Chris Craytor - Health & Fitness Association - The Rebrand & Event Recap

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[00:02:15] We're live. Chris Crater, welcome to the future of fitness.

[00:02:22] It's good to be here. Thanks Eric.

[00:02:24] Yeah, it's great that we finally made it happen. I mean, we've been, gosh, I got to

[00:02:28] moderate a panel with you, I think initially two, three years ago now at our session

[00:02:32] and got to meet you there. I was very impressed with your insights and answers to

[00:02:36] a lot of the questions on the panel. And like the industry goes since then, I've

[00:02:39] kind of run into your hallways probably half a dozen times. And now we're finally

[00:02:43] sitting down to have a conversation. It's great. You do a lot within the industry

[00:02:47] and even just now in the pre-recording conversation, I was like, oh man, you

[00:02:51] do that too. That's pretty extensive. So I mean, you're involved with

[00:02:56] IHRSA now, Health and Fitness Association. We'll talk about that in a minute.

[00:02:59] Right. Is it ACAC? I think you guys have, is it 14? How many locations?

[00:03:03] Yeah, almost 14. Yeah. Yeah, awesome. And then Well Health, which I didn't

[00:03:09] really realize until now. So there's like, there's a million things, a

[00:03:12] million trajectories we can take. So I'm going to, we're going to skip the

[00:03:17] introduction. People want to know more about you. I would suggest go to his

[00:03:19] LinkedIn and look at his resume and everything he does because there's so

[00:03:23] much to discuss here. So let's start with IHRSA now Health and Fitness

[00:03:26] Association. You and I are about, as data is recording about 10 days after

[00:03:31] Feet on the Ground in Los Angeles. What was your takeaway? And of course

[00:03:34] the big rebrand and you know, you're a part of all that. Like give us

[00:03:38] some nuggets from that for that event.

[00:03:40] Sure. Well, I mean, I think the energy was really high in LA. First of

[00:03:44] all, thanks for having me again. I think the LA would feel great, right?

[00:03:47] I mean, I think attendance was up. So booth space was up in terms of number

[00:03:51] of exhibitors. All those things kind of contribute to what is a more lively

[00:03:55] show. You know, I think we actually had some of the equipment vendors who

[00:03:58] really felt like they were understaffed and underprepared for the

[00:04:01] first day of the show and it's as busy as there been. So all that's

[00:04:04] really good signs in terms of the industry and also in terms of just

[00:04:07] overall enthusiasm. You know, the shows that are happening during COVID,

[00:04:11] I remember the first one in Dallas, we were all happy, so happy just to

[00:04:15] be back together at that particular convention that we didn't really

[00:04:18] realize until now you're here today, how dead that actually was compared

[00:04:22] to what it was here in LA. And so, you know, kudos to everyone who

[00:04:26] soldiered through that process versus staff, all the people who kind

[00:04:29] of stuck with everybody during that process because, you know, quite

[00:04:32] frankly, it was not easy for the association just like it wasn't easy

[00:04:35] for clubs. And being on the board now I'm rolling off here after six

[00:04:40] years of being on the board. I got extra stupor senior year because of

[00:04:43] COVID, kind of like a college athlete that basically I got the extra

[00:04:46] extra year. And it's been awesome, right? We took it from where it

[00:04:50] was in 2020, which was okay, are we even gonna survive? Now running

[00:04:54] a great show back to putting money away for a rainy day and all

[00:04:57] the things that you should do in terms of being responsible. And

[00:05:01] I think that's a great thing for the industry. And now as we move

[00:05:04] forward with rebrand, now Health and Fitness Association, you

[00:05:07] know, we're coming at a time where there's really nice positive

[00:05:09] momentum. The goal here is for certainly EarthSat is in order

[00:05:13] Health and Fitness Association as an organization, as well as a

[00:05:15] new board to really take it to the next level. And really say,

[00:05:18] okay, now that we're back here to kind of a level set really

[00:05:20] positive, you know, how do we then take this new brand and

[00:05:23] under this new big umbrella, continue to grow the influence

[00:05:27] of the industry? And really, health has got was really,

[00:05:32] you know, this rebrands going on for about a year and a few

[00:05:34] months. And, you know, early on, we identified that health was

[00:05:36] something that wanted to be included simply because that is

[00:05:38] ultimately the product of what we're doing, whether it be

[00:05:41] physical, emotional, mental health, you know, this idea

[00:05:44] that we are contributing to the health of the members and

[00:05:46] guests who use our facilities. No matter what type of business

[00:05:50] you're running, whether it be a giant club or a tiny one,

[00:05:53] you know, you're there to make people feel better. And I

[00:05:55] think ultimately, that's, that's what we're about. And I

[00:05:58] think the other big part of it is healthcare $3.2 trillion

[00:06:01] industry. If we have $3.2 trillion industry, and you're

[00:06:03] looking at health clubs as a let's call it a $50 billion

[00:06:06] industry here in the US and $100 billion around the world,

[00:06:08] you know, we're tiny. So how do we attach ourselves to that

[00:06:11] group that obviously has a much bigger footprint and mandate?

[00:06:14] Yeah, I really like it. I guess, first of all, since we

[00:06:16] love acronyms, are we rolling with HFA now? Is that the

[00:06:20] you know,

[00:06:20] You're trying to do like the not the not HFA because it's

[00:06:25] like, that one like it's the ampersand I heard people

[00:06:26] call it HFA. Okay, Health Amp Goodness Association. So I

[00:06:30] think either one is going to end up getting done. So

[00:06:32] we'll see what happens. But I think either one's fine.

[00:06:34] Yeah, well, I think it's a really, you know, when you look

[00:06:38] at it like, okay, Health Fitness Association seems kind

[00:06:40] of obvious. Well, the obvious one is is kind of correct,

[00:06:43] right? It is like, we've been talking about in this

[00:06:45] industry for a very long time, like, how do we

[00:06:47] integrate into a larger wealth and health and wellness

[00:06:50] economy? Like, where do we find our spot in that

[00:06:53] ecosystem? And I think this is a nice step, at least for

[00:06:55] branding acknowledging that that's what we're part of,

[00:06:58] you know, it'll kind of trickle down. I mean, and

[00:07:00] what is your exact role within Earth? Is it the

[00:07:04] chairman of the board directors? Is that right?

[00:07:06] That's right. Yes, I've been chair of the board for the

[00:07:07] last two years. So I had a two year term as chair and

[00:07:10] been on the board since 2018. So it's been a nice long

[00:07:15] run, definitely a time to hand the baton off. But

[00:07:18] you know, to jump on to what you just said, I

[00:07:20] think the other big factor was that in the halls of

[00:07:22] Congress or even in Geneva with the World Health

[00:07:24] Organization or some other, you know, governmental body

[00:07:27] or quasi governmental body, Health and Fitness

[00:07:29] Association is really clear compared to URSA which

[00:07:33] comparatively was not. And ultimately, it's about

[00:07:35] having a really recognizable presence and voice

[00:07:39] and being able to have someone remember who you

[00:07:42] are because ultimately we were forgotten in 2020.

[00:07:45] And the goal is obviously not to be forgotten

[00:07:46] again should things take a downturn for some

[00:07:49] reason that hurts our end.

[00:07:50] Yeah. Yeah. And one of the things I noticed

[00:07:53] because I spent a decent amount of time with the

[00:07:55] EGM team in their booth and man, it was like

[00:07:59] it was humming, you know, like it felt like

[00:08:01] business was being done again, which really, you

[00:08:05] know, wasn't just hey, we're going to meet up for

[00:08:06] a dinner and have a couple of meetings. But it

[00:08:08] was like, hey, we're intentionally here to do

[00:08:12] some business. I mean, that's something that

[00:08:13] you recognize and you noticed as well in these

[00:08:15] conversations that you had there.

[00:08:16] Yeah, absolutely. I mean, you know, we've

[00:08:19] we definitely felt that and I heard that as

[00:08:20] well. I know a number of deals that were

[00:08:23] actually signed at the show, which is

[00:08:24] obviously good news for the suppliers. And I

[00:08:26] think that, you know, I would tend to agree

[00:08:29] with you that people were there actually looking

[00:08:31] at equipment, looking to buy things, looking

[00:08:32] to transact and looking for what's next. And

[00:08:36] I think that felt good. It really felt good.

[00:08:39] Now, who knows what the rest of the year

[00:08:42] brings or even five years from now. But

[00:08:43] we had this nice recovery period or 2023

[00:08:46] for most of the operators I've talked to.

