Operators and Slumlords

By:  Blair McHaney, Gold’s Gym Wenatchee
GGFA Director Emeritus

In business, “Operations” refers to the time, money, processes, energy and effort put into making the stuff you sell.  Marketing, R&D, sales, customer insights, external factors, trends etc. all shape the decisions that determine what it is you want Operations to “do.”  What is it they are making?

Great Chief Operating Officers find efficient ways to reduce cost and increase quality in order to deliver products and services that customers love and from which the company can make money. 

What are you selling and what does it mean to be operationally efficient in a health club?  It means you keep costs down without hurting quality, you produce with very few defects, and your customers like what they’re buying.  Great operators are obsessed with reducing defects and improving efficiency. 

 What does a “defect” look like in the product you sell?  For the customer, this shapes their entire experience with your “product.”  In the fitness business, I believe we sell an experience.  People buying memberships expect certain courtesies and functionality.  Their usage of plant, equipment, programs, and their interaction with our people will define their experience.  A “defect” in the member experience is a defect in our product/service.

The great news is that there are many operators that focus on their member experience.  Some have been doing this since their first day in business 30-40 years ago and some are new to the industry, and others are folks changing their view in order to compete.       

But a good portion of our industry does not operate this way.  Many operators are content to say one thing and do another.  It is these operators that take no responsibility for the experience of their members that are doing the most damage to the industry.  It dawned on me that many club operators (scour social media and you will see the evidence) are really just slumlords.  They buy a bunch of equipment, put it in a building, lock “occupants” into long-term contracts, and begin pulling out all the short-term profit.  So why don’t people just leave if it is so bad?  They do.   Once their contracts expire they leave in droves.  But they are replaced with the “newly fooled” that come in to occupy a vacated space until they figure out the truth, and then they too leave in droves.  The model apparently works for a while until you can’t replace the number that are expiring and not renewing.  And they don’t just leave – they give you the finger on the way out.  

Slumlords extract all of the value and don’t do much to add any.  They ignore their tenants, squeeze their bank accounts, let stuff get rundown, and focus primarily on new ways to extract value from occupants in the form of fees.  Most of these fees are imposed on things that add no value for the occupant – like charging for a new key-tag.  In these operations, no one is the advocate for the customer.  Staff is pretty much limited to delivering bad news to members through messages like “that’s our policy” when it comes to money.  These gyms will do anything in their power to get that next payment.  When occupants scream about the facilities being run down, their people being rude and the place being dirty, they do what a slumlord does – they ignore them. 

 I have abbreviated the descriptions below but these are accurate:

Occupant – A person that has space in or on something.

Member – A person that is part of a society, a party or a community.

In the case of members, you are always a part of something.  It is about you.  You are the reason for the existence of the society, party, or community.  You are a fractal of the whole.  American Express has members and they make me feel like I am a member.  They protect me, treat me well, and listen to me if I need something or have a complaint.  I have SAY and I am respected.

For occupants, it is all about the agreement or lease. 

When companies are only sales-centric, then sales has too much influence on product decisions and gym operations.  Sales input, by its very nature, focuses on the short-term horizon and often does violence to the long-term value of gym operations.  I think this is why you start to see Yelp! comments like – “…a grand total of zero people who clean up after themselves, weights blowing all over the place like tumbleweeds, 67 employees who can sign you up but only 1 who lets you cancel…” 

This is not an isolated comment.  I chose this one because it was one of the many Yelp! comments (174) in this theme for this gym.  And it repeats itself with every gym in every community with ratings of 3 stars or lower.  What do they sell?  They don’t sell a “membership” because these people are not treated like a member. 

Good operators are highly self-aware, sell memberships and treat members as though their business’ future depended on the member being happy. 

Bad operators sell agreements.  They treat the people spending money with them as though their business’ future depended on enforcing an agreement. 

One of the worst things in the fitness industry is that some crappy operators have been profitable and even held up as “experts”.  Struggling gym operators have looked to them for answers, repeated their practices, and gone broke.  How can I say they are “crappy” if they were profitable?  Well, in November of 2001 every Wall Street analyst rated Enron as highly as Apple is rated today.  One month later they collapsed.  Do you want to know your chances of having a future in the fitness business?   What your members and former members are telling their friends and family is the crystal ball through which you can view your future.

LISTEN TO THE VOICE OF YOUR CUSTOMER.  

If you are a gym member, do everyone a favor (whether you love or hate your gym) and go give them a Yelp! rating so other people make the right purchase decisions.  

Vision
The GGFA is heard and respected as the unified voice of all franchisees. We are involved in all decisions that affect our brand and the franchisees. It is our goal to secure Gold’s Gym as the most profitable franchising opportunity in the fitness industry and the number one fitness brand in the world.

Mission
We serve as advocates for all franchisees to help them maximize the profitability and

stability of their businesses.

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About GGFA

The Gold's Gym Franchisee Association is the independent voice of the Gold's Gym franchisees.
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