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CEO Corner- Bill Davis of ABC Fitness Solutions Talks Online Content, Recruiting New Members and the Future of Fitness

CEO Corner- Bill Davis of ABC Fitness Solutions Talks Online Content, Recruiting New Members and the Future of Fitness

Bill Davis of ABC Fitness Solutions talks about maintaining community via online content, recruiting new members, and, of course, the prospects of the fitness industry in the midst of the pandemic.

Bill Davis had 20 years of technology experience, at finance firms and in healthcare, when he became the CEO of ABC Finance, longtime financial advisors to the fitness industry, in February of 2019. He came in at just the right time. A few months later, the company, transitioned to become ABC Fitness Solutions, a firm more focused on assisting with the overall apparatus of operations of fitness clubs, emphasizing technological solutions. Now, gyms and fitness spaces are increasing their online offerings during the covid-19 pandemic. In September, ABC purchased Tranerize, an all-purpose communication app for personal trainers and their clients. Athletech News spoke to Davis about maintaining community via online content, recruiting new members and, of course, the prospects of the fitness industry in the midst of the pandemic. This interview was edited for clarity and brevity.

Athletech: ABC has been helping to finance gyms and fitness brands since 1981, so take us to today. We have several large chains going through bankruptcies, like Gold’s and New York Sports Clubs/Boston Sports Clubs. I think the challenges of covid-19 are obvious. How bad are things and how badly do you expect them to get?

Bill Davis: It’s interesting that you are highlighting those specific brands. What each of those brands had in common — and what you need to be attentive to — is that they had gone through ownership changes and those owners took advantage of an attractive debt market. What really put pressure on them was their balance sheet or how much they were leveraged. So, as the clubs were forced to close starting in March, and you combine the obligations of rent with the debt service requirements, you see the challenges specific to those brands.

If you move away from them, the customer base that we support, I would say that is atypical in many of these are mid-sized-to-larger-sized enterprises. They have what I would characterize as stronger balance sheets and they were able to weather what was a very material dislocation in their business from March until when they were able to reopen. So, it was a difficult period, but in the context of ABC’s customer base, we’ve seen 90 percent of those clubs be able to reopen. It’s affording them an opportunity to not only invite their members back into the clubs but begin to think about new and differentiated ways to engage with their membership base, both in the club and out of the club, which was one of the attractive aspects of why we acquired Trainerize.

Athletech: What role will Trainerize have in your business and what capabilities will that allow for your clients?

Bill Davis: Tranerize is a phenomenal business and had just an exceptional experience during the Covid-19 crisis, because what it promoted was the ability for personal trainers, in particular, to remain connected to their membership base, even when clubs were shut down and they were able to do that through mobile, totally remote capabilities.

Trainerize brings three essential capabilities to ABC. First is to allow us to extend our reach to a market ABC previously did at least not fully engage with and that is the individual personal trainers themselves. There are literally hundreds of thousands of personal trainers that are sole proprietors that leverage technology like Trainerize to engage directly with their membership base. So, we’ve naturally extended our market reach.

Number two is we are able to take that personal training application — which, again, is delivered in a mobile experience — and integrate it into our club management solution, so it becomes yet another module of this comprehensive club management solution.

And then the third is through the Trainerize mobile experience: it represents the cornerstone of what will be a more comprehensive on mobile strategy for ABC that we will be offering to our enterprise customers as a way in which they’re going to be able to engage with their membership base, whether they’re in the club or out of the club.

Athletech: Reading beneath the surface, does this signal a desire on the behalf of fitness clubs to have instructors primarily online for the foreseeable future?

Bill Davis: Well, I would say it’s really an “and,” not an “or.” What I mean by that is I think clubs are absolutely recognizing, through the Covid-19 experience, members have come to learn to exercise in various settings, whether it’s in their home, whether it’s on the road, or frankly whether it’s outside, and clubs have an opportunity to continue to remain the center of one’s fitness or healthy lifestyle experience, but at the same time be able to leverage those same experiences, whether they want to do it at their home or on the road. Whether you have a favorite spin instructor, you have a favorite small group exercise instructor, the opportunity to engage in that experience in person and/or at home, what I’m really describing here is the flexibility to really be able to do both.