[00:08:48] It was a pretty solid year and most of

[00:08:50] the operators I know had a pretty solid

[00:08:52] start to January as well. So I think you're

[00:08:53] going to see continued catch up as people

[00:08:56] try to, you know, renovate and or

[00:08:58] replenish their clubs. And I think that

[00:09:01] that has not, at least in my view, has a

[00:09:02] slowdown for our businesses in terms of

[00:09:04] what we want to do from a capital

[00:09:06] improvement standpoint. If anything, we're

[00:09:08] we're being more more aggressive now with

[00:09:10] capital improvement based on the success

[00:09:12] of previous years.

[00:09:13] Yeah, awesome. You know, I've asked a lot

[00:09:15] of people this question, but when you

[00:09:16] walk the trade floor, you looked at, you

[00:09:18] know, the brands and the products and

[00:09:20] technologies that were represented there. Is

[00:09:23] there anything that caught your eye?

[00:09:25] Anything that seemed truly innovative more

[00:09:28] than some of the other ones?

[00:09:29] Yeah, you know, I'm like a single video out.

[00:09:31] So don't want to spoil anything, you know,

[00:09:33] but I think that first is always about

[00:09:35] trends and the health and fitness

[00:09:36] association show trends, right? So that

[00:09:38] you have, you know, one year it was

[00:09:40] all of this type of equipment. The

[00:09:41] next year it was something else. So

[00:09:43] this year, I think the trends that stood

[00:09:44] up for me were one, the continued

[00:09:46] emphasis on strength training

[00:09:47] equipment generally, you know, I think

[00:09:49] all the different modalities of the

[00:09:50] strength training equipment even ways

[00:09:51] of combining things in a more space

[00:09:53] efficient configurations and bringing back

[00:09:56] even some of the more traditional pieces

[00:09:58] in a very customizable way. You know,

[00:10:01] one of the things that I saw is a lot

[00:10:02] of the larger equipment manufacturers

[00:10:04] really trying to take their functional

[00:10:05] training studios, trying to take their

[00:10:08] free weight like racks and half racks

[00:10:10] and so on and make them very much a

[00:10:12] kit of parts that could be assembled

[00:10:13] by a creative health club or fitness

[00:10:16] studio owner. And then the other is

[00:10:17] obviously recovery. You know, we've

[00:10:19] all seen it. We've, you know, it's

[00:10:20] been very popular, you know, whether

[00:10:22] that be from cold plunge tubs to

[00:10:24] cryo to massage pads, you name it,

[00:10:27] red light, I mean, on and on and on.

[00:10:28] There were more booths this year

[00:10:30] about recovery than even expected.

[00:10:32] So from my point of view, watching

[00:10:35] that trend, I would expect that to

[00:10:36] be a continuation of this year in

[00:10:38] terms of where clubs potentially

[00:10:39] are re-invested.

[00:10:40] Yeah. On the last day of the

[00:10:42] trade floor, I always like in

[00:10:43] the afternoon to walk and do all

[00:10:44] the recovery modalities because by

[00:10:47] that time generally you're

[00:10:48] physically pretty exhausted, right?

[00:10:50] So it's like a good time to test

[00:10:51] all that stuff out. One thing that

[00:10:52] was really interesting to me and then

[00:10:54] I saw the price tag, I was like,

[00:10:56] Oh my God. It was the, the

[00:10:57] waterless cold plunge, right?

[00:10:59] Did you try this thing?

[00:10:59] It's like essentially a water bed

[00:11:01] with the folds over you and then it

[00:11:03] drops the temperature down to

[00:11:04] like 38 degrees.

[00:11:06] Yeah, very, very cool.

[00:11:07] In fact, I want to follow up

[00:11:08] with those people and learn more.

[00:11:09] But did you try that one as well?

[00:11:10] That was pretty interesting.

[00:11:11] Yeah, so funny how a bunch of my

[00:11:12] folks did try it and they were

[00:11:13] very much intrigued, you know,

[00:11:15] and my response was that sounds

[00:11:17] really cool. It's going to appeal to

[00:11:18] the casual cold plunger.

[00:11:20] I don't know. I think the purist

[00:11:21] just wants to get in the water

[00:11:22] and suffer.

[00:11:23] Yeah.

[00:11:24] Well, in 40 grams.

[00:11:25] That's really cool.

[00:11:26] I mean, that's fun stuff to see

[00:11:27] innovate.

[00:11:28] Yeah.

[00:11:28] Well, it's $40,000.

[00:11:29] So, you know, I don't know how

[00:11:30] casual of a person that would be,

[00:11:33] but I think I would imagine it

[00:11:33] would be more of the, you know,

[00:11:35] clinical setting.

[00:11:35] No, that's not it.

[00:11:36] Yeah, that's a,

[00:11:37] wow, that's a semester at college.

[00:11:38] It says the father with son in

[00:11:40] college.

[00:11:41] Well, let's get into some of

[00:11:42] the other really interesting

[00:11:43] topics that I was hoping to talk

[00:11:45] to you about today.

[00:11:46] Now this has come up in

[00:11:47] conversations both on this

[00:11:48] podcast, in meetings and things

[00:11:50] like that.

[00:11:51] Like, you know, I feel like

[00:11:53] there's a lot of headwinds

[00:11:55] specifically for boutique fitness

[00:11:58] this year, right?

[00:11:58] Everyone's kind of projecting.

[00:12:00] Why do you think that is?

[00:12:01] I mean, what's your reasoning

[00:12:02] behind that?

[00:12:02] I mean, a lot of people point

[00:12:04] at real estate costs, right?

[00:12:05] That's a big one.

[00:12:06] I mean, just cost overall,

[00:12:08] I think inflation, you know,

[00:12:09] as our people more inclined to

[00:12:11] do kind of an all in one

[00:12:13] health club, you know, gym

[00:12:15] membership or the, you know,

[00:12:16] going to have, you know, their

[00:12:18] soul cycle and their, you

[00:12:19] know, A, B and C, right

[00:12:21] membership.

[00:12:22] So that's one thing I, you

[00:12:24] know, I'm not exactly sure.

[00:12:25] I'm not specifically in the

[00:12:26] boutique business, but I keep

[00:12:27] hearing that and I'm curious to

[00:12:28] you, like when you look at

[00:12:30] the potential headwinds for

[00:12:32] this year and we're already

[00:12:33] almost at the end of Q1,

[00:12:34] bananas, but like when you

[00:12:36] look at the opportunities for

[00:12:38] the larger health clubs like

[00:12:39] ACAC and, you know, companies

[00:12:41] of that elk, like where do

[00:12:43] you see the opportunities for

[00:12:44] growth?

[00:12:44] Do you think that's, are you

[00:12:46] looking at challenges for

[00:12:47] boutique as a reality and

[00:12:49] something that you can maybe

[00:12:51] capitalize on or is that

[00:12:52] not even on your radar or

[00:12:53] yeah, what's your vision

[00:12:55] here going into the year?

[00:12:56] Yeah, a lot to unpack.

[00:12:58] So as far as studios and

[00:13:00] the market, you know,

[00:13:01] obviously I think there's

[00:13:03] like any market they're

[00:13:03] going to be winners and

[00:13:04] losers.

[00:13:05] Like even when the stock

[00:13:05] market is getting crushed,

[00:13:06] there's always a few stocks

[00:13:07] that are winning.

[00:13:08] So I don't know that it's,

[00:13:09] you know, necessarily all of

[00:13:10] the studio market that maybe

[00:13:11] is facing headwinds, but

[00:13:12] certainly portions of it

[00:13:13] are.

[00:13:14] Ultimately there is, as you

[00:13:15] kind of indicated, a kind of

[00:13:16] retention problem, right?

[00:13:17] How often does that person

[00:13:19] who's coming to the studio

[00:13:20] doesn't have the kind of

[00:13:20] like, what I'd say club

[00:13:21] relationship with the studio

[00:13:22] in many cases, but perhaps

[00:13:23] enjoys the workout.

[00:13:24] You know, how do they

[00:13:25] convert from a once a week

[00:13:26] member to a twice a week

[00:13:27] participant?

[00:13:29] You know, how do they

[00:13:29] really drive that revenue?

[00:13:30] Or is it, Hey, once every

[00:13:31] couple of weeks, I'm, I'm,

[00:13:32] you know, I'm finding a

[00:13:33] class at such and such

[00:13:34] place.

[00:13:34] So I do think that is

[00:13:35] something that, that has

[00:13:37] been interesting to watch.

[00:13:38] I'll give you a couple of

[00:13:40] kind of data points here

[00:13:41] on that in a second, but

[00:13:42] on the health club side

[00:13:43] and where we look at the

[00:13:44] world, you know, I've

[00:13:45] really been focused on,

[00:13:46] you know, one, battling

[00:13:48] inflation.

[00:13:48] I think clubs feel it too.

[00:13:49] You know, certainly if we

[00:13:50] look for new clubs to

[00:13:52] build, we're probably

[00:13:53] looking more new clubs

[00:13:55] to buy rather than

[00:13:56] build just because of the

[00:13:57] economics of building.

