August 7, 2020
Club Automation News
August 7, 2020
With COVID, a need arose for a body of advocates for the fitness industry. Where industries like hospitality and retail had groups of people with lobbying power in local and state governments, fitness businesses had no representation. We brought together leaders from four State Fitness Alliances to talk about their experiences.
Jeff VanDixhorn is a founder of Club Automation and helped form the Illinois Fitness Alliance.
Blair McHaney is the CEO of MXM Medallia, a powerful member engagement tool for the fitness industry, a gym owner and operator, and one of the founders of the Washington State Fitness Alliance.
Francesca Schuler has been CEO of In-Shape since 2015. She’s one of 2014 San Francisco Business Times’ most influential women in business, and she’s one of the founders of the California Fitness Alliance.
Steven Schwartz is the CEO and President of Midtown Athletic Clubs. He’s also one of the founders of the Illinois Fitness Alliance.
The goal of this webinar was to inspire club leaders in states with established fitness alliances to participate and to encourage club leaders in states without fitness alliances to become part of a group or a leadership team that starts an alliance.
Short on time? Here are the takeaways:
For the full webinar, read below or play the recording above.
Maria Morton: One second. Let me pull up a few things. Thank you all for joining us today and thank you to everyone who has let us know where you're coming from in chat, by the way. Steven, you have a fan club.
Steven Schwartz: I saw that. I just wrote back, thank you. Love you. Thank you. You're terrific.
MM: Yes. Thank you everyone for joining us for today's webinar, Fighting for the Fitness Industry. Before I pass it over to our panelists, I'm just going to get us started with a few housekeeping announcements. First of all, you guys have all been muted. That's just to cut down on background noise. Please do stay engaged with the webinar. Let us know your experiences, your thoughts, and if you have any questions you can use the chat tool that you guys have been using to let us know where you're coming from or there's also a Q&A button at the bottom of your screen too. We do have some time allocated at the end of this webinar for questions. We'll try and get as many of those answered as possible. Also, the webinar will be recorded so if you'd like to share this with a member of your team or other friends, we will be sending this out after the webinar or if you need to skip out early, you can always re-watch it later. I think those are all of our housekeeping announcements. With that, I would like to pass it over to the founder of Club Automation and CRO of Club Automation and CSI Spectrum, Jeff VanDixhorn, who will be leading this conversation. Over to you.
Jeff VanDixhorn: All right. Thank you, Maria. Before I get started, I do think it is important to recognize Maria, who I know wants to turn her camera off now. This is the 22nd webinar that Maria has led for our organization in the last five months. Of the 44 that we've done across all our product lines. It is a huge job, Maria. I want to publicly thank you. It's like herding cats. Maybe not with this group, but a lot of times and yeah, just appreciate your service to our industry by helping to organize these webinars. Thank you.
Just a quick introduction of myself, as Maria mentioned, I'm the Chief Revenue Officer at CSI Spectrum, Club Automation, and TennisSource. What's also, I think, interesting and relevant to this conversation, we're also part of the Daxko family of products which services boutiques, in our market kind of the enterprise club space, but then also we service boutiques and not for profit, YMCAs, JCCs. Collectively across Daxko, we're servicing 10,000 plus gyms and fitness centers across the country in every state.
The goal of this webinar, as Maria mentioned, was to talk about these state alliances and the plan for us, as this is a springboard, right? To circulate this information in this webinar. We put this together a little bit in the last minute, just feeling the urgency and the need to get this information out. Obviously not only to our live audience today, but just as importantly, we will be distributing this across our 10,000-customer base as well as a lot of the other industry outlets to continue to get this message out.
Personally, I've had an interesting viewpoint to watch this happening. Not only do I sit in the seat from the technology side, but I'm also a club owner. I have clubs in Illinois and Wisconsin and so I've seen this happening from both sides. How do we affect positive movement in our industry and for our industry and for our clubs going forward? What we've seen, and I've seen personally, is that it really takes the collective effort, a collaborative effort, to do this effectively. You see a lot of people try and do this in one offs and when you bring this together and it becomes more collective and collaborative, I've seen the power of this and I've seen the power of this led by people that we have on this panel today, Francesca, Blair, and Steven, and I've sat in.
