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features

Talking point: The middle man

Many industries have aggregators so it makes sense for the health and fitness industry to have them too. Are they a force for the good, or could it become a case of the tail wagging the dog? Kath Hudson reports

Published in Health Club Management 2019 issue 7

The aggregator issue led to a spirited debate at the Active Uprising conference, indicating that there are grievances and mistrust on both sides. There are a few different types of aggregator, and any operator looking to engage should do their research to find the right fit. Companies like Rig and ClassPass mainly give studio/boutique customers the option of accessing multiple studios, while Hussle (formerly Payasugym) sells consumers monthly memberships and pays gyms per visit. Gympass has a similar model, but sells to corporates. MoveGB lists services for free and encourages people to become members.

As well as offering consumer choice, aggregators give operators wider reach, data and the opportunity to sell unsold slots. It should be possible to achieve a win-win, but some operators say they have been bullied by aggregators, who promise one thing when onboarding them and further down the line demand exclusivity and/or higher commissions, otherwise they will withdraw their support. This is a massive deal for an independent boutique and could lead them to going out of business, which doesn’t benefit anyone.

PureGym’s CEO, Humphrey Cobbold, believes that aggregators disrupt, and endanger, the traditional gym model, which has been built on monthly memberships. He says that if they are allowed to gain a position of power, they can demand more commission and set pricing, which ultimately will be to the cost of consumers, resulting either in higher memberships or inferior facilities.

Hussle’s Neil Harmsworth argues aggregators are great for consumers and it is only the budget gyms that are resistant to them, as they “have built market-leading positions by cannibalising full-service operators and putting downward pressure on industry price points and margins.”

Many other industries do have aggregators – which we can learn from – but they are different. The travel and property industries aren’t trying to build customer loyalty or inspire behaviour change in the way the health and fitness sector is. Our industry has the lofty ambition to get people active and moving, which is different to booking a flight – this makes it less cut throat and instead calls for co-operation.

The middle man/woman is definitely present in the industry, so what is the best way forward to ensure that everyone wins? We ask the experts…

Humphrey Cobbold
PureGym: CEO
Humphrey Cobbold

As an industry, we need to ensure we do not sleep walk into a situation where we become over reliant on aggregators, because if they are allowed to get too powerful they will control pricing. This is exactly what has happened with Booking.com, for hotels, and Rightmove, for estate agents. In the Polish health and fitness market this has already happened with Benefit Systems, which provides operators with 50 per cent of their members and has forged a position where it controls the market.

If we allow aggregators to become this dominant in the UK health and fitness market, they will inevitably increase their margins at the expense of the operators’ margins, and the operator will struggle to say no to accepting a lower price per visit.

Aggregators claim they are good for consumers, since they are driving incremental joiners/members and help the industry to increase access and reduce marketing costs. In less penetrated markets this may be true, such as Brazil or Spain, but independent, fact-based analysis in the UK and other markets suggests the modest benefits aggregators may bring are much lower than the cost to the operator.

"If an operator is going to engage, there are some golden rules: remain in control, think about the future not just the present, never sign long term or exclusive deals and monitor the situation very, very carefully"

Two of the major aggregators have each raised around US$500m. I have worked with some of the Silicon Valley providers of that capital and I know they will be asking these aggregator platforms to try to get positions of strength and pricing power in this market. The only viable way they can make a return on the huge investment is by trying to extract profits currently earned by the hard graft and capital investment of operators.

If an operator is going to engage, there are some golden rules: remain in control, think about the future not just the present, never sign long term or exclusive deals and monitor the situation very, very carefully. Operators must learn how to use aggregators to drive reach and trial, but to avoid being so reliant on them that they can dictate terms.

This means retaining control of the inventory released to aggregators – for example, only one place in peak classes, and using aggregators to fill off-peak classes. Direct customers should be rewarded.

When approaching an agreement with an aggregator, my recommendation would be to only trial a small number of gyms, not the whole business. Do not accept incentive payments or guarantees to sign up for long periods of time – make sure you can exit on three months’ notice. Measure the true underlying incremental performance very carefully. Above all, never let an aggregator control a material chunk of your members.

If the right decisions are taken, we will have a situation whereby the aggregators work for and service the industry, not the other way round. Going forward, I would not rule out a situation in which an industry-owned “cooperative” aggregator is created which provides benefits to consumers but ensures the industry business model can be sustained for the good of all in the long run.