[00:13:59] You know, we like the

[00:14:00] idea of buying more clubs

[00:14:01] or we're definitely

[00:14:03] looking.

[00:14:03] You know, I think that

[00:14:04] the way that I would

[00:14:05] approach it is that we

[00:14:07] spend all this time

[00:14:08] trying to get our wages

[00:14:09] up and keep our team

[00:14:10] members, you know, paid

[00:14:12] in a way that allowed

[00:14:13] them to keep up with at

[00:14:14] least what was recorded

[00:14:15] as inflation.

[00:14:16] And that's been priority

[00:14:17] one.

[00:14:17] And now that we're here

[00:14:18] in 2024, I guess I'm

[00:14:20] looking at a couple of

[00:14:21] things. One is what are

[00:14:22] the social connections

[00:14:23] we can build in the

[00:14:23] club? So if anything,

[00:14:25] we're pushing a lot

[00:14:26] harder into social

[00:14:26] events and activities

[00:14:29] and ways for our

[00:14:30] members to engage with

[00:14:31] one another that

[00:14:31] creates some social

[00:14:32] connectivity.

[00:14:33] The other is, I think

[00:14:34] this idea that clubs

[00:14:36] are going to start

[00:14:36] bundling larger clubs

[00:14:37] and be bundling

[00:14:38] services. Some clubs

[00:14:39] already do it very

[00:14:39] well, even from the

[00:14:40] HVLP or lower price

[00:14:41] standpoint, being able

[00:14:42] to just create an

[00:14:43] average revenue per

[00:14:44] member that tends to

[00:14:45] be higher by selling

[00:14:47] services that are

[00:14:48] potentially being

[00:14:49] consumed outside the

[00:14:50] four walls. Now,

[00:14:51] recovery is a great

[00:14:51] example. You know,

[00:14:52] the idea of selling

[00:14:53] recovery services to

[00:14:54] accompany a gym

[00:14:55] membership, potentially

[00:14:56] at a price that's

[00:14:57] lower than they could

[00:14:58] buy from an

[00:14:58] a la carte location.

[00:15:00] Certainly it's a

[00:15:00] nice value add

[00:15:01] proposition. We've

[00:15:01] seen bundling of

[00:15:03] Pilates. We've seen

[00:15:04] bundling of group

[00:15:05] exercise. This is

[00:15:05] something that's not

[00:15:06] new to the industry,

[00:15:07] but I think clubs

[00:15:08] that really are

[00:15:08] successful at getting

[00:15:10] those members who

[00:15:11] are willing to pay

[00:15:12] more or to have a

[00:15:13] more disposable income

[00:15:15] to pay on fitness,

[00:15:16] getting those dollars

[00:15:17] to stay within your

[00:15:18] four walls is going

[00:15:19] to be primary instead

[00:15:20] of having that leak

[00:15:21] out. So what are you

[00:15:22] able to do as a club

[00:15:23] to modify your

[00:15:24] package such that

[00:15:26] both VIP members,

[00:15:27] if you want to call

[00:15:28] them that or your

[00:15:28] high spending members,

[00:15:30] like call them the

[00:15:30] fit fluent. You

[00:15:31] know, they love

[00:15:32] fitness and they're

[00:15:32] also a little bit

[00:15:33] effluent that they

[00:15:34] want to come in

[00:15:35] and spend with you

[00:15:36] instead of another

[00:15:37] business down the

[00:15:38] street. So I think

[00:15:39] for larger clubs,

[00:15:40] it's going to be the

[00:15:40] revenue per member

[00:15:42] maximizing that value

[00:15:43] as well as building

[00:15:44] the social connection.

[00:15:45] You know, and then

[00:15:46] the last part,

[00:15:47] you know, that's outside

[00:15:48] of the more member

[00:15:49] focused piece is really

[00:15:50] the team training.

[00:15:51] How good is your team?

[00:15:52] How good are the people

[00:15:53] that you have serving

[00:15:54] your members because

[00:15:55] they're going to make

[00:15:55] a difference.

[00:15:56] And then, you know,

[00:15:57] that will hopefully

[00:15:58] through that investment

[00:15:59] in training and education

[00:16:00] and customer service

[00:16:01] support be able to

[00:16:03] keep more of your

[00:16:03] members because having

[00:16:04] a great customer

[00:16:05] service experience

[00:16:06] is a reason why many

[00:16:07] people come back

[00:16:07] to a business.

[00:16:08] I had great service

[00:16:09] there means I'm

[00:16:09] likely to return.

[00:16:10] So are you providing

[00:16:11] great service in your

[00:16:12] club to accompany

[00:16:13] those pieces that

[00:16:14] help keep your

[00:16:14] members connected

[00:16:15] and paying you more money?

[00:16:16] Yeah, I want to all

[00:16:17] excellent points.

[00:16:18] Let's circle back

[00:16:19] to the first one.

[00:16:20] Can you give us some

[00:16:20] like maybe some examples

[00:16:22] or tactical applications

[00:16:23] of social events,

[00:16:26] community, things like

[00:16:27] that that you guys do

[00:16:28] or you're looking to do?

[00:16:29] Sure.

[00:16:30] I mean, we have clubs

[00:16:31] that are fairly

[00:16:32] medically oriented.

[00:16:33] So, you know,

[00:16:34] we do weekly monthly

[00:16:35] luncheons with

[00:16:36] physicians.

[00:16:37] They're talking about

[00:16:38] a pick a topic.

[00:16:39] So some of our senior

[00:16:40] members come in,

[00:16:40] they learn about

[00:16:41] something that's

[00:16:41] important to them.

[00:16:42] And, you know,

[00:16:43] they have lunch together

[00:16:43] and now they're meeting

[00:16:44] one another

[00:16:45] as an example.

[00:16:46] So how does that then influence?

[00:16:47] We did the we have

[00:16:48] rooftop pools.

[00:16:49] So we did some

[00:16:49] polar plunges here

[00:16:50] this winter where

[00:16:51] everyone got to come up

[00:16:52] and jump in the water

[00:16:53] and then have a beer

[00:16:54] afterwards, right?

[00:16:55] So, you know, those are

[00:16:56] those are two examples

[00:16:57] of things on top of my head.

[00:16:58] But all those are little, right?

[00:16:59] You may get 10 people,

[00:17:00] you may get 25 people,

[00:17:01] you may get 40,

[00:17:03] you may get,

[00:17:03] you know,

[00:17:04] something in between.

[00:17:05] You may hold a big event

[00:17:06] for 300 people.

[00:17:07] But ultimately it's about

[00:17:08] creating connections

[00:17:09] which are done

[00:17:09] on a one-on-one basis.

[00:17:11] And that person who attends

[00:17:12] those events at your club

[00:17:13] now feels like

[00:17:15] there's more value.

[00:17:16] Wow, I did something here

[00:17:17] that's unique

[00:17:17] that I'm not just going to get

[00:17:18] down the street from somebody else

[00:17:20] that I was able to get here.

[00:17:21] We we had our

[00:17:22] we've had been holding

[00:17:23] our happy hours,

[00:17:24] not happy hours,

[00:17:25] happy hours

[00:17:26] where you can actually learn

[00:17:26] how to use the app

[00:17:27] and educate some of our members

[00:17:28] who are, you know,

[00:17:29] need some help.

[00:17:30] You can serve wine if you like,

[00:17:31] you know,

[00:17:31] that's also defined.

[00:17:33] But it's all good.

[00:17:34] Like anything that brings

[00:17:36] a member of the club

[00:17:36] for something other than a workout.

[00:17:38] Right.

[00:17:38] And I think that that to me is

[00:17:40] is great.

[00:17:41] And then what's

[00:17:42] what goes unsaid is

[00:17:43] group exercise.

[00:17:44] You know, I think, you know,

[00:17:45] everyone approached

[00:17:46] it a little bit differently,

[00:17:47] but having great instructors

[00:17:48] and building communities there.

[00:17:49] So having special classes,

[00:17:51] bringing in guest instructors,

[00:17:52] just doing some unique things

[00:17:54] that are outside the day

[00:17:55] to day norm

[00:17:56] for those groups of folks

[00:17:57] who love already love

[00:17:58] that group.

[00:17:59] Yeah.

[00:18:00] Yeah, it's interesting.

[00:18:01] I mean, it sounds a lot like

[00:18:02] how maybe 10 years ago

[00:18:04] we would have associated

[00:18:06] all those types of efforts,

[00:18:08] initiatives, activities

[00:18:10] with Boutique, right?

[00:18:11] Like these little community

[00:18:12] building events

[00:18:13] and things like that.