I'm part of the Illinois [Fitness Alliance] so I've sat in on that one but really have seen the power of these alliances. Our goal today is if you're in a state that has an alliance and there are a number that do now, that you join, you participate, you get involved. If you're not in a state, in a state that does not have an alliance yet, our goal today is that you're motivated and inspired to become part of a group or a leadership team that starts that alliance. Hopefully today you'll get some information that not only inspires you, but starts to give you some information in terms of how you can get this started. As we've talked about in this panel, there's no reason to reinvent the wheel. Right? There are people who have gone forward and these are the people, on this panel today, and we can learn from that and continue to build off of that.
The other thing that has really struck me about these times, and Steven gave a quote before we started this webinar, which I don't know if I'll deliver that exact quote but I think in difficult times, and I think we've all heard this, it exposes or it highlights leaders. Right? I think what we've seen in these times, there are people who have stepped up in our industry as leaders in very challenging times. I think all of us would probably agree that these could be some of the most challenging times that we've ever experienced, both personally and vocationally, and in these times, we have an opportunity to either step up or I would say “turtle.” And this group of people that you're seeing here today have really stepped up. Not only on behalf of their own organizations but on behalf of their states and I would say on behalf of our industry as a whole. Because all of us, I think, really believe and understand the need and the importance of what we do for our communities and for our country and it's becoming even more important and will be as we come out of this pandemic. With that, I would love to introduce our panelists.
I will start with Blair McHaney. Blair is the CEO of MXM Medallia, which is a really powerful technology engagement tool that is used across industries but MXM is specifically being used in the fitness industry. Again, a powerful tool to really engage with your members and understand getting that feedback loop and all of those tools to really connect well with your members. He is also founder and president of Confluence Fitness Partners. He's a gym owner and operator. Blair, you do not look this old, but he started that in the state of Washington in 1983. He’s a long-time industry leader. He is also one of the founders of the Washington State [Fitness] Alliance. Welcome, Blair.
Blair McHaney: Thanks, Jeff.
JVD: Next, Francesca Schuler. Francesca has been CEO since 2015 of In-Shape. In-Shape is a group of clubs, 60 full-service health clubs across the state of California. She comes into this industry with a lot of experience at a high level in the retail industry. She was with, in leadership roles, Bev Mo, Treasury Wine Estates of American, which I think we could all deal with a little wine right now, Francesca. Method Products Inc and The Gap. She was also USO Woman of the Year in 2019, a well-deserved honor, and one of 2014 San Francisco Business Times most influential women in business. She is one of the founders of the California Fitness Alliance. Welcome Francesca.
Francesca Schuler: Thanks, Jeff.
JVD: And last but not least, coming off a back surgery yesterday is Steven Schwartz. So glad you were able to make it here, Steven. Steven is the CEO and President of Midtown Athletic Clubs. He joined Midtown in 1987, for those of you aware of that group of clubs. It was founded in 1970 by his father, Allen Schwartz who was also one of the founders of IHRSA and prior to joining Midtown and continuing that legacy, Steven was, and I did not know this, Steven was a Director of Development for Hyatt Hotels in Chicago and an associate at Laventhol & Horwath in San Francisco and Phoenix. He comes, again, to this industry with a lot of background in business experience. Midtown service has a total of 33 clubs, eight that are owned, 33 that are managed clubs. The owned clubs ranging anywhere from 80,000 square feet to 300,000 square feet. If you have not seen the renovation to Midtown Chicago, which I think Steven, might be the most toured facility now by other club owners in the country, it's a must see.
SS: It feels that way.
JVD: He is also one of the founders of the Illinois Fitness Alliance. One of which I'm a member as a vendor as well as a club owner. Welcome, Steven.
SS: Thank you.
JVD: To get started, we're going to open this up and obviously we have a wealth of knowledge on this panel and to talk about the state fitness alliances. Also, as Maria mentioned, if you have questions, post them in the Q&A and we will get to as many questions as we can at the end. To kick it off, Francesca, I think it was a number of months ago that I had gotten a reach out from you. It was the first I had heard about state alliances. I'd love for you to just kick us off to talk about how did this idea come about? And then for each of the other panelists to kind of maybe share how you then got involved in a state alliance.
