It's not just middle-of-the-road clubs that are taking advantage of flexible financial strategies to maintain customers. The Houstonian Club and Spa, whose clientele includes well-heeled members of Houston's prominent energy sector, has been letting members spread out hefty initiation fees, starting at $14,000, over a three-year period with no interest. The club, whose average dues are $385 per month, is also allowing customers to temporarily suspend memberships without penalties.
"If somebody gets a little in over their head, we allow them to use the club, bill them their dues, plus a portion of their outstanding dues," said club general manager Mark Stevens.
The 150,000-square-foot club, which spans 18 acres, has focused on making the overall experience more indulgent for its members. Stevens said they have invested "several million" in refurbishments over the past year; expanding outdoor tennis courts and adding showers with full-body jets.
"Our retention level is still exceptional for the industry," said Stevens, who added it slipped to 94 percent in 2008, which was still well above the industry norm.
As members watched their discretionary dollars more closely, the club saw a fall-off in revenue from extras, such as personal training, so it responded by beefing up weekly group offerings to about 150 classes from 125.
Stevens said members have told him: "We'll bypass vacations because you provide the vacations for us. We can come to your resort pool and it's like being in Mexico."
Lavishing more attention on current ranks has also been the order of the day at the Greenwood Athletic and Tennis Club outside Denver, Colorado, where the roster includes sports celebrities in former Denver Broncos' quarterback John Elway and the team's current head coach Josh McDaniels.
The 13-acre operation, which houses a 90,000-square-foot athletic club and a 52,000-square-foot indoor tennis facility, has added complimentary services such as a workshop series, called "Ask the Expert", and has partnered with local retailers to offer discounts to club members.
It has also completed extensive renovations, spending about $7.5 million over the past five years. "We spent the whole last year of 2009 trying to figure out how we could add more value to our current membership," said Paula Neubert, president and general manager. "We do have people that are pinching pennies, trying to pull back."
The personal touch is making a difference for independent operators - regardless of their size - and has helped them retain business during tough times.
At Namaskar, a bare-bones yoga studio on Chicago's north side, owner Alexandra Murman is adamant about knowing all of her students by name. She sends a personal email to each new attendee after their first class and another to remind regulars when class packages are about to expire.
Murman, who took over the business a year ago during height of the recession, has seen business steadily build over the past 12 months.
"I was starting with a diamond in the rough and I was able to polish it up," she said, attributing her success to small details, such as fresh paint, better signage and a more individualized approach. "I would rather get fewer people that would stick around for a while, than tons of people."