[00:18:14] So it seems like, you know,

[00:18:15] maybe it's just me, you know,

[00:18:16] I haven't been an operator

[00:18:17] in a long time, but the

[00:18:19] it seems like health clubs,

[00:18:20] larger health clubs

[00:18:21] like yours are starting

[00:18:22] to incorporate a lot of those tactics

[00:18:24] into it to kind of,

[00:18:25] you know, essentially be a wise shop

[00:18:26] shop for for many consumers.

[00:18:29] Yeah.

[00:18:29] And in the Boutique,

[00:18:30] it's interesting Boutiques are

[00:18:31] they're fantastic, right?

[00:18:32] Great member community.

[00:18:33] I agree.

[00:18:34] And you have the great

[00:18:35] independent studios

[00:18:36] wherever you happen to be.

[00:18:37] But you also have a lot

[00:18:37] of franchise studios.

[00:18:39] And I think that

[00:18:40] if you've seen a proliferation

[00:18:41] of franchise concepts,

[00:18:42] in many cases, like they're

[00:18:44] they run a little bit differently

[00:18:45] than say the one person

[00:18:46] who just like lives and breathes

[00:18:48] no different than a restaurant

[00:18:49] group that has a number of restaurants.

[00:18:51] They can all be very good

[00:18:52] and tasty and excellent.

[00:18:53] But the sense of community

[00:18:54] around a single local restaurant

[00:18:56] is often different.

[00:18:57] And we recognize that.

[00:18:58] So, you know, I think that

[00:18:59] the industry has changed somewhat

[00:19:01] and not in a bad way.

[00:19:02] I think it's awesome that we have

[00:19:03] when we go to a new city

[00:19:05] and we see some of our most

[00:19:06] familiar boutique brands,

[00:19:07] you know, it's always like, OK,

[00:19:09] well, I know I'm going to

[00:19:10] get a great work out there, right?

[00:19:11] Whenever we go, because

[00:19:12] it's going to be consistent and awesome.

[00:19:14] Like who goes to a new

[00:19:15] store goes to Starbucks

[00:19:16] and they go to a new city.

[00:19:17] Lots of people because

[00:19:18] it's going to be good, right?

[00:19:19] So it's not a bad thing.

[00:19:20] It's just it's just a different

[00:19:22] type of sense of community

[00:19:23] than say the local

[00:19:24] coffee shop might have.

[00:19:25] Yeah, really good insights.

[00:19:27] The I think last time

[00:19:29] you and I did a panel,

[00:19:31] one of the things we talked about

[00:19:32] was industry buzzwords, right?

[00:19:33] If I'm remembering this correctly,

[00:19:35] right? So seems every year

[00:19:36] two new ones pop up.

[00:19:38] And this one was absolutely

[00:19:39] without a doubt personalization

[00:19:41] with the name of the game, right?

[00:19:43] Hmm.

[00:19:44] He for from Gerald,

[00:19:46] my friend of mine,

[00:19:47] he put in in good terms of

[00:19:48] like contextualization, right?

[00:19:50] Making everything more

[00:19:52] in context with the actual user

[00:19:54] or member.

[00:19:54] So when you look at like that trend

[00:19:56] and a lot of is driven by AI,

[00:19:58] which we're going to talk about

[00:19:59] for sure, right?

[00:20:00] But how are you guys

[00:20:03] looking to or are you?

[00:20:04] I mean, are you following this

[00:20:06] trend? Are you looking to further

[00:20:07] personalize or contextualize

[00:20:09] the experience for your members?

[00:20:10] What's how important is that to you

[00:20:12] and how are you guys going about it?

[00:20:13] Yeah, I think that for one,

[00:20:15] I don't know that we're doing

[00:20:17] a great job of this, right?

[00:20:18] I mean, at the end of the day,

[00:20:19] I think it's one of those pieces

[00:20:20] that requires a big technology

[00:20:22] investment in these this day

[00:20:23] and age in terms of being able

[00:20:24] to deliver that to the

[00:20:26] consumer. What I will say,

[00:20:28] you know, from a personalization

[00:20:29] standpoint, there's two ways

[00:20:30] that we would approach it.

[00:20:31] One, we're a larger group,

[00:20:32] right? Larger, bigger box club

[00:20:33] with hundreds of classes

[00:20:34] and all that.

[00:20:35] So for us, the personalization

[00:20:37] becomes more of a breadth

[00:20:38] of activities and a breadth

[00:20:40] of opportunities for you to engage

[00:20:42] and being able to have something

[00:20:43] that fits where you are.

[00:20:44] You know, if you're if you're

[00:20:45] looking at it, you know,

[00:20:46] one of our clubs where you have

[00:20:47] indoor outdoor water,

[00:20:48] you have tennis, you have

[00:20:50] obviously all the regular classes,

[00:20:52] you have strength training

[00:20:52] equipment, personal training,

[00:20:53] small group. All of these things

[00:20:55] are all together, right?

[00:20:56] The challenge is how do identify

[00:20:57] those folks who would be interested

[00:20:58] in those various modalities

[00:21:00] and get them engaged in something

[00:21:01] that maybe they've never tried before.

[00:21:02] You know, throw a pickleball

[00:21:03] in the mix, right?

[00:21:04] So I guess like the way that

[00:21:06] the way I'd approach

[00:21:07] personalization in our world

[00:21:08] as a club is more about offering

[00:21:10] enough that the individuals can pursue

[00:21:13] less about doing prescriptive type

[00:21:15] personalization and optimization.

[00:21:17] You know, I think a lot of folks

[00:21:19] are getting into this bio hacking

[00:21:20] and doing their blood tests

[00:21:22] and figuring out what vitamins

[00:21:23] need to take, where they're

[00:21:24] deficient and all this.

[00:21:25] Our brother lives in Boulder.

[00:21:26] So if he listens to this,

[00:21:27] I think literally everyone

[00:21:28] in Boulder is optimized at this point.

[00:21:30] I'd like to own a supplement shop

[00:21:32] in Boulder, I think.

[00:21:33] Yeah, yeah, yeah.

[00:21:33] I think that I think that ultimately

[00:21:35] there's been a lot of people

[00:21:36] focused on that.

[00:21:37] I think we do understand that.

[00:21:40] I think it just hasn't been core.

[00:21:42] The last piece I'll bring up

[00:21:43] is on personalization.

[00:21:44] We tend to be a one-on-one

[00:21:45] training group.

[00:21:45] Yeah, we do have some small groups

[00:21:47] and some trainers are good at that,

[00:21:48] but we do a lot of training

[00:21:49] and most of the training

[00:21:50] we do is one-on-one.

[00:21:51] I know it's a bit old school

[00:21:52] and people don't talk about it,

[00:21:53] but at the end of the day,

[00:21:54] those folks who are with us

[00:21:55] who are working with

[00:21:56] our personal trainers

[00:21:57] are getting the most personal

[00:21:59] type of attention

[00:22:00] you possibly could imagine.

[00:22:01] And so as you've seen workouts

[00:22:03] move away from the kind of

[00:22:05] one-on-one experience

[00:22:06] into a coach led, group led

[00:22:08] type economic model,

[00:22:09] having that one-on-one attention,

[00:22:11] you know, in my mind

[00:22:12] doesn't actually get more personal.

[00:22:14] And the last piece I'll throw in

[00:22:16] is on the medical side.

[00:22:17] I think we do have a number of programs

[00:22:19] that will run on the medical fitness

[00:22:20] side of the house.

[00:22:21] So, you know, when you're meeting

[00:22:22] with a nurse that we have

[00:22:23] in all of our larger clubs,

[00:22:25] talk about your health history

[00:22:27] and talk about, you know,

[00:22:27] where you are on your personal

[00:22:29] health journey

[00:22:29] and then tailoring an exercise program

[00:22:31] to meet you where you are.

[00:22:33] We do see personalization in that way.

[00:22:34] But but ultimately,

[00:22:36] we think about it

[00:22:36] from a technological solution,

[00:22:38] you know, I don't think we're there yet.

[00:22:40] Although we do have an E-gym circuit

[00:22:41] we're trying out.

[00:22:42] So I think we've had a good number

[00:22:44] of members really go through that

[00:22:44] and really enjoy that.

[00:22:46] And that is a nice way of

[00:22:47] kind of dipping our toe in that one.

[00:22:49] Yeah, well, they they make it simple.

[00:22:51] Right.

[00:22:52] The gym crowd,

[00:22:53] you know, the technology

[00:22:54] I got to play with was really,

[00:22:56] yeah, even I could figure it out.

[00:22:57] And yeah,

[00:22:58] you know, one of the things

[00:22:59] that we talked about

[00:23:00] before we started recording

[00:23:01] here, Chris, was

[00:23:02] it really it really piqued my interest

[00:23:04] was, you know, how we can set up

[00:23:07] health clubs and gyms

[00:23:08] and the talent and the staff

[00:23:10] that we have within it.

[00:23:11] You know, as far as

[00:23:12] defensibility against

[00:23:13] artificial intelligence, like

[00:23:15] everyone's worried about it.