FS: Sure. Happy to start. This really was born out of the shutdown that started in March for all of us. We quickly realized in California that there is definitely a big role to be played nationally for advocacy for the industry, for everything from reopening to relief, but that a huge percentage of the decisions were going to be made at the state level and then California in particular, there's many even made at the county level. A few of us got together, we were all regional players, so myself, Randy Carr from California Fitness, Family Fitness, Corey from Choose, Angel Banos from Gold So Cal, and the team at Fitness SF – so Don and Sebastian. We really said, how can we control our own destiny? We had several things we were obviously concerned about. One was, when do we reopen? But two, how do we reopen? And how do we make sure that if there are standards being developed at the state level in California, we would be able to have a say in that. So honestly, this was born out of a series of phone calls.
We didn't even know each other that well, to be honest with you. We had all kind of met each other a couple of times. I've been in the industry much less than many of you but we quickly got together and it's been this amazing collaboration. We were lucky enough to be joined early on by Mark Thomas, who is the CEO of [inaudible 00:11:29] with the Big Orange Theory franchisee. Because really, we started with several objectives. One was to be as inclusive as possible. We wanted to make sure we represented all parts of fitness. Every format as well as give a voice to our teams who were feeling like most of us had to furlough our teams who were feeling like, "Who's advocating for me?" As well as our members who were missing their gym, studio, Crossfit Box, whatever it was.
So that was really how it started in early April and we quickly put up a website and talked daily, quite frankly, as an advisory board and have been really fortunate to grow the number of operators involved. A lot of partners, Daxko being one of the many suppliers that quickly jumped in to help and participate. So that's how it started and we've grown quite a bit and had some successes, which we'll talk about later. But we're closed, so I would say our work has just begun.
JVD: Yeah. Thank you. Blair and Steven, I think one of the points we want to make today is, this needs to be a collaborative across states. How did you guys then start your alliances in Washington and Illinois?
BM: I'll jump in there for a minute, because both the Illinois alliance and California alliance helped us tremendously. On the MXM side, we're collecting a lot of data that we hope could actually help the entire industry in that somebody would grab that data and say, at least be, if you're an epidemiologist or a physician, don't ignore the data. At least be curious about this data. And want to inquire about it and say, "I wonder how they compiled that data. I wonder why there aren't any occurrences happening in gym?" At least be inquisitive about it. That was our goal. I found myself on calls with the New York State Fitness Alliance, other alliances, working with both Mountain Side and EO Center in Arizona and nothing was really happening back home in our state.
While I sit here, my two clubs have been fully closed for five months right now. We're still not open. Right? It’s fighting a battle on three fronts. I called Francesca, I connected with the Illinois Alliance, I got docs from the Illinois Alliance, Francesca helped us tremendously and I just said, instead of trying to get consensus on anything here, hell, I'm just going to do it myself. Right? I'm going to put the money and I'm going to stand up to the thing, I'm going to call a few people that I know are influential in our state, and I'll say, "Will you be on the board?" They said, "Yep, we'll be on the board."
The whole idea for us was we were watching Governor Inslee talk to the Hospitality Association, the taverns, and I'm traveling around thinking, "Why the hell aren't they talking to us?" Well, the answer was, we weren't organized. I'll tell you, the second we organized, they engaged with us like that and said, "You're the experts, let's talk." And by the way, in the last three weeks, we've grown. We have a nine-member board, 219 locations.
JVD: That's great.
SS: Impressive. Well, our case is really very simple. The power of networks has been proven many times and particularly in this industry. But it's true, even back many years ago in the hotel industry, we all knew each other. It didn't matter if it was Hyatt or Marriott. We saw each other. We talked to each other. One of the reasons why I think Midtown Chicago is as great as it is, is because I was a part of a round table of international guys and I saw all these clubs around the world. John Brady who is the President over at Midtown Athletic Club Division and Francesca are friendly and they started talking on a regular basis and I guess they then grew into a whole network of CEOs who were calling on a regular basis and so John told me about the fitness alliance and thank goodness for Francesca, I just cut and paste. She sent me the website and the whole format, and I do not feel the need to reinvent that wheel.