Operators must not become reliant on aggregators, says Puregym’s CEO
Eamon Lloyd
Gympass: director of partnerships
Eamon Lloyd

The increasing number of operators partnering with third parties to grow shows how these types of business models can expand the industry in terms of both members and revenue. Gympass is an exclusively B2B model: companies investing in the health of their employees are turning to us to make introductions to the right facility partners.

Our deeper relationship with a niche group of employers means we can match their needs nicely to local operator partners’ facilities, driving a significant penetration far beyond the traditional corporate wellness model. On average, 80 per cent of the members we send to our partners are new and we are helping to defeat inactivity by offering our corporate clients a variety of activities and facilities.

"In order to achieve a win-win situation, it must be recognised that one size doesn’t fit all and operators shouldn’t believe an intermediary that suggests otherwise "

To avoid any pitfalls, we ensure operators approach the partnership carefully by answering the hard questions early on, taking time to get the deal right and knowing what success looks like for both parties. We urge operators to do their numbers and understand we are part of their growth strategy, not the whole solution. In order to achieve a win-win situation, it must be recognised that one size doesn’t fit all and operators shouldn’t believe an intermediary that suggests otherwise.

The industry is experiencing a rapid period of growth and change, operators willing to take the time to understand how a variety of innovative partnerships could benefit their business will do well. Through informed decisions, with respect to their business situation, they can capitalise on the opportunity to grow and, ultimately, ensure more people in the UK become and remain active.

Lloyd says aggregators are helping to defeat inactivity
Neil Harms-worth
Hussle: COO
Neil Harmsworth

The world is digital, so aggregation is here. Outside the budget gym sector, almost all the leading operators now use at least one of the main commercial aggregator services because there are huge advantages for collaborating with third parties that offer a proven route to customers.

At Hussle, we are experts at engaging with the Gen-Z and millennial ‘pre-member’ market and helping them to fit fitness into their lives on a basis that works for them. These are customers who are happy to pay a premium price through Hussle to access full-service clubs in a way that works for them, during a phase of their life that makes them unable to commit to a full membership.

Our main operator partners are full-service clubs whose primary revenue stream comes from contracted members, which makes our pre-member focus highly complementary to their business, as we provide them with incremental revenue and interaction with future members – a true win-win. Ultimately it will be the customers who determine what happens in the future. I always find it interesting to ask the operators I meet to look at their own behaviour. If you use aggregator services in other sectors, then you know how useful they can be.

I encourage all operators to simply have a conversation with companies like Hussle, Gympass or ClassPass to understand how each company can support your goals, and then meet with the operators who have fully embraced these services to learn from their experiences.

Chris Heron
The Engine Room: founder
Chris Heron

My experience with aggregators is that they are experts at on-boarding you, but further down the line they threaten you to become exclusive to them in a very aggressive manner. I have had negative experiences with two large aggregators concerning exclusivity. They over-rode verbal agreements we had by pointing out the small print. I found their way of doing business very underhand. They only provide an app – they don’t have any of the overheads – but they want to keep taking an increasing amount of the margin.

"My advice is to tread very, very carefully. Read and understand the small print, reach out to other studio owners to get their experience. Be strong and tough in your dealings with them and don’t let them push you around"

Unfortunately, in the London boutique market, aggregators are a necessary evil and, going forward, there is definitely a market for the high-end sites to create an industry-grown aggregator. In the meantime, operators need to be careful about how they deal with aggregators and make sure they do not become dependent on them. My advice is to tread very, very carefully. Read and understand the small print, reach out to other studio owners to get their experience. Be strong and tough in your dealings with them and don’t let them push you around.

On their part, aggregators need to provide greater transparency. They need to be more than just a platform, but work in partnership with operators to grow their business. This requires a human element, greater engagement and regular meetings. We’re in this industry to get people fitter and healthier, so there should be an element of working together, not this feeling that they’re working against you. Also we need less of the aggressive sales tactics – the hotel industry might be ready for it, but the health and fitness industry is not.