[00:23:16] Right.

[00:23:16] I just if you listen to podcasts,

[00:23:18] you listen to Rogan.

[00:23:19] I just listened to

[00:23:20] the Ray Kurzweil interview

[00:23:22] that he did who the guy

[00:23:23] who originally kind of identified

[00:23:25] the singularity coming and

[00:23:27] tough read.

[00:23:27] If people want to read a book

[00:23:29] that like waiting through molasses,

[00:23:31] at least for my intellectual capacity,

[00:23:33] that's a really hard one.

[00:23:34] Very fascinating, kind of scary.

[00:23:36] You know, and everyone's

[00:23:36] so everyone's like

[00:23:37] my wife's worried about losing her job.

[00:23:39] You know, someday encoders,

[00:23:41] you know, feel like they're going to

[00:23:42] say we're all we're all have this

[00:23:43] kind of either varying degrees

[00:23:46] of fear around AI.

[00:23:47] So when you look at like,

[00:23:48] how do we keep our staff

[00:23:51] in our health clubs,

[00:23:52] you know, defensible against AI?

[00:23:53] What does that mean to you exactly?

[00:23:55] I'm super curious about that.

[00:23:57] Yeah, you know, I did a

[00:23:59] I read a weekly or not

[00:24:01] weekly, but TechCod monthly

[00:24:03] letter in the CBI magazine

[00:24:05] that that is put out

[00:24:06] and by Earth and now health and fitness.

[00:24:09] And and I think that

[00:24:10] wow, a year ago

[00:24:12] when Chad GBT was really kind of

[00:24:14] really just getting his first sea legs.

[00:24:16] I actually typed in the prompt

[00:24:18] and said, what are the parts of the

[00:24:19] health in person health

[00:24:20] and fitness industry

[00:24:22] that cannot be taken over by AI?

[00:24:25] We're asked at the question.

[00:24:26] And so what's interesting

[00:24:28] is it dovetails a lot with

[00:24:29] where we are strategic

[00:24:31] which is social connections among people

[00:24:33] like going and having that

[00:24:34] in person experience.

[00:24:36] It's not going to change.

[00:24:37] You know, we're social creatures.

[00:24:38] You know, you've seen this idea

[00:24:40] of remote work versus office work.

[00:24:41] You know, I realize that plenty of people

[00:24:44] never want to set foot in an office again.

[00:24:46] I get that.

[00:24:46] That being said, I do know that

[00:24:48] having social connections

[00:24:49] and having

[00:24:51] interpersonal relationships

[00:24:52] AI is not going to get

[00:24:53] in the middle of it.

[00:24:54] Just like they're not getting

[00:24:55] in the middle of the one on one

[00:24:56] personal training session.

[00:24:57] If you have that relationship

[00:24:58] trainer, but I also believe

[00:25:00] that putting your head in the sand

[00:25:02] and saying that AI won't affect us

[00:25:04] isn't a great strategy

[00:25:05] because ultimately it's going to

[00:25:06] have to influence how we do our business.

[00:25:09] Because I'll use examples, you know,

[00:25:10] obviously marketing is coming into this

[00:25:12] right with their AI tools of

[00:25:14] optimizing the right kind of marketing

[00:25:16] for the right type person.

[00:25:17] You know, how do we make sure

[00:25:18] that Chris doesn't quit, right?

[00:25:20] And it may even mean

[00:25:21] that I need a phone call, but

[00:25:23] Eric, it looks like based upon

[00:25:24] what we know about you,

[00:25:25] you need to text, you know,

[00:25:26] so you how to actually optimize

[00:25:29] the experience of the marketing side

[00:25:32] on the sales side.

[00:25:33] I think you're going to see

[00:25:34] some of these things that

[00:25:35] were done by people, right?

[00:25:38] If you think about selling,

[00:25:39] why not go online and craft

[00:25:40] your membership online with somebody

[00:25:41] and build exactly what you want

[00:25:43] versus having to say approach

[00:25:45] an office and go on a tour, right?

[00:25:47] Because a lot of people prefer

[00:25:48] to do this from the comfort of their home

[00:25:49] rather than actually have to go in anywhere.

[00:25:51] But when I think about clubs like man,

[00:25:53] part of being in a club is being around people

[00:25:56] and having a shared experience.

[00:25:57] So it costs a lot more, you know,

[00:25:59] and it never seems to be an issue

[00:26:01] to sell those tickets

[00:26:02] for a hell of a lot of money.

[00:26:03] You know, I think that people

[00:26:05] really do enjoy that in-person feeling.

[00:26:08] But when that happens,

[00:26:09] I think, you know, it's incumbent

[00:26:11] on clubs to make that

[00:26:12] as enjoyable as possible.

[00:26:13] So if if people love that

[00:26:16] and they come in and experience

[00:26:17] like your friendly, friendly team

[00:26:19] or their other members who they like

[00:26:20] or their workout buddies

[00:26:21] and that type of thing,

[00:26:22] then they man,

[00:26:24] they're going to have a great time.

[00:26:25] They come in and they're all alone

[00:26:26] running on a treadmill

[00:26:26] and no one ever talks to them

[00:26:28] and no one engages them.

[00:26:29] No one ever says anything to them.

[00:26:31] And then they walk out and leave.

[00:26:32] At some point,

[00:26:32] they're going to wonder

[00:26:33] if they're better off, you know,

[00:26:35] joining a club

[00:26:35] that's the cheapest possible

[00:26:37] and putting a basement treadmill in.

[00:26:38] And I think that's where

[00:26:39] if we're going to be

[00:26:41] really trying to combat this world of

[00:26:43] of what I would call

[00:26:44] tech driven solution

[00:26:45] instead of in person.

[00:26:46] We've got to set up our game

[00:26:48] and be better, you know,

[00:26:49] and that's and that

[00:26:50] and that ultimately will be the key.

[00:26:52] You know, it is disheartening.

[00:26:53] You know, I go to the grocery store

[00:26:55] and everything self checkout,

[00:26:56] which I hate, obviously.

[00:26:58] I mean, some people probably prefer it.

[00:26:59] And if you do fine.

[00:27:01] But I mean, for me, like this idea

[00:27:03] that that's better than someone

[00:27:05] who's there who I can talk to

[00:27:06] and hang out with.

[00:27:06] I don't I don't buy it

[00:27:07] because invariably I screw something up

[00:27:09] and the attendant has to come over

[00:27:10] anyway and back to square one.

[00:27:12] Right.

[00:27:13] So I think that

[00:27:14] I think that that there's a

[00:27:15] there's an advantage to to to that.

[00:27:18] Now on the workout side,

[00:27:20] I think actually being able to build in

[00:27:22] and I'm sure there's plenty of folks

[00:27:23] that you can partner with this club company

[00:27:25] already out there now.

[00:27:26] Right.

[00:27:26] But being able to build

[00:27:28] those customized workout programs

[00:27:30] for people when they're not with trainers,

[00:27:32] I think is a huge opportunity.

[00:27:33] You know, people get bored

[00:27:35] of the same stuff all the time.

[00:27:36] And if we can do a better job

[00:27:38] of, number one, providing workouts

[00:27:40] that are going to be effective

[00:27:42] for that individual using AI tools

[00:27:44] and using what we know about that member

[00:27:47] and then being able to measure results

[00:27:48] to show that they're making progress

[00:27:49] by being there.

[00:27:50] I mean, I see that as just

[00:27:52] absolutely huge opportunity

[00:27:53] for the industry

[00:27:54] because we are terrible at results.

[00:27:56] We're much better at it.

[00:27:57] Yeah, and it's I've said this

[00:27:59] on this podcast numerous times

[00:28:00] and probably in many more conversations.

[00:28:03] But, you know, program design

[00:28:05] doesn't really need to be done by the trainer,

[00:28:07] even if it's a personal training setting.

[00:28:09] Right.

[00:28:09] Like it's time consuming.

[00:28:11] It's never like

[00:28:12] there's a lot of things

[00:28:13] that technology can do that,

[00:28:14] you know, we may not be able to do

[00:28:16] like bring in data from,

[00:28:18] you know, wearables or whatever.

[00:28:20] It may be even subjective data

[00:28:21] given to by the client

[00:28:23] that can adjust.

[00:28:24] You know, that way we can focus

[00:28:25] more of the time on the human

[00:28:26] and human stuff, right?

[00:28:27] Like I don't think that's necessary.

[00:28:29] This episode of the Future of Fitness

[00:28:31] is brought to you by our friends at Wotify.

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[00:29:42] Now on to the show.

[00:29:46] A lot of people who coaches

[00:29:47] or trainers out there

[00:29:48] pride themselves on being

[00:29:49] one of the best program designers

[00:29:50] out there like I'll just clue you in

[00:29:52] is no one really cares that much.