In our case, there are a group of us who were calling each other just to try and check up on what's going on in the industry. It was clear that none of us were in the loop with the city, the state, or the county. I originally was just incensed over the fact that we didn't have any PPP that we could qualify for, that I could see us as a country spending all this money. I'm a Democrat. I'm one of these guys who's out there saying, "I'll pay more money in taxes," which puts me in the minority in a lot of my friends, and I saw that we were going to spend all this money and our company, which is a family business 50 years, 2,500 employees, donates 10% of its profits every year since the beginning to community things. We were going to get nothing. Our associates were going to get nothing. It just incensed me. I really aged through the whole process and I was calling congressmen that I knew and some senators that I knew. I was calling around and it became very clear that we are not at the table. We're not even in the room. We're not really even in the same zip code with the people that are actually making these decisions.
IHRSA, that I love, been on the board, helped found, they were working at a peripheral level nationally and things were happening locally and all these things. I called my local alderman, in the city of Chicago there's 50 aldermen. They're like the city council members. Because there's 50 of them, they're all like little mayors. My guy happens to be the chairman of the finance committee, so he's important and the mayor happens to be a member, but I don't know her. He said, "Well, the mayor set up this task force to help with the reopening plan. There's nothing for health clubs but you fall under retail, so let me put you in touch with the person who's deputy mayor and maybe he'll get you involved." The deputy mayor called me. He said, "Yeah, we don't have anybody for health clubs. So why don't you be the guy."
It's embarrassing but that's how it happened. "Why don't you be the guy and you report to this woman, Tonya Dawood, who is the general counsel of the Illinois Retail Merchants Association. She's in charge of the retail and other services." There were three of us representing all retailers, all health clubs, and all salons and spas for the city of Chicago. Now, the city of Chicago is a big deal and they have very strict rules and it was shocking. I then talked to my friends, I heard about Francesca, and we all just formed the Fitness Alliance. We reached out and the same thing happened with the state, and we got involved at the state level. The state is a little more inclusive. But one of the things I've found is that they, the politicians, love the idea that there's a formal group and body that they can talk to because ... and if you've ever been to political events, I was a developer of Hyatt Hotels, you'd go around and you have to meet with all the various constituents. It's really helpful when there's a point person. When there's a subgroup when you can talk to people. They all thanked us for putting this together and said, "We really wanted to work with one group and then you deal with your members." So that's my spiel.
JVD: Yeah, no, thank you. Again, I think there are some fitness alliances that have been formed and we're going to continue to provide information on those. The message that I'm hearing from all of you is that you've just got to get started, right? None of you had the full plan. None of you knew exactly where this would go. The structure. But just get started. Get people together, and then lean into other states that have already done this. Right? My encouragement to the people who are on this call who are in states that don't have an alliance, you can do this. Right?
SS: You can do this.
JVD: It doesn't have to be perfect to start.
SS: Jeff, the person who takes the lead will spend a hell of a lot of time. I don't know how much time you guys are spending but it's just a shocking amount of time for me, at least in the beginning. Having to answer questions, get people on board, explain, work on what the concept is, decide as a group what our objectives are. It's a lot of work.
JVD: Yes. That's actually a lead-in to my next question for all of you. Can you talk a little bit about the structure of your alliances? I'm assuming they're similar. Maybe there's some differences in terms of Steven, what's volunteer? Who are the board members generally? What are their responsibilities? Maybe it's not all that defined yet. I’d also like to ask, are there paid positions where you've brought in people that actually are now being paid to do things?
SS: In our case, there are no paid positions. We don't have enough money to pay positions. We did something very smart and I don't know if any of the other guys have done this. Because I was working with this Illinois Merchants Association, and they have full time lobbyists, we made a deal with them that for $10,000 a year we will be an associate member of their organization and they will be our official lobbyist in Springfield and Cook County and they've given us an enormous amount of time and attention. They get to the table on everything.
BM: Yeah. The way we're organized and again, we don't have any paid staff. The way we got started, and I'll say this, if we do this right, and I hope people notice at the beginning, how similar the three logos are. That's the gracious work of Francesca's daughter who has helped us stamp out our site and then I turned that over to my son and he in turn stamped out one for the Oregon Fitness Alliance and then turned that over to them. It's one thing I would really encourage in this. I really think it should be a similar look and feel across all of these alliances. I wish people would not over think this and just call it Fitness Alliance. We quickly stood up a nine-member board, we wanted to have representation, very large clubs from studios, from fitness only, so we put together a nine-member board.