Heron says aggregators are a “necessary evil” in the boutique market
Fact check

In collaboration with other industry players, PureGym sponsored a piece of independent, fact-based research into aggregators and what they mean for our industry. Completed by the international consulting firm OC&C, this has been widely shared with operators, industry associations and the aggregators themselves. Copies are available from: [email protected]

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features

Talking point: The middle man

Many industries have aggregators so it makes sense for the health and fitness industry to have them too. Are they a force for the good, or could it become a case of the tail wagging the dog? Kath Hudson reports

Published in Health Club Management 2019 issue 7

The aggregator issue led to a spirited debate at the Active Uprising conference, indicating that there are grievances and mistrust on both sides. There are a few different types of aggregator, and any operator looking to engage should do their research to find the right fit. Companies like Rig and ClassPass mainly give studio/boutique customers the option of accessing multiple studios, while Hussle (formerly Payasugym) sells consumers monthly memberships and pays gyms per visit. Gympass has a similar model, but sells to corporates. MoveGB lists services for free and encourages people to become members.

As well as offering consumer choice, aggregators give operators wider reach, data and the opportunity to sell unsold slots. It should be possible to achieve a win-win, but some operators say they have been bullied by aggregators, who promise one thing when onboarding them and further down the line demand exclusivity and/or higher commissions, otherwise they will withdraw their support. This is a massive deal for an independent boutique and could lead them to going out of business, which doesn’t benefit anyone.

PureGym’s CEO, Humphrey Cobbold, believes that aggregators disrupt, and endanger, the traditional gym model, which has been built on monthly memberships. He says that if they are allowed to gain a position of power, they can demand more commission and set pricing, which ultimately will be to the cost of consumers, resulting either in higher memberships or inferior facilities.

Hussle’s Neil Harmsworth argues aggregators are great for consumers and it is only the budget gyms that are resistant to them, as they “have built market-leading positions by cannibalising full-service operators and putting downward pressure on industry price points and margins.”

Many other industries do have aggregators – which we can learn from – but they are different. The travel and property industries aren’t trying to build customer loyalty or inspire behaviour change in the way the health and fitness sector is. Our industry has the lofty ambition to get people active and moving, which is different to booking a flight – this makes it less cut throat and instead calls for co-operation.

The middle man/woman is definitely present in the industry, so what is the best way forward to ensure that everyone wins? We ask the experts…

Humphrey Cobbold
PureGym: CEO
Humphrey Cobbold

As an industry, we need to ensure we do not sleep walk into a situation where we become over reliant on aggregators, because if they are allowed to get too powerful they will control pricing. This is exactly what has happened with Booking.com, for hotels, and Rightmove, for estate agents. In the Polish health and fitness market this has already happened with Benefit Systems, which provides operators with 50 per cent of their members and has forged a position where it controls the market.

If we allow aggregators to become this dominant in the UK health and fitness market, they will inevitably increase their margins at the expense of the operators’ margins, and the operator will struggle to say no to accepting a lower price per visit.

Aggregators claim they are good for consumers, since they are driving incremental joiners/members and help the industry to increase access and reduce marketing costs. In less penetrated markets this may be true, such as Brazil or Spain, but independent, fact-based analysis in the UK and other markets suggests the modest benefits aggregators may bring are much lower than the cost to the operator.

"If an operator is going to engage, there are some golden rules: remain in control, think about the future not just the present, never sign long term or exclusive deals and monitor the situation very, very carefully"

Two of the major aggregators have each raised around US$500m. I have worked with some of the Silicon Valley providers of that capital and I know they will be asking these aggregator platforms to try to get positions of strength and pricing power in this market. The only viable way they can make a return on the huge investment is by trying to extract profits currently earned by the hard graft and capital investment of operators.

If an operator is going to engage, there are some golden rules: remain in control, think about the future not just the present, never sign long term or exclusive deals and monitor the situation very, very carefully. Operators must learn how to use aggregators to drive reach and trial, but to avoid being so reliant on them that they can dictate terms.

This means retaining control of the inventory released to aggregators – for example, only one place in peak classes, and using aggregators to fill off-peak classes. Direct customers should be rewarded.

When approaching an agreement with an aggregator, my recommendation would be to only trial a small number of gyms, not the whole business. Do not accept incentive payments or guarantees to sign up for long periods of time – make sure you can exit on three months’ notice. Measure the true underlying incremental performance very carefully. Above all, never let an aggregator control a material chunk of your members.

If the right decisions are taken, we will have a situation whereby the aggregators work for and service the industry, not the other way round. Going forward, I would not rule out a situation in which an industry-owned “cooperative” aggregator is created which provides benefits to consumers but ensures the industry business model can be sustained for the good of all in the long run.