[00:29:54] Right.

[00:29:54] No, unless you're a professional athlete.

[00:29:57] Hey, that's about right.

[00:29:58] Well, I feel like we all

[00:29:59] I mean, I used to gym.

[00:30:00] We build a library.

[00:30:01] I mean, whether you actually

[00:30:02] are really diligent

[00:30:02] about planning everything out

[00:30:04] or you're somebody who just goes in

[00:30:05] and figures it out as you go along.

[00:30:07] A lot of us have developed

[00:30:07] our own personal libraries on that.

[00:30:09] And we still have a great time doing it.

[00:30:11] You know, I think where

[00:30:12] we look at the trainers

[00:30:13] want to maybe push

[00:30:13] a little harder than you would have gone.

[00:30:15] Right.

[00:30:16] We're going to show you something new.

[00:30:17] But I agree with you.

[00:30:18] I think people people sometimes inflate their value

[00:30:21] as it relates to certain aspects of their jobs.

[00:30:23] Program design, potentially being one of those.

[00:30:25] Yes.

[00:30:26] Slight shift here.

[00:30:26] But it's something that

[00:30:28] and maybe it's just my age.

[00:30:29] Right.

[00:30:30] I'm in my upper 40s now.

[00:30:31] And I feel like now in my life is when

[00:30:33] I've never seen this much

[00:30:34] comparison of generations.

[00:30:36] Like everyone's like,

[00:30:37] you know, the Broomers

[00:30:38] versus the millennials and like,

[00:30:40] you know, Gen X and Gen Y.

[00:30:41] Like there's always like

[00:30:42] this seems to be this

[00:30:43] this categorization of people by age

[00:30:46] and the difference between the generations.

[00:30:48] I mean, when you guys look at how you

[00:30:51] I think a lot of that has to do with

[00:30:53] how fast technology has grown

[00:30:54] over the last 30 to 40 years.

[00:30:56] Right.

[00:30:56] Like people, I don't know,

[00:30:58] we're probably about the same interest,

[00:31:00] but like, you know,

[00:31:01] we probably grew up

[00:31:02] with almost no technology.

[00:31:03] Right.

[00:31:04] Like no internet.

[00:31:05] I was a latchkey kid.

[00:31:07] Right.

[00:31:07] I would just take off

[00:31:09] say be home before sundown.

[00:31:10] That was what I did.

[00:31:12] And now, you know,

[00:31:12] like many generations are born with technology

[00:31:15] is just digital natives.

[00:31:16] Right.

[00:31:16] So I think that's kind of part of it.

[00:31:18] But anyway, I'm kind of going off

[00:31:20] from Tangee here.

[00:31:20] But the point I want to make is like

[00:31:22] the question I want to ask is

[00:31:23] are do you guys intentionally

[00:31:24] look at different generations

[00:31:26] and how to serve them?

[00:31:28] Or is that critical to what

[00:31:29] you guys do as a strategy

[00:31:30] or is it something that you're aware of

[00:31:32] but you're not really focusing on a whole lot?

[00:31:34] Like, how do you how do you tackle that?

[00:31:36] Yeah, it's interesting.

[00:31:36] You know, we don't typically target

[00:31:39] aggressively the youngest demographic.

[00:31:41] You know, our clubs

[00:31:42] tend to operate a price point

[00:31:44] that is towards the higher end of the market.

[00:31:46] We try to our average age of members

[00:31:48] is oftentimes closer to 50.

[00:31:50] Certainly in most cases,

[00:31:51] in some cases over 50

[00:31:53] and always closer to 50 than 40.

[00:31:54] Right.

[00:31:54] So I think they have a

[00:31:56] they have an opportunity, obviously,

[00:31:57] to attack the Gen Z,

[00:31:58] as you want to call them that

[00:31:59] with technological solutions.

[00:32:01] And people really invest

[00:32:02] a lot of money in catering to that.

[00:32:03] You know, but I also think in our world,

[00:32:06] the consumers who have

[00:32:07] the most disposable income

[00:32:08] in the most most well aren't 25,

[00:32:10] despite what Instagram

[00:32:11] we want you to believe.

[00:32:12] Right.

[00:32:13] You know, our core member

[00:32:14] is somebody who owns their home,

[00:32:17] is established, is stable,

[00:32:19] has disposable income or wealth,

[00:32:21] certainly enjoys a higher level

[00:32:22] of service and attention

[00:32:24] when they walk through the doors

[00:32:25] of their fitness center,

[00:32:26] wants to be part of a community

[00:32:28] as opposed to just, you know,

[00:32:29] being a member of a place

[00:32:30] that really you're

[00:32:32] you're somebody who is connected there.

[00:32:33] That's like our core consumer.

[00:32:35] And I think there's this huge temptation

[00:32:36] to over technology everything.

[00:32:39] And I'm the last person to look.

[00:32:40] I'm not a paper guy.

[00:32:41] I'm not like print tons of paper

[00:32:42] and print reams of it

[00:32:43] and all of that.

[00:32:44] I'm not.

[00:32:45] I'm certainly not somebody

[00:32:47] who's trying to be a Luddite

[00:32:48] and say, hey, no tech.

[00:32:49] And let's all just

[00:32:51] write our names on a piece of paper

[00:32:52] when we walk in the door.

[00:32:53] But I think that there's a tendency

[00:32:55] to over overemphasize technology

[00:32:57] at the expense of human connection

[00:32:59] and ultimately.

[00:33:00] And that is a challenge

[00:33:01] because if you're trying

[00:33:02] to cater to somebody

[00:33:03] who's say 70 years old,

[00:33:05] thinking about my parents

[00:33:05] who are in their 70s

[00:33:06] and you're catering to them

[00:33:08] like they don't want to sign up on an app.

[00:33:10] They want to talk to somebody.

[00:33:11] Right. They don't want to.

[00:33:13] You know, I've been to some

[00:33:14] some locations where

[00:33:16] you literally show up,

[00:33:17] you scan a QR code,

[00:33:18] you buy a membership on the app,

[00:33:19] you scan your barcode

[00:33:20] and then you walk in.

[00:33:21] That's the only way

[00:33:22] to even get in the club.

[00:33:22] And that's the only way

[00:33:23] you can buy a membership

[00:33:24] is just to buy it on the app.

[00:33:25] My parents are never joining that club.

[00:33:27] They're never going to go there.

[00:33:28] And the US, there are millions

[00:33:30] and millions and millions,

[00:33:31] tens of millions of these people.

[00:33:32] Right.

[00:33:33] And so I think that

[00:33:34] the tendency goes that way

[00:33:36] where if we look at generational,

[00:33:37] we're so worried about

[00:33:38] what this next generation doing is doing

[00:33:41] that we're actually forgetting

[00:33:42] about the opportunity

[00:33:43] that's in front of us.

[00:33:44] Because when we're looking

[00:33:45] at somebody who's on the,

[00:33:46] you know, not that you don't have

[00:33:48] that you have zero technology

[00:33:49] and not advocating again for that.

[00:33:51] But this idea is like,

[00:33:53] wait a minute,

[00:33:53] like the older active adult

[00:33:55] is a massive opportunity for us still.

[00:33:58] You know, the number of people

[00:33:59] we're getting on Medicare

[00:33:59] grows 8% a year.

[00:34:01] OK, 8%.

[00:34:02] And that's 65 plus.

[00:34:03] People are living longer and longer.

[00:34:05] People want to do things

[00:34:06] longer and longer

[00:34:07] and live healthier and healthier.

[00:34:09] So there's a real need.

[00:34:10] And I don't understand

[00:34:12] why we try to, you know,

[00:34:13] we all fight for the same people

[00:34:14] who switch memberships,

[00:34:15] you know, because they

[00:34:16] switch departments.

[00:34:17] We're not going to have somebody

[00:34:18] for 10, 15, 20, 30 years

[00:34:19] as a member of the club.

[00:34:20] To me, that's just a better value.

[00:34:22] So while I agree that

[00:34:24] we do get generationally focused,

[00:34:25] I think too much

[00:34:26] of that generational focus

[00:34:27] is on trying to attract

[00:34:28] the younger generations

[00:34:30] at the expense of actually understanding

[00:34:31] the opportunity that literally

[00:34:33] is waiting outside your door.

[00:34:34] Well said.

[00:34:34] Very grounding.

[00:34:36] What you stated there,

[00:34:38] Tracey, I think it's really good.

[00:34:39] I want to give a certain amount of time

[00:34:40] on this interview, too,

[00:34:42] to Weld Health.

[00:34:43] Sure.

[00:34:43] Really interesting.

[00:34:44] You know, I'm

[00:34:45] I'm embarrassed to say

[00:34:46] it wasn't really on my radar

[00:34:47] until we started talking.