I found myself as a lifetime entrepreneur trying to do everything, and it was something I had to get myself out of. Fortunately, we have board members like Shelly Stockman from Bainbridge Athletic Club who kept staying to me, "Have us do something." I mean, they were very assertive, and I really appreciate that, and I was able to say, "Okay, let's divvy up the work this way." We decided immediately, we'd like this thing to stand up and have energy of its own and some pull through past COVID-19. We also said, let's not over think that right now. Let's tackle what's in front of us right now and let's figure out where the energy is going here.
I'm sure whatever we have right now will morph as we go and we'll learn from each other during this, but we wanted a nine-member board, and I'm sure others have done it the same way, right? We wanted some representation from Spokane, from the Southwest part of the state, the Southeast part of the state, and so on and also representation of studios and extremely large clubs.
FS: We're similar. I mentioned the advisory board. I would say we, and I appreciate the credit, but it's fully a team effort. That's been one of the gifts, honestly, of this work in this really hard time. It's been the collaboration with my fellow founder advisory boards. We have an advisory board very similar and we're very intentional to choose representatives from across the state as well. Each of us represent a part of California. We made sure we could work at both the state and the county level, which has really worked well for us. We also have a trade association advisory board because we wanted to expand our footprint, particularly to independent operators and boutiques.
We have Josh Levy who is with the Association of Fitness Studios, Amy Thompson from Idea, we recently added Doris Hughes who has a huge influence in the group fitness world. We're working on a couple others. We'd love to get representatives from [inaudible 00:23:59] and Ace, etc. Just again, to get the message out, and equally important for so many displaced people in our industry to feel like they have a place to get questions answered and advocate for themselves and for the industry. We did hire a lobbyist. We did some fundraising, each of us contributes, we have quite a few partners, a lot of very helpful and generous supplier partners as well. We really didn't have a voice at the governor level at all and didn't have as strong of a network as Steven does in Illinois so we felt we really needed someone to be that voice and get that in. So, Randy actually, his PR agency worked closely with a lobbyist and we hired them. They are fully engaged with us, which has been great.
Then we have a pretty active group of partners we reach out to for help as needed as well. Setting up the logistics of the website, etc, some of my marketing team did that, it was great. My daughter, it's definitely a family affair. Her internship fell through in the summer, so she was unfortunate to live with me and I was like, "Hey, I've got a job for you. It's not paid or anything. I'm going to ask you to do things at midnight and 6:00 in the morning but it'll be really good experience on your resume." She graciously took it. It's been a good experience. She's not really paid but has been really helpful in coordinating that. I would say the biggest challenge in this is people want to be involved, which is great. The communication and helping people feel involved is the hardest part.
We get questions from individuals, small operators and bigger operators, and that's been the hardest part, keeping that group informed while also trying to advocate at the state and county level. I've been to a ton of county meetings, as have all my counterparts, advocating for the category, etc. It is definitely a night job but I would say that we're really lucky that everyone has rolled up their sleeves and done whatever it takes to get it done.
SS: Francesca, let me just say this. In Illinois, we've written bylaws, we're 501c6, so we have the ability to be an association and make political donations. Our decision was, we think at least, for a large state, that our dues are very low. The boutique people really argued very hard for that. I also felt that, if we didn't do that, we'd never get enough members. Our board is made up of three people from the small category, which is really boutiques, three people from the medium category, it's all by revenue, three people from the large category and it's going to be up to three people from the vendor category. Vendors and large pay $1,000 a year, medium pays $250 or something, and small pays $100.
We only have collected $15,000, $16,000 so far. It's a paltry amount of money, but our lobbyist only costs us $10,000 a year and now we just have to keep getting our members to pay, which is a hard thing to do. We also had a competing boutique association that felt we weren't representing them in the very beginning, which I think was totally incorrect. We now have some work to do to bring them back into the fold. It's led by a guy who's kind of disruptive.
JVD: Yeah. Let's touch on that a little bit. I know Francesca, you mentioned this. I think we've covered the org charts and where some of the revenue comes to fund some of these things. Can you just maybe expand up on the importance of ... The audience maybe on this webinar live is more enterprise, multipurpose type clubs, but there's obviously a massive segment of boutique and it could be YMCAs and JCCs and nonprofits. Can you talk about the importance of why this needs to be? Or you feel this should be a more collective effort across those segments?
