Get Your Loyalty Strategy in Shape: What Gyms Can Teach Us About Keeping Pace with Changing Customer Needs

Article Type: Loyalty program

Published: August 23, 2024

Reading Time: 3 minutes

Overview

Gyms are facing an unexpected challenge: their members are actually using their facilities. This shift, driven primarily by Gen Z fitness enthusiasts, offers valuable lessons for businesses managing customer loyalty programs. Just as gyms must adapt to changing member behaviors and preferences, loyalty programs must evolve to meet the shifting needs of their customer base.

The Gym Industry Challenge: When Success Creates Problems

Bro, Does Your Program Even Lift?

A recent Business Insider article highlighted a surprising problem many gyms are experiencing: people are actually using them. This shift is creating operational challenges for an industry that traditionally relied on members paying for memberships without regularly using the facilities.

The Gen Z Fitness Revolution

Gen Z consumers are driving this change in gym usage patterns. According to a recent McKinsey survey, 56% of Gen Z consumers rate fitness as a very high priority in 2024. This increased engagement creates a significant operational challenge for gyms.

The Capacity Problem:

• Planet Fitness has an average of 6,500 members per location
• Most Planet Fitness locations can only accommodate about 300 people at any given time
• Most gyms can only accommodate a fraction of their total membership at any given time

The Impact on Satisfaction:

• Crowded gyms have seen a 20% drop in member satisfaction
• Lower satisfaction could drive higher churn rates as frustrated gym-goers seek alternatives
• While more member engagement usually means more revenue, overcrowding creates sustainability issues

Shifting Workout Preferences and Behaviors

A Shift in Workout Preferences

Gen Z is not only using gyms more frequently but also using them differently than previous generations:

Workout Style Changes:

• Gen Z favors weightlifting over traditional cardio
• Women are more interested in strength training
• Less focus on "cardio and being tiny and thin" compared to previous generations

Social Aspects:

• Younger members see the gym as a social venue
• Demand for space to socialize and connect with others

Gym Industry Response:

• Trading out underused machines
• Adding hang-out spots
• Installing game courts
• Creating co-working spaces
• In some cases, charging extra to access new amenities

Lessons for Loyalty Programs: The Loyalty Take-Away

Are You Seeing Something Similar for Your Loyalty Program?

The challenges faced by gyms offer valuable lessons for businesses with loyalty programs. Just as gyms must adapt to the changing needs of their members, companies must also evaluate whether their loyalty programs are aligned with the current preferences and behaviors of their customers.

Three Critical Questions to Assess Your Loyalty Program

1. Are Your Customer Profiles Different Now Than When You Built Your Program?

Just as gyms are now focusing on the needs of Gen Z, businesses should assess whether their loyalty programs are attracting and retaining the right customer segments.

Key Considerations:

• Has your target audience shifted?
• Are there emerging demographics you should cater to?
• Do your program benefits align with current member preferences?

2. Are Your Benefit Usage and Costs Becoming Hard to Manage?

Gyms are learning that overcrowding can lead to dissatisfaction—a lesson that can be applied to loyalty programs.

Key Considerations:

• If too many customers are using certain benefits, it might become costly or unsustainable
• Regularly reviewing the usage patterns of your program's benefits can help you manage costs while maintaining customer satisfaction
• Balance between benefit accessibility and program sustainability

3. Are You Offering What Today's Customers Find Valuable?

Customer preferences and expectations are constantly changing, and your loyalty program should evolve accordingly.

Key Considerations:

• Just as gyms are rethinking their layouts and services, consider how your program's structure can be updated
• Evaluate whether your rewards meet the needs of a shifting customer base
• Assess whether your engagement strategies are still effective

Keep Your Program in Shape

As customers change, what they want from you, what you'd like from them, and what that costs change, too. Your program strategy needs to adjust to fit.

A program needs regular sweating to stay in shape. Consider whether a few tweaks to its form will help yours lift more weight for your business.

About Kognitiv

Kognitiv is redefining loyalty with its AI-native outcome-based technology. Our award-winning loyalty software and a suite of cross-channel intelligence and personalization products enable brands to deliver hyper-personalized experiences, predict and optimize customer engagement in real time, and achieve measurable results.

It's time to move beyond transactions and earn customers' lifetime loyalty. Discover how reimagining your loyalty strategy and customer engagement with AI can foster deeper connections and drive long-term success.

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Related Topics

Article Category: Strategy & Consulting

Publication Date: August 27, 2024

Contact Information

Interested in exploring loyalty, martech, and adtech solutions? Contact Kognitiv to discuss how to optimize your loyalty strategy and customer engagement.

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