The time has come to make "New Year Resolutions"- to log in to an e-commerce website and order shoes, search for a nearby gym and walk in for a free walk-through. In India, where the fitness penetration is 0.05 per cent, it is safe to assume that most people do not go beyond New Year resolutions and buying fitness gear, only a few go on for a walkthrough and a handful pay up and buy a gym membership. A majority of those who buy the membership end up doing a charity, as only 15 per cent complete their tenure and less than 10 per cent actually renew their annual plan.
Since the last few years, the Rs 6000 crore fitness industry in the country has seen some disruption. Deloitte research finds that 36 per cent of Indian millennials have a fitness app installed on their phones and about 45 per cent think leading a healthy life is essential. Now, there are Zomatos and Jet Privileges like agrregators and reward programmes in the fitness world too. There are aggregators that provide memberships at a special price and then there are others who incentivise by rewarding members for working out. Together, they are playing a vital role in keeping the fitness industry survive in tough circumstances.
The aggregators make sure they catch your attention while you are searching for a gym. They spend on Google and Facebook ads to get noticed and once the potential member lands on the website or downloads the app, there are a huge number of gyms and studios put on display to choose from. “These platforms work as marketing mediums where people discover the gym and the products it offers,” says Shraddha Sheth, vice president - sales, operations and marketing, Gold’s Gym India, a chain that has 147 centres spread across 95 cities in India.
Sheth believes the aggregators have brought some beneficial disruption into the industry. “As soon as they get into the system, a newcomer who otherwise hesitated to walk into a gym, is suddenly willing to try a product or a gym or a studio,” she asserts. “If we take Gold's Gym for an example, the aggregators are promoting it on their platform, so there is a display of how the gym looks and an emphasis on different offerings. The offering does not mean memberships - it could mean a Zumba class, spinning class, functional training class, among many others. It changes the perception of the consumers. They now look at gyms as a solution provider to their particular health problem,” she adds.
Aggregators like Fitternity, Fitpass and others, partner the gym and offer a discounted price to the end customer. So, if the membership to a Gold’s Gym or Talwalkar or Snap or Any Time Fitness is Rs 30,000 per year, then the discounted price available with the aggregator is around Rs 25,000. The aggregator manages to offer a discounted price as the gym chain agrees to offer a discount as a cost for acquisition. These platforms also provide passes, through which a member can work out at any partner gym and is not necessarily restricted to one gym. So, Monday one can use the pass at Gold's and Tuesday at some other rival studio or centre.
“Such models end up cannibalising the parent business and that is why you see restaurants today are opting-out of the food aggregators and thier premium plans. We don’t see this as a sustainable model. When we started in 2016, there were about 35 gym aggregators, whereas we have only a handful now,” says Sanmati Pande, CEO and founder of Growfitter, which defines itself as an incentivised wellness platform. Growfitter is also an aggregator but its business model is based around reward programmes.
“Our research showed that the high cost of acquisition is a pain-point for the fitness chains and therefore, retention is extremely critical. Also, we found out that the more a member works out on a regular basis, he or she is more likely to opt for a personal trainer or any other offering that the gym has. Based on that, we came up with a reward programme, which makes us different from the rest and makes our business far more scalable,” Pande adds.
Growfitter installs a kiosk at all its partner-gyms and asks the members to scan the intelligent QR code available in the kiosk to register attendance. The more the member works out, the more rewards they will get. If a member works out seven days out of nine, they get a movie ticket for free, 25 out of 30 days will get them an H&M T-shirt. The rewards include free stays at Club Mahindra resorts, travel to Singapore and 100 per cent cashback. Growfitter partners with movie ticket platforms, hotel chains and airlines, and because they buy in bulk, they get it at a discounted price. In some cases, also at no cost, as they drive relevant traffic to sample the product/offering which Growfitter is dishing out as rewards.
“We had launched the cashback programme last October during the festive season. Our revenue which used to be a negative nine per cent year on year, jumped to 35 per cent because of the reward programmes,” informs Pande. 20 - 40 year olds are the ones who use the platform the most. While the lion's share of the traction is in metros, Pande says the traffic is well-spread in tier-II and tier-III towns too - a market which is equally important for Growfitter, he says.
This reward programme has worked for the gym. “On average, a member with annual membership works out for 150 - 160 days out 365. Today, because of the reward programmes, our daily workout has gone up by 15 per cent, the retention rate is up to 53 per cent and because they are renewing their membership for free, we see a growth in the purchase of personal training and other in-house services,” says Sheth.
The footfall in the gym, she says, has gone up by 12 to 15 per cent because of aggregators. However, she believes that the stickiness only comes with long-term memberships and the short-term passes do not translate into long-term relationships. For any customer acquired through aggregators, the chain offers a commission ranging from five to 10 per cent on the membership. “This is a slice out of my marketing spends,” Sheth adds.
A gym runs on a fixed cost, and the number of members it has does not matter, as the rent, bills, salaries and other operating expenses remain the same. So, the experiment with the tech platforms "is worth a try," feels Sheth. She says in times like these, when the economy is under stress and major sectors are witnessing a slowdown, gyms suffer the most. “In India, it is a luxury as people only spend after they have their essentials covered. As an industry, we are witnessing a challenging time as the footfalls are dropping - both acquisition and retention are under stress. Going against the flow, we have managed to retain our numbers because of our experiments with aggregators,” Sheth concludes.