Good Life Fitness Club

Good Life Fitness Club

Table of Contents

TOC o “1-3” h z u HYPERLINK l “_Toc372626170” Introduction PAGEREF _Toc372626170 h 3

HYPERLINK l “_Toc372626171” Statement problem PAGEREF _Toc372626171 h 3

HYPERLINK l “_Toc372626172” Environmental Scan PAGEREF _Toc372626172 h 3

HYPERLINK l “_Toc372626173” Financial Analysis and Decision Criteria PAGEREF _Toc372626173 h 4

HYPERLINK l “_Toc372626174” Why people join and leave Fitness clubs: PAGEREF _Toc372626174 h 4

HYPERLINK l “_Toc372626175” Challenges Facing Fitness Clubs in General PAGEREF _Toc372626175 h 5

HYPERLINK l “_Toc372626176” Main challenges facing GoodLife Fitness Club PAGEREF _Toc372626176 h 6

HYPERLINK l “_Toc372626177” Why GoodLife has been Successful PAGEREF _Toc372626177 h 6

HYPERLINK l “_Toc372626178” Strengths of GoodLife PAGEREF _Toc372626178 h 7

HYPERLINK l “_Toc372626179” Weaknesses of GoodLife PAGEREF _Toc372626179 h 8

HYPERLINK l “_Toc372626180” Net profits at GoodLife at retention of 65% and 70% PAGEREF _Toc372626180 h 8

HYPERLINK l “_Toc372626181” The average long -term value of total revenues at 60%, 70% and 80 retention rate. PAGEREF _Toc372626181 h 8

HYPERLINK l “_Toc372626182” Alternatives PAGEREF _Toc372626182 h 8

HYPERLINK l “_Toc372626183” Implementation measures PAGEREF _Toc372626183 h 9

HYPERLINK l “_Toc372626184” Recommendation PAGEREF _Toc372626184 h 9

HYPERLINK l “_Toc372626185” References PAGEREF _Toc372626185 h 10

IntroductionCompanies face many challenges particularly on how best to increase sales by maintaining the current customers and attracting new ones. This issues is common also affect Goodlife Fitness Club, a Club operating in Kitchner, Ontario with over 40 branches in Ontario and Quebec. Indeed, the fitness business is very competitive and highly demanding because of the nature of the business, since most customers want to get quick results. Whereas more are realizing the importance of staying physically fit and therefore joining fitness clubs, they as well leave in large number. This case analysis seeks to examine this issue in regard to Goodlife Fitness Club

Statement problemThe indicated in the case by Mcdougall (n.d) the problem facing Goodlife Fitness Club is facing a problem of high number of customers leaving the club, which is having a negative impact on the profitability of the company. The club’s manager Krista Swain is faced with the challenge of preparing a plan of how to retain customers in the club. The strategy that she will formulate will be used across more than 40 operated by Goodlife Fitness.

Environmental Scan In a national study carried out by Canadian fitness and research institute, it established that majority of Canadian believed that taking part in physical activities was beneficial and helped in preventing certain diseases like heart disease and lowering stress. Nonetheless, the number of Canadian taking part in physical activity was lower. According to the study, 63% of adults aged 18 years and above considered physical activities to be insufficient for maximum health benefits. In addition, the study found out several reasons why despite many Canadian new the benefits of physical activities, they did not engage in them, accordingly, the most common physical activities walking, gardening, swimming, bicycling and home exercising.

Though the Canadians were engaged in comparatively low physical activities, the fitness market grew at around 6% each year. This growth was attributed to demographic changes taking place (as baby boomers became more and more interest in physical fitness). Other reasons for this growth were marketing and social trends and preference of customers. The study as well noted that nearly 10% of the Canadian population had joined health clubs, but left when their membership expired and did not come back. The main reason why they left was a decline of interest in the fitness, the clubs took to much time, and some customers did not like their clubs. In addition, the members left because some clubs operated like factories with little professionalism, some fitness clubs had few instructors, inadequate equipments and poor facilities.

Financial Analysis and Decision CriteriaWhy people join and leave Fitness clubs:Generally, people join fitness clubs due to a number of reasons; most of which relate to health benefits or perceived health benefits and social gains of joining such clubs where they are able to identify with friends and family or particular figures. With respect to the perceived or actual health benefits, most people have come to associate physical activity with health benefits of disease prevention especially heart disease and cardiovascular related illnesses. While those highlighted benefits relate to diseases, other people join fitness as a way assuage their stress and gain some level of peace of mind. Moreover, the belief that exercising enables people to carry on with their day-to-day tasks acts as a pull factor to the fitness club.

Apart from the dissatisfaction or lack of satisfaction with the services offered that leaves members disgruntled forcing them to quit, members also join clubs and are forced to leave when clubs fail to take a professional approach to their training as they manage the clubs as factories. For instance, the clubs that offer low prices just for purposes of attracting customers and later increase the membership fee are likely to see many members quit. An important and significant factor is the gradual loss of interest in continuing with the exercise. Moreover, when the results are taking too long to materialize then some members quit. Other members quit when they find the exercise too hard to cope with while others find that they do not like the fitness club they joined and are forced to quit.

Challenges Facing Fitness Clubs in GeneralThe biggest challenge relating to this is the high turnover rates of customers in the fitness industry. Customers join fitness clubs but then most of them leave at the end of the membership without opting to continue (Rigsby 2012). Management of fitness clubs is another challenge that has a significant effect.