[00:34:48] And then you started

[00:34:49] giving me some of the numbers

[00:34:50] and the insights

[00:34:50] of what you guys are doing.

[00:34:51] Like, this is fantastic.

[00:34:52] So can you describe

[00:34:53] like what what is Weld Health?

[00:34:55] What is your involvement there?

[00:34:56] And then we can kind of get into

[00:34:58] some of the insights

[00:34:59] that you're cleaning for this year.

[00:35:00] Sure.

[00:35:01] I mean, Weld

[00:35:01] as it started out

[00:35:02] as an internal project at ACAC.

[00:35:03] So we were in Long

[00:35:05] during physician

[00:35:05] referred exercise programs

[00:35:07] and we wanted to track our outcomes.

[00:35:09] And anybody who started

[00:35:10] building software

[00:35:11] can tell you that it's never done.

[00:35:13] You just keep bolting stuff onto it.

[00:35:14] And over time, we realized

[00:35:16] that there were more

[00:35:16] opportunities in the space.

[00:35:17] So we started working

[00:35:18] with Johns Hopkins

[00:35:20] and then we found out

[00:35:21] that the CDC

[00:35:22] or the Medicare was going to be

[00:35:24] or CMS rather

[00:35:24] was going to be reimbursing

[00:35:26] for diabetes prevention program.

[00:35:28] So maybe we can help

[00:35:29] clubs facilitate that.

[00:35:30] We want a grant with them.

[00:35:31] This goes back to 2019

[00:35:33] and then all of a sudden 2020 happens

[00:35:36] and everyone disappears

[00:35:37] from what I call in-person fitness.

[00:35:39] Right.

[00:35:39] It's like, oh crap,

[00:35:40] like a lot of the work

[00:35:41] that we've been doing

[00:35:42] was now pushed aside.

[00:35:43] And quite frankly,

[00:35:44] you know, that wasn't

[00:35:45] the first thing clubs were bringing back

[00:35:46] when they reopened their doors.

[00:35:47] They were about masks and sanitizer

[00:35:49] and spacing and all those things.

[00:35:50] So, you know, for Weld,

[00:35:52] we continued to serve our clients here,

[00:35:53] but then we started working on

[00:35:54] processing all sorts

[00:35:56] of different kinds of claims.

[00:35:57] So we work for with health care.

[00:36:00] We help process claims

[00:36:01] for retail settings

[00:36:02] all over the country.

[00:36:03] We work with, obviously, health clubs.

[00:36:05] We work with YMCAs, JCCs,

[00:36:06] pharmacies, community health centers,

[00:36:08] you name it.

[00:36:09] The idea is that retail settings,

[00:36:10] places that are outside

[00:36:11] of the clinical sphere,

[00:36:12] don't have a lot of the tools

[00:36:13] they need to adequately bill

[00:36:16] for services and administer those programs

[00:36:19] that are going to get them paid

[00:36:20] and bring participants into their location.

[00:36:23] And so we started working on that,

[00:36:24] you know, really in earnest,

[00:36:26] you know, during the pandemic

[00:36:27] and then continue to build that out.

[00:36:28] We added support for

[00:36:30] some of the most popular

[00:36:31] third-party payer programs

[00:36:32] in the industry.

[00:36:33] So if you know about those,

[00:36:35] obviously there's Silver Sneakers

[00:36:36] and Optum with the Renew Active

[00:36:38] and Activeness bit from Ash.

[00:36:39] And yeah, there's a bunch.

[00:36:41] We won't go into all the programs

[00:36:42] and then trying to help clubs

[00:36:43] actually get paid more money

[00:36:44] by delivering all.

[00:36:45] So, you know, we started working with clubs

[00:36:47] to simplify that process,

[00:36:50] you know, make it easier

[00:36:51] to determine who's eligible,

[00:36:52] make it easier to get paid,

[00:36:53] make it easier to turn off people

[00:36:54] who potentially aren't eligible.

[00:36:56] So we put all that under one big platform.

[00:36:59] And so with Well, we started,

[00:37:00] you know, we grew, we were really small

[00:37:02] and then we kept on growing

[00:37:03] and probably from 2022 in October

[00:37:07] until now, it's about,

[00:37:08] we've grown our location count

[00:37:09] by about 10 times.

[00:37:10] So we're at about 6,000 locations

[00:37:12] we serve around the country

[00:37:14] and continuing to grow

[00:37:16] and continuing to add services

[00:37:18] and payers and I think our goal

[00:37:21] in a big picture sort of way

[00:37:23] is to capitalize on what is inevitable

[00:37:25] even if slow movement

[00:37:26] towards third-party paid activities

[00:37:28] and services inside of community setting.

[00:37:30] And so speaking from a fitness standpoint,

[00:37:34] we don't see that slowing down.

[00:37:36] We see that increasing,

[00:37:37] you know, to the point I made on Medicare growth,

[00:37:39] you know, the programs that serve Medicare members,

[00:37:41] that is those people who are going

[00:37:42] to get a Medicare Advantage plan

[00:37:44] and have a free fitness membership.

[00:37:46] Those programs are growing by 8% a year.

[00:37:48] So what does that mean?

[00:37:49] That's 8% of the, you know,

[00:37:51] if you think about 8%,

[00:37:52] that means that group

[00:37:54] and right now that size of that market

[00:37:55] is about 15 million people who signed up.

[00:37:58] So on the Medicare Advantage side,

[00:37:59] so you're gonna go 8% a year on that,

[00:38:01] it's about a million a year, right, or more.

[00:38:03] So every, you know, so every single year

[00:38:07] that many more people are getting a free membership.

[00:38:10] Now granted there's some people who fall off

[00:38:11] on the backside of that, right,

[00:38:12] who pass away or otherwise can't work out.

[00:38:15] But each year all of that's coming

[00:38:16] and we grow our health club industry from 2020,

[00:38:19] 2010 to now at 3%, 3.4%.

[00:38:21] So it's growing at double the growth rate, right,

[00:38:24] coming in and that doesn't account for things

[00:38:27] like a gym pass or a class pass or FitOn

[00:38:30] or Ziamo, these corporate,

[00:38:32] Husk and Global Fit, you know, corporate entrants

[00:38:35] who are now continuing to mine corporations

[00:38:37] for group-based memberships.

[00:38:38] So putting all that in together,

[00:38:40] you know, the fundamental C change is that,

[00:38:43] you know, just like a doctor's office

[00:38:45] accepts all types of insurance,

[00:38:47] we at a health club need to understand

[00:38:48] that while we're still gonna get cash pay,

[00:38:50] the percentage of people who are going

[00:38:51] to be insurance based or third party based pay

[00:38:54] is going to increase and is not slowing down.

[00:38:57] You mentioned EGEM, their WellPass network

[00:38:59] has just been introduced in the States

[00:39:00] and it's huge in Germany right now.

[00:39:01] You know, the biggest country for gym pass

[00:39:03] isn't the US, it's Brazil, right?

[00:39:06] I mean, they will continue to grow here

[00:39:08] in the US market and you have this great,

[00:39:12] you know, kind of group of members

[00:39:14] and who's processing, who's dealing with it,

[00:39:16] who's making sure that it's all being handled properly.

[00:39:18] And so Well Health, we felt like there was room

[00:39:21] to step in that void to make sure

[00:39:23] that the two sides could talk to each other

[00:39:25] and everyone felt good about the programs

[00:39:27] and the transaction.

[00:39:28] How does that work from the member consumer perspective?

[00:39:34] Are they like, are they made, like do you help inform them

[00:39:37] of the programs that are available to them?

[00:39:39] Like how does it, I understand the involvement

[00:39:41] at Health Club and why it's so critical

[00:39:43] and I could probably guess to how a lot of that works

[00:39:46] but from the member consumer side,

[00:39:47] how do they interact with this?

[00:39:49] Yeah, there's, you know, so Well doesn't take

[00:39:51] the position of marketing programs.

[00:39:52] We try to be agnostic, you know, we love them all.

[00:39:55] We think they're all great, you know,

[00:39:56] but I think the members hear about it often

[00:39:59] from their health insurer, they're marketed to directly.

[00:40:01] I think that you have a couple of challenges for clubs.

[00:40:04] One is which programs do you decide to take?

[00:40:06] Which ones are right for you

[00:40:07] because they may not all be right for you

[00:40:08] at your price point or reimbursement level.

[00:40:11] And then beyond that is from a member standpoint,

[00:40:15] when they come in,

[00:40:16] a lot of times they don't know what program they have.

[00:40:17] What do I have?

[00:40:18] I think I should be here.

[00:40:21] How do I sign up?

[00:40:22] And so I think that's a challenge.

[00:40:24] And the last part is once they're there,

[00:40:25] many of these programs are based on visits.

[00:40:28] So if the person, not all, but some,

[00:40:30] but the majority are based on visits,

[00:40:32] so they don't attend, club doesn't get paid.