Operators must not become reliant on aggregators, says Puregym’s CEO
Eamon Lloyd
Gympass: director of partnerships
Eamon Lloyd

The increasing number of operators partnering with third parties to grow shows how these types of business models can expand the industry in terms of both members and revenue. Gympass is an exclusively B2B model: companies investing in the health of their employees are turning to us to make introductions to the right facility partners.

Our deeper relationship with a niche group of employers means we can match their needs nicely to local operator partners’ facilities, driving a significant penetration far beyond the traditional corporate wellness model. On average, 80 per cent of the members we send to our partners are new and we are helping to defeat inactivity by offering our corporate clients a variety of activities and facilities.

"In order to achieve a win-win situation, it must be recognised that one size doesn’t fit all and operators shouldn’t believe an intermediary that suggests otherwise "

To avoid any pitfalls, we ensure operators approach the partnership carefully by answering the hard questions early on, taking time to get the deal right and knowing what success looks like for both parties. We urge operators to do their numbers and understand we are part of their growth strategy, not the whole solution. In order to achieve a win-win situation, it must be recognised that one size doesn’t fit all and operators shouldn’t believe an intermediary that suggests otherwise.

The industry is experiencing a rapid period of growth and change, operators willing to take the time to understand how a variety of innovative partnerships could benefit their business will do well. Through informed decisions, with respect to their business situation, they can capitalise on the opportunity to grow and, ultimately, ensure more people in the UK become and remain active.

Lloyd says aggregators are helping to defeat inactivity
Neil Harms-worth
Hussle: COO
Neil Harmsworth

The world is digital, so aggregation is here. Outside the budget gym sector, almost all the leading operators now use at least one of the main commercial aggregator services because there are huge advantages for collaborating with third parties that offer a proven route to customers.

At Hussle, we are experts at engaging with the Gen-Z and millennial ‘pre-member’ market and helping them to fit fitness into their lives on a basis that works for them. These are customers who are happy to pay a premium price through Hussle to access full-service clubs in a way that works for them, during a phase of their life that makes them unable to commit to a full membership.

Our main operator partners are full-service clubs whose primary revenue stream comes from contracted members, which makes our pre-member focus highly complementary to their business, as we provide them with incremental revenue and interaction with future members – a true win-win. Ultimately it will be the customers who determine what happens in the future. I always find it interesting to ask the operators I meet to look at their own behaviour. If you use aggregator services in other sectors, then you know how useful they can be.

I encourage all operators to simply have a conversation with companies like Hussle, Gympass or ClassPass to understand how each company can support your goals, and then meet with the operators who have fully embraced these services to learn from their experiences.

Chris Heron
The Engine Room: founder
Chris Heron

My experience with aggregators is that they are experts at on-boarding you, but further down the line they threaten you to become exclusive to them in a very aggressive manner. I have had negative experiences with two large aggregators concerning exclusivity. They over-rode verbal agreements we had by pointing out the small print. I found their way of doing business very underhand. They only provide an app – they don’t have any of the overheads – but they want to keep taking an increasing amount of the margin.

"My advice is to tread very, very carefully. Read and understand the small print, reach out to other studio owners to get their experience. Be strong and tough in your dealings with them and don’t let them push you around"

Unfortunately, in the London boutique market, aggregators are a necessary evil and, going forward, there is definitely a market for the high-end sites to create an industry-grown aggregator. In the meantime, operators need to be careful about how they deal with aggregators and make sure they do not become dependent on them. My advice is to tread very, very carefully. Read and understand the small print, reach out to other studio owners to get their experience. Be strong and tough in your dealings with them and don’t let them push you around.

On their part, aggregators need to provide greater transparency. They need to be more than just a platform, but work in partnership with operators to grow their business. This requires a human element, greater engagement and regular meetings. We’re in this industry to get people fitter and healthier, so there should be an element of working together, not this feeling that they’re working against you. Also we need less of the aggressive sales tactics – the hotel industry might be ready for it, but the health and fitness industry is not.