Athletech: Tell me about the change in attitudes about online classes from 2019 to 2020. One survey showed that only 25 percent of gyms were offering something online before 2020. Of course, that’s now gone up to 70-something percent. One expert told me that, before Covid-19, a lot of gyms saw it as a way to cannibalize the business. How quickly have attitudes changed and do you feel that past skepticism of working out online has hindered these businesses in any way?

Bill Davis: I think the sentiment and/or intentions have changed dramatically to the positive, and what I mean by that is I think more and more clubs have absolutely moved closer to and/or fully embraced the fact that digital engagement with the membership base is not a threat; it’s actually a very positive necessity. I think you’re going to see that percent that you reference move closer and closer to 100 percent over a reasonably short period of time. That’s my expectation.

I think the second part of your question: Were they late or in any ways unnecessarily hesitant? I think that what’s attracted me personally to the fitness industry, a year and a half ago, was what I saw in the healthcare industry and in the education industry and that was a lag in technology adoption as a whole. The fitness industry, in many respects, is no different, and what they are coming to realize is that technology can actually be a really powerful enabler and an engagement tool that dramatically improves the level of engagement that members have with their fitness clubs, again whether they’re in the physical club or if they’re outside the club.

Athletech: Let’s talk about the difficulties of competing on the online marketplace where there are so many options. Speaking personally, I picked my gym because it was near my house. If I was going online, that gym would be competing with some pretty well-established brands and that gym is also competing with a lot of free YouTube stuff that you can’t beat on price point. Where do you even begin to start competing in that space if you’ve never done it before?

Bill Davis: I think you have to go back to what really motivates members’ behavior and how they themselves think about their own wellness and healthy lifestyle. Our fundamental belief is that that centers around a sense of community and those members’ desire to continue to have that community and human interaction. There are phenomenal online capabilities, but it’s not a question of either/or but what allows that member to engage in the most compressive way, and we think about that in terms of the flexibility of different kinds of exercise experiences that they want.

Certain days, they may want to work on cardio equipment. Certain days, they may want to do a group exercise. Certain days, they may want to do an individual yoga experience. How you are able to offer an experience where that level of flexibility and efficiency can be realized? We think that local club has a unique advantage in terms of being able to provide that.

That doesn’t mean that you won’t go and take that free online class and or/even have a Peloton in your home. Over time, the question is: How does all of that come together in an integrated to where the member becomes central to their healthy lifestyle and wellness to where that all becomes some kind of an integrated experience, if you will? And that’s where that mobile app and what it’s tracking and what it’s capturing becomes central to being able to deliver on that integrated experience.

Athletech: Let’s say I run a regional chain in the Northeast or someplace. What aspects of the pre-existing business do I look to bring out online? What niche can I find? What do I bring to that online marketplace?

Bill Davis: Again, I think about it more holistically, and I will get to your question. If I am an operator of a regional chain in the Northeast, I am first thinking about my facilities and how do I create a healthy and a safe environment that invites my members back. And that has everything to do with how I configure my clubs and my cleaning protocols and my air cleaning systems that I’m implementing and the like. All of that is critically important because you have to create a very safe environment and make certain it aligns with your membership needs.

In terms of online, this I think about more holistically, in terms of: How big is the programming? It starts with the appeal of both your instructors and also your personal trainers. So, am I equipping that member to be able to access both, whether they’re in the club or out of the club? Back to the Trainerize acquisition, the ability of that member to engage with their personal trainer on a consistent basis, some of it may be in-person, some of it may be on their own, some of it may be digitally-connected, that’s a capability that I’m thinking about as an owner.

In a similar way, given the appeal of my instructors and the fact that members often associate on a very personal level with particular instructors, how do I set it up to where I could actually take that yoga class, whether it’s in person or at home? And then, more broadly, how do I think about augmenting that programming with other tools, with other content, that may be readily available, that is integrated into my programming library, that that member could access for the same price that they’re paying the club?

I’m thinking about all of those things. It’s being further enhanced by how I, over time, think about wellness, how I think about nutrition, how I think about the tracking of all of my fitness experiences. Those are all the types of digital capabilities that ABC is focused on delivering to our customer base, so that they in turn can be delivered to their membership.