[00:40:34] So club work, you know,

[00:40:35] there's a lot of groups out there trying to figure out

[00:40:36] how do I get that person to visit more times

[00:40:39] so I get the maximum amount of revenue.

[00:40:41] Groups like V-Labs for example,

[00:40:42] are really focused on how do I grow that business

[00:40:46] by recruiting the members to be more active.

[00:40:48] So I do feel like those are the challenges

[00:40:51] for the member.

[00:40:52] On the other side from the member is, you know,

[00:40:53] what are the rules around your program?

[00:40:56] You mentioned this early on with Studio Hopping

[00:40:57] and people going to studio, studio,

[00:40:59] and what's that look like in the headwinds

[00:41:00] and all the competition.

[00:41:01] A lot of these networks,

[00:41:02] and some of them are 25 to 30,000 clubs strong

[00:41:04] in terms of size,

[00:41:05] allow for a lot of flexible use between various locations.

[00:41:09] So as you move from location to location,

[00:41:11] so a person can have a membership

[00:41:14] that is either through their company

[00:41:15] or through their insurance plan

[00:41:17] that allows them to visit whatever location they, right?

[00:41:19] So it's kind of cool, right?

[00:41:20] Like, so, you know, wow,

[00:41:22] I'm gonna go to a stretching location this month,

[00:41:26] you know, on Saturday,

[00:41:27] but on Friday I wanna do Pilates.

[00:41:29] Okay, cool.

[00:41:30] I can just do that now and it's all paid for

[00:41:32] and free to the member who pays nothing.

[00:41:34] So that's a pretty good deal if you're a member, right?

[00:41:36] That's a chance to eat.

[00:41:38] It's pretty awesome.

[00:41:39] So, you know,

[00:41:40] it's hard to imagine that type of activity doesn't grow.

[00:41:43] So let me get this straight.

[00:41:44] It's cheaper and more flexible.

[00:41:45] Okay, that sounds like a good deal.

[00:41:47] And so I think that's where we feel like

[00:41:49] there's gonna be continued growth.

[00:41:51] It's certainly as the members figure out

[00:41:53] how easy it is to get the work up they want.

[00:41:56] Awesome, man.

[00:41:57] You know, HSA, FSA was another big topic of conversation.

[00:42:02] Once again on this podcast

[00:42:04] and the Health and Fitness Association conference,

[00:42:08] but you know,

[00:42:09] how much focus are you guys putting there right now

[00:42:11] or is that something you're going to kind of wait and see?

[00:42:14] Yeah, and we have some plans around that,

[00:42:16] you know, I think in terms of how we would approach it.

[00:42:17] You know, as I mentioned to you kind of

[00:42:18] in our opening conversation,

[00:42:20] I think it's pretty new

[00:42:22] and how people are going to reimburse

[00:42:25] for these services in clubs and studios and the like.

[00:42:29] I think there's some,

[00:42:30] there's a number of folks out there

[00:42:31] really trying to help consumers achieve access

[00:42:34] to their HSA, FSA funds for fitness

[00:42:36] through letters of medical necessity.

[00:42:38] And you know, I think it's very new.

[00:42:39] So it's frothy.

[00:42:41] We're gonna take a patient approach.

[00:42:42] I mean, the hard part about software by the way

[00:42:44] is once you build it,

[00:42:45] it's really hard to tear it all out

[00:42:47] then basically start over again.

[00:42:48] You end up just tinkering with stuff

[00:42:50] that maybe was crappy to begin with, right?

[00:42:52] So you had a bunch of flawed assumptions

[00:42:54] and you're now trying to repair for the next 10 years.

[00:42:56] But I think it's gonna come, right?

[00:42:58] There's no doubt it's gonna come

[00:42:59] under what context and how to best approach it.

[00:43:02] And I'll give one example, you know,

[00:43:03] I think because we help a lot of,

[00:43:06] of course, say YMCAs deliver

[00:43:07] their evidence-based health programs

[00:43:09] like Enhanced Fitness for Fall Prevention

[00:43:12] or Certainly Diabetes Prevention

[00:43:14] or Live Strong Cancer, the like.

[00:43:15] There's no reason why those programs

[00:43:17] should not be eligible for HSA, FSA funds.

[00:43:20] And by the way, those programs come

[00:43:22] with a membership in most cases.

[00:43:24] So if I'm looking at it from the position

[00:43:26] of a health club operator,

[00:43:28] those are things that are really easy to get paid for

[00:43:31] because there's no drama about what is necessity.

[00:43:33] You know, if a physician recommends somebody

[00:43:35] start working out because they have cancer,

[00:43:37] what program could you build for them

[00:43:39] inside of your clubs

[00:43:41] that makes taking HSA and FSA payment

[00:43:43] 100% a no-brainer, right?

[00:43:46] And yeah, these letters will last.

[00:43:48] These letters of medical necessity will last a year.

[00:43:51] So there's certainly an opportunity for you

[00:43:53] as a club owner or operator to sell

[00:43:55] a year-long membership to somebody upfront

[00:43:58] because gosh knows in December of this year,

[00:44:00] everyone's trying to use their,

[00:44:02] show their FSA funds before the 31st.

[00:44:04] You can sell a year-long membership to somebody.

[00:44:06] You know, that's a pretty cool opportunity.

[00:44:07] I predict that in December,

[00:44:09] there's gonna be a ton of people

[00:44:10] jumping on their sub and waiting.

[00:44:12] Yeah, yeah, super interesting.

[00:44:13] Well, Chris, I appreciate you coming on.

[00:44:17] Last question I always have is,

[00:44:18] as an industry, what do you need help with?

[00:44:21] What would you like to hear from people about

[00:44:23] if they're gonna reach out to you?

[00:44:25] Oh gosh, you know, I think,

[00:44:27] well, there's all the stuff that I've been,

[00:44:29] my brain, man, what are all the things

[00:44:31] that have happened to us recently that we need help with?

[00:44:32] You know, ultimately, I think for me,

[00:44:35] it's gonna be around

[00:44:37] managing the people side of the business.

[00:44:39] You know, I think everyone goes to MBA school

[00:44:41] to learn how to run spreadsheets

[00:44:43] and build models and do all this.

[00:44:44] But, you know, managing the people side of the business

[00:44:47] is easily the hardest one.

[00:44:48] You know, we have in our clubs about 1,500 people

[00:44:51] that work for us on full part time

[00:44:53] and probably a couple thousand in the summer.

[00:44:56] And so how much of our business is people?

[00:44:58] A lot of it.

[00:44:59] And how do we develop better techniques

[00:45:01] to train our team?

[00:45:03] How do we build better techniques

[00:45:04] to motivate and inspire?

[00:45:07] You know, what are the areas

[00:45:08] in which we can become an employer of choice for people?

[00:45:11] And by that return,

[00:45:13] provide something of value to the team.

[00:45:16] That's where my brain is.

[00:45:18] You know, I think that,

[00:45:19] we can pick out a treadmill,

[00:45:20] we can pick out paint colors, you know,

[00:45:22] but the nuance in the art of how to develop and run

[00:45:25] and manage a great culture, a great team, you know,

[00:45:27] I'm always curious about,

[00:45:29] about your techniques for delivering that

[00:45:32] and learning more about those who do it well.

[00:45:34] Awesome.

[00:45:34] And if people want to get ahold of you, Chris,

[00:45:37] I mean, I know you're on LinkedIn,

[00:45:39] fairly active there.

[00:45:40] Anywhere else you'd want people to go?

[00:45:42] Yeah, you send me an email.

[00:45:43] It's chris at acac.com.

[00:45:46] So, or chris at weldhealth.com,

[00:45:48] either one, W-E-L-L-D-H-E-L-T-H,

[00:45:51] H-E-A-L-T-H, how you got it?

[00:45:53] You know, send it today.

[00:45:54] We'll get it out.

[00:45:55] Thanks man.

[00:45:56] Either one, send me an email, it's great.

[00:45:57] Love to hear from you.

[00:45:58] And yeah, Eric, it's been a true pleasure.

[00:46:00] It's great to reconnect on this,

[00:46:01] on the podcast and, you know,

[00:46:04] I appreciate you having me out.

[00:46:05] Hopefully it was,

[00:46:06] it was an interesting discussion for you.

[00:46:08] Oh yeah, for sure, man.

[00:46:09] Pleasure is all mine.

[00:46:10] So that's, that is a wrap.

[00:46:12] Ladies and gentlemen, Chris Crater.

[00:46:14] Hey, wait, don't leave yet.

[00:46:16] This is your host, Eric Malzone.

[00:46:18] And I hope you enjoyed this episode

[00:46:20] of Future of Feminists.

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[00:47:08] and this is the Future of Fitness.

[00:47:09] Have a great day.