FS: Yeah. Absolutely. At the end of the day, I think all of us are in this industry because we believe in the importance of physical activity for good health, good mental health. We all share values, and at this point, there are many unhealthy people. If people find a place to be healthy, I don't care what it is, they should be part of this. We're advocating for the same end goal. Look, we have some markets where we compete even on the advisory board level, but this is not a business competition time nor need. This is really about, how do we make sure that the only industry that's focused on good physical health is viewed as an essential business and without getting caught up in the details of whether you do it at Crossfit or Orange Theory or In-Shape or at Lifetime. Who cares?
If somebody finds a community that motivates them to be healthy, that's really all we care about. It's really important that we take that perspective because I do think if we're ... One of our challenges as an industry is we are quite fragmented. You can imagine if you're a governor or a senator and you're getting the same message from four different people but maybe slightly different, we're not making their job easier. I think one, we share the same values so we should speak as one voice. Two, let's make it easy to advocate. You know? We do show up with one voice. I completely agree with what Steven said. They really appreciate having one voice. I think it makes us better, quite frankly. We all have our blinders and so thinking through it from different people's perspective actually makes us better and stronger. And I think there's a huge people part of this.
So many of our team members are unemployed. We have so many people in this industry that are part-time. Giving them a way to feel like they can advocate for their industry of passion is really important as well and I don't think we should be inclusive. I think that's been one of the challenges of the industry. We've been so fragmented. The boutiques are over here, and the multipurpose are here, and the national players are here. The more we can unify the better.
SS: Francesca, our biggest players in our business are insignificant. I mean, the largest companies in our business are two billion dollars. That's not the same-
FS: Like Walmart.
SS: I have a dozen between where Jeff's office is and my office is, we've got a dozen companies that do multiples of that. We're insignificant. So unless we band together to cooperate and collaborate, we're just even less significant.
FS: Totally agree.
SS: The only thing about our business, is because our business is high profile and caters to a lot of the people that might be in the political class, we will almost always have a connection in our network to someone who matters. California, Illinois, New York, Florida, these are very big places. But I will bet dollars and donuts that even in those places, there's not six degrees of separation. There's two degrees of separation and less between us and someone who makes a decision. Having a bigger coalition gives you a much greater chance of having that be true. We had guy join early on, he was pushing hard for a lobbyist, which was $10,000 a month, which we just couldn't raise the money for. But it turns out his college roommate was a state senator in leadership.
Next thing, you know, we have a state senator who is in leadership on each one of our calls, chiming in on what he's going to do at legislature. When I went and talked to – now I'm drilling down into some specifics, Jeff, I'm sorry. But when I talked to the lobbyist and to some of my other political people that I knew, politicians, state rep, our local state rep. A local state rep in any state is not that big of a job. You can get on the phone with any one of these guys, unless they're really a jerk, talk to all of them. What he said to me is, your today problem is an executive problem, not a legislative problem. The legislature is not involved in setting the rules on Covid. The executive is. What you need is a guy to get you to the governor, the mayor, the county president, and their public health people. Those are the people making the decisions. When you start poking around a little bit, you start to learn where to go and how to focus. You learn who's got contacts.
BM: You know, Jeff, Elizabeth Ashe asked a question here about given what Steven is saying about timing that. I do want to point something out. You notice when Steven firs started talking about this, he knew a congressman and he knew a senator and I think by the nature of those relationships, it probably pulled Steven's time quite a bit more. If you have those relationships, you're the one that's going to go work those relationships and that is going to require quite a bit more time. But no matter what, it is going to be, I would say the faster you can stand up a board and divide up responsibilities. I had Joel [inaudible 00:33:24] and Jack [inaudible 00:33:25] working on the sponsorship and the dues portion or how are members going to pay portion. Somebody else working on the communication and the social media portion. Got somebody else working on the membership drive portion and we just kind of divvied up responsibilities quickly and that has helped me be able to tend to two other businesses as much as possible.
What's step one, two, three? What are the shortcuts? You should be seeing it right here. Stand up a website. Spend a little bit of money to get a website stood up. Get some help from another alliance. Start building it. Two, talk to some influential people that are in the fitness industry and say, "I want to start an alliance. Will you be on my board?" Three, build the board out and just establish something. There has to be some place that when you're out there talking to all these club owners, for them to look and say, "Oh, that's who you are and what you stand for." But I would say be front and center with who you are and what you're going to stand for. Then people will know if they want to align with that or not. It moved very quickly for us.