. Lack of sufficient professional approach is also a challenge that cannot be overlooked. Sports personalities that acquire fitness clubs and turn them into some type of special factory make it more challenging to achieve the objective of a fitness club. Availability of trained and qualified instructors to offer proper and professional instructions to the club members seems to be a challenge the industry must grapple with for a longer period of time Spielvogel 2003). Lastly, fitness clubs depend on equipment and special facilities and these are the assets that should attract members. Frequent equipment breakdowns and poor maintenance of facilities challenge the ability of the fitness clubs to operate continually. These challenges make clubs to fail leaving their members with membership yet without facility (Rigsby 2012).

Main challenges facing GoodLife Fitness Club As noted in the problem statement, the main challenge facing Goodlife fitness club is how to retain customers in the club. Though the club enroll a high number of customers at the start of their season, a significant percentage do not come back after their membership has expired.

Another challenge is the high employee turnover is one big challenge facing the club. Employees who were previously content at GoodLife are quitting searching for job opportunities elsewhere. As a record example, the club has lost over 600 employees out of 1400 to this type of employee turnover in a span of 2 years.

Lastly, the club is faced with the high advertising costs incurred in trying to get new members . Moreover keeping with the normal challenges that face fitness industry especially knowing that failure is more likely than success.

Why GoodLife has been SuccessfulGoodLife focuses on member retention and on scientific fitness where professionalism is sort after to ensure that members are not just treated like goods in a factory but given professional instructions by well trained.

The company’s success was established from the beginning by setting its goal straight and objective. The goal, from start, was to ensure best equipment is put in place and facilities that are of good quality are installed. The club’s objective of providing high quality services with well trained personnel bolstered its success in the industry riddled with many challenges and where many fitness clubs have failed and still continue to fail. To strengthen these goals, the club also focused on providing a clean training environment and giving members customized training programs so that each member had training program customized to their own needs. These are recapitulated in Good Life Fitness Club’s motto of “Measurable Constant Improvement.”

Strengths of GoodLifeThe club enjoys a long history of success since 1979. This long history of successful operation has made the club to be associated with success hence it has attracted many members and this is a strong and reasonable factor to use to retain members.

Using customized training programs for maximum member retention is a very strong aspect of the club since most clubs that fail do so for failing to meet customer expectations. Involving customers makes them feel more part of the club hence strategy is a good one for member retention. Therefore, GoodLife club has a strong membership base of over 700,000

It has heavily invested in high quality equipment and facilities; which provide a shield against failure resulting from equipment breakdowns or lack of facilities. This is also an area that most fitness clubs seem to have failed on. By learning from the failures of the other competitors in the industry, Good Life is making good use of business intelligence and taking a member-based approach.

It has well trained instructors as compared to its competitors who emphasize establishment of factory-type clubs. Therefore Good Life has used very strong aspects to target member retention.

With specific dependence on services of well trained professionals in all areas of the business operations and service delivery GoodLife is intent on ensuring that member expectations are fulfilled.

Weaknesses of GoodLifeOne of the weaknesses of GoodLife is high employee turnover. In addition, customization of programs may not be a sustainable strategy over along period since as members increase satisfying each member based on their individual needs would require more resources to be used hence the club will be left with limited options that include increasing the number of professional instructors, increasing the price of training or compromising on its strategy of high quality and turning to the factory-type approach used by other competitors.

Net profits at GoodLife at retention of 65% and 70%Presently, the retention rate of GoodLife is at 60% and the business wants members to remain at the club for a long term. If this is achieved and the retention rate moves from 60 to 65%, basing on the previous year figures, the gross revenue of GoodLife would go up by $35,000, if the retention ate moved to 70% then the gross income would increase to $70,000.

The average long -term value of total revenues at 60%, 70% and 80 retention rate.

As noted before, in the statement the current retention rate of members is 60% and this translates to a total revenue of $120,000, therefore at 70% retention, this figure will move to $171,000 and at 80% the total revenue will be $213,000.

Alternatives

The Goodlife to overcome its current challenges, it is important that the manager Krista remains focused on the core business of the club of providing high quality fitness services and maintain the professionalism that put the club above the rest. Similarly, there is need to increase the number of top management. GoodLife is a big club but is only managed by one person and this can be overwhelming and therefore result in poor services. Therefore, there need to increase the number of senior employees in the operations and management. The retention rate has dropped to 60% probably because of the high pressure suffered by Krista.

Implementation measures Short term: Krista ought to assign more duties and responsibilities to all her employees and allow them to be responsible for those tasks. This way, the employees will be motivated, while Krista would have more time to address customer demands and come up with ways to deal with their needs.

Medium term: in the medium term, Krista has to identify unnecessary expenses and reduce these expenses, this way, additional revenues of the company will be available and can be used for other activities such as offering more bonuses and incentives to employees, and acquiring ultra modern fitness machines.

Long term: Krista needs to do performance evaluation and promote some employees. Indeed, when employees are well treated well in their careers, they will be happy and translate this to customers’ service. The long term objective ought to increase the retention rate of customers from 60%to 65%, and this means diverse strategies have to be applied.

RecommendationFor the success a successful strategy to retain employees, Krista has to implement all the three measure, short term, medium term and long term strategies. This will involve, continuing with good customer services and focusing on customer retention, motivating employees by giving them more responsibilities.

References Mcdougall, G (nd)GoodLife Fitness Cubs. Case 17.

Rigsby, P. (November, 2012) No matter what industry you’re in- problems create opportunities. Even in the fitness industry. Retrieved on 17, November 2013 from http://fitbusinessinsider.com/fitness-industry-problems-an-opportunity-for-you/

Spielvogel, L ( 2003). Working out in Japan: Shaping the female body in Tokyo fitness clubs. New York: NY, Sage Publications,