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Athletech: I was looking at ABC’s Fitness Solutions “Rebound Bundle,” and it includes some new-member incentives like digital gift cards and online enrollment time. This is at a time when many clubs are trying not to lose members, so why is it a good idea to simultaneously seek out new ones?

Bill Davis: Two answers: One is, as a practical matter, fitness clubs are only always recruiting and onboarding new members. Just recognize that that is an essential tenet to what makes clubs successful over time: their ability to attract and retain a new membership base.

Second, though, is there are a lot of what we call “free agents” in the marketplace, and what I mean by that is there are a lot of members that are critically evaluating where they, in fact, would like to be associated with, from a club membership perspective, and that has a lot to do with how safe they feel, but also the programming that is being offered, and so what we’re really motivating these club operators to do is to recognize and ultimately take advantage is that there are several members out there that want to be affiliated with a club, but they’re effectively making a buying decision.

Athletech: What are the characteristics of somebody who’s one of those free agents? Why have they left their old gym? Why are they looking for a new one?

Bill Davis: It could be a host of reasons. Let me give you three. It could be as simple as having retreated during the Covid-19 shutdown. You saw clubs continue to bill members even when they were not able to access the club over the period of time and, in certain instances, that turned members off from that particular club. Second, it could be safety. They just don’t feel that the club they were originally affiliated with was taking the necessary steps to where they felt safe going back into that environment. And then the third, more positively: They just simply are attracted to some of the alternatives that we’ve been talking about, in terms of enhanced programming, in terms of a greater leverage of digital experiences that gives that member a greater sense of freedom and related flexibility.

Athletech: Earlier you mentioned the importance of instilling trust in people and that people may be turned off by safety issues. I think a lot of public places are desperate for people to come in and to stay and the calculation I’ve been seeing is that people who are extremely cautious are going out less. People who are not as cautious are going out more. Does this put gym owners in an uncomfortable position? If you have the person who doesn’t want to wear a mask or keep a distance, who isn’t taking this too seriously, if that’s the person who’s the most willing to go to your business, there is a financial incentive to cater to that person, but you would turn off the person who is taking Covid-19 very seriously. Is this a dilemma your clients are facing and, if so, what course of action would you guide them towards?

Bill Davis: I have two reactions to the question. I would say to your specific question, what we’re seeing and sensing — and there’s always exceptions — but for the most part, as clubs establish protocols, as clubs clearly articulate the expectations of their membership base, for all intents and purposes, you are seeing a high degree of compliance. Back to that sense of community, people want to be an active, positive part of that community. You are seeing a high degree of compliance and alignment and it correlates very nicely to the clarity and consistency that those clubs articulate such protocols and expectations.

The second part it brings to mind — and this is a conversation in which I am in active dialogue with a lot of club operators around — is really playing for the long term. We are going to be in a period of volatility or uncertainty for the next several months. That is the reality, simply due to what we’re seeing in terms of the volatility of the Covid-19 pandemic itself. In terms of encouraging club operators to take a longer-term: If a member is not comfortable complying with the protocols or requirement and the like, make it exponentially easy on them to freeze their account, to cancel their account, to create a an experience to where another member truly feels like you have their best interest in mind. You’re seeing more and more active, very positive dialogue around that basic principle. When people do feel safer, they have an opportunity to come back without any judgment or any specific consequence.

Athletech: For fitness spaces, January tends to be an important month. What should we look for this January? What signs should we look for as signs things are better in the market and what would be a sign that they are not?

Bill Davis: It really is around two critical metrics: new member joins. January, by far, is historically the very best month of the year in terms of new member joins, whether it’s around the New Year resolutions that get put into place, people coming in off the holidays and wanting to get back into shape. All of those are positive influences, so the expectations around new member joins is number one, with continual focus on new member retention. We have seen stabilization relative to that, as we have worked through June, July, August, September, but continue to have a watchful eye in terms of people’s willingness to stay engaged with their clubs via their memberships is the other thing to be critically focused on.

I think both new member joins and retention correlate to a sense of safety and — am I getting value for the price that I am paying on a monthly basis? — which lends itself to augmenting that onsite experience we’ve been talking about with the digital experience that we’ve been talking about.

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