Heron says aggregators are a “necessary evil” in the boutique market
Fact check

In collaboration with other industry players, PureGym sponsored a piece of independent, fact-based research into aggregators and what they mean for our industry. Completed by the international consulting firm OC&C, this has been widely shared with operators, industry associations and the aggregators themselves. Copies are available from: [email protected]

More features

Artificial intelligence

When you hear the words ‘artificial intelligence’, do you think of talking computers and helpful androids? Think again. We find out how AI can be used in fitness
people

Jean-Michel Fournier

CEO, Les Mills Media
In the long term, the fitness industry will utilise technological advances in augmented reality and holographic telepresence

Sight & sound

The audio visual aspect of your club is one of the biggest factors in keeping members motivated and engaged with your offering. So how can you optimise this? We asked four of the top audio visual suppliers in the industry for their tips
people

Rachael Blumberg

Platefit: creator and founder
People know yoga, Pilates, HIIT and Barry’s Bootcamp, but many don’t know vibration training and it’s my intention, passion and purpose to make it available and bring it to the world
interview

Paul Juris

Director of sports science, Brooklyn Boulders
We’re trying to help people understand exactly how much effort they need to apply in order to get the best outcome, so they can do it over a long period of time and not burn out. The overall training effect is then much better
people

José Teixeira

SC Fitness, Portugal: head of customer experience
People often assume that those who pay more stay longer, but we don’t see this. What we see is that if you have PT you stay longer because you use more, not because you pay more
people

Andrew Grill

Practical Futurist
Your marketing department will have to start writing ad copy for robots, not for humans. These digital agents will be gatekeepers, a bit like a PA. It’s already happening, so get ahead and start using it

Body image

Will the body image debate define the future of fit-tech? Becca Douglas looks at the evidence
people

Ben Keenan

SUF Cycling: commercial director
This isn’t a spin around the park: SUF Cycling requires participants to dig deep, which can push some people not used to HIIT out of their comfort zone

The middle man

Many industries have aggregators so it makes sense for the health and fitness industry to have them too. Are they a force for the good, or could it become a case of the tail wagging the dog? Kath Hudson reports

Activelab 2019

Following the ActiveLab Live! finale at the recent Active Uprising conference, we take a look at startups that are using technology to help people become healthier and more active
celebs

Chris Hemsworth

I believe we all have untapped potential. And we all need support to achieve our goals. Centr puts the world’s best in the palm of your hand, to help you develop a healthier body, stronger mind, and a happier life - CHRIS HEMSWORTH

Bio Hacking

Silicon Valley hacker Dave Asprey used his tech skills to gather the latest fitness kit to create a bio hacking boutique. Kath Hudson investigates

Tech upgrade

New technology is transforming the way the health and fitness industry functions and interacts with customers. Liz Terry catches up with operators around the industry for an update

Get upgraded

HCM asks the industry’s leading software suppliers about the new tech and software features you can look forward to getting your hands on in 2019

Body Insights

Want to know your biological age or your bone density, or maybe get a 3D model printed showing your hard-won new biceps? The latest tech enables this and much more. HCM does a roundup of the new kit on the market for fitness testing and body scanning

In-club Tech

What’s happening in the world of health club management software? We get the inside view from some of the best-known tech companies in the sector

How can clubs get the most out of virtual?

HCM’s Steph Eaves gets tips from our panel of experts

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A new age of indoor cycling is upon us, characterised by a more diverse range of bikes and consumers. Steph Eaves breaks down the options in this two-part series
interview

Matthew Allison, Space Cycle

I want to build a social lifestyle brand that combines music and wellness to create something that inspires people. I want to change the way people think of working out, so it’s like going to a club or a concert

Body composition analysers

Body composition analysers are an excellent way to differentiate your club, as well as help your members get results. Kath Hudson reports

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We asked some of the biggest names in health club management software to share their predictions for the future

Smart and flexible member payments

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ActiveLab 2018: Meet the startups in fit-tech

Following the ActiveLab Live! finale at the recent Active Uprising conference, we take a look at startups seeking to solve some of society’s biggest challenges through technology designed to get people active

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Company profile: Booker by MINDBODY
Booker by Mindbody is the leading cloud-based salon and spa management platform. Developed to meet ...
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Company profile: Technogym
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Video Gallery
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Get Fit Tech
Sign up for the free digital edition of Fit Tech magazine and the free weekly Fit Tech ezine
Sign up
Directory
Fitness equipment
FunXtion International BV: Fitness equipment
Software
Book4Time Inc: Software
Locking solutions
Monster Padlocks: Locking solutions
Spa software
ResortSuite: Spa software
Direct debit solutions
Harlands Group: Direct debit solutions
Diary dates
03-05 Aug 2020
Raffles City Convention Centre, Singapore
30 Sep 2020
Exhibition Centre Cologne, Cologne, Germany
01-04 Oct 2020
Exhibition Centre, Cologne, Germany
07 Oct 2020
Palais Brongniart, Paris, France
The Leisure Media Company Ltd
The Leisure Media Company Ltd