SS: Blair, maybe we're different because we've been around forever, but in New Hampshire I bet this person knows everybody.
BM: I'll bet you're right. I'll bet you're right.
SS: I just, my buddy, Mel at East Bank, got a guy down at Lake Shore who is my biggest competitor, who I've never met before, and it was a very tense first conversation. Then Gale Anders who, we said, "Let's do a Zoom call and invite everybody you know." And we got up and said, "We've got to do this, blah, blah, blah. Can you invite all your friends to do another Zoom call?" After three Zoom calls, it had grown to 200 people.
FS: One thing I would just add is, don't try to over organize in the beginning. You know what I mean? I think we all run companies; we all do all these things where we're used to having a plan. We didn't totally have a plan and it was okay because the situation is really fluid. I mean, California is a great example. We made a huge amount of progress and then we got shut down again. I completely agree. It happens quite organically, quite quickly if you get a few people involved. Duplicate, I mean, I'm already learning from stuff Illinois did and Washington did. We're not adopting that in California.
I think the tendency can be to say, "Well, we must have a plan and we must be formal." Honestly, with a few Zoom calls and some text messages, you'd be amazed how quickly we can move if motivated. I would just add to the points that were raised is, duplicate everything we've done, we're happy to help anybody, number one. Number two, just get a few people who are willing to roll up their sleeves and kind of just start. Don't overthink mission statements and things like that because you don't really need it. It'll happen.
SS: By the way, the thing that made it valuable for people in Illinois is we were a source of information.
SS: I started a contact list, my personal contact list, I gave up on all the IT stuff. I should have called Jeff and had him do it for me. But as soon as I talked to a state rep, I sent out the information. As soon as I was on any committee that the city put on, I typed it up and sent it out so that people got to understand that a lot of times, and Jeff will attest to this, it's like, I send it out, somebody says, "You screwed it up." I send it out again. It's not the most professional organization ever run but it's coming all the time. The meetings were not with a lot of notice. It was two days. Get on a Zoom call. Because I don't have time to screw around. Plus, we're in a crazy time. What are you going to take three weeks? Three weeks is a month. Is two months. So anyway, I would just get started. I would be a source of information. Here's what I've heard, here's what's happening. The first couple Zoom calls are an incredible cathartic, everybody gets there-
FS: The first couple? My daily Zoom call is cathartic with everybody.
SS: It's a big mess.
BM: I want to come off the top on something Steven is saying there and actually something I stole from Steven when I first put this together in the message that I sent out. I remember Steven said something to the effect when he started the Illinois Fitness Alliance – I do not want to waste a minute of anybody's time. I want to be tactical and effective. That became our ... I stole that from Steven and that was my message out to people and so we made it a point to do that. I do an update almost every day. You will get, we have a flood of questions because of the new guidance that we just put out on Tuesday with me begging the governor’s office, don't put that out there. It's way too confusing. Don't do it.
We have to make an announcement in an hour. Sorry, we've got to go. We'll come back and talk to you afterwards. So much confusion about it. What I do in order to kind of close the loop with people, almost daily, I take my iPhone, I hold it up, and I give an update. I just say, "Here's today's update. Here's what I suggest. Most of the questions are coming in on studios. Here's how I would translate the document that's in front of you." And it makes it much faster. It's one way to really do a mass close the loop with everybody that's coming in on Facebook and asking questions in a conversation.
JVD: Yeah. Thank you. I'm going to try to boil this down a little bit. If you had to boil down all the objectives and the things you're trying to accomplish and there's a lot of things and moving pieces, if you had to boil that down, what would you say are the top couple objectives of your alliances?
FS: I can start. The way we think about it, it's probably first advocate and I think about advocation, advocating in a couple different buckets. One is advocate to really establish fitness as an essential business. That's what's killed us through all of this. We're not viewed as an essential business. How do we advocate to change the perception that we are essential and that we are safe? I think the second thing is to provide safety standards that are written by operators, not by somebody sitting in a government office. Those will need to continue to evolve as we're seeing but how do we have standards that are workable so people can actually make money and survive versus, "Yeah, these standards sound really good but three people can manage that." That's part of advocating for safe reopening with standards that work for everybody. That's why I think it's important to be inclusive because you have to think about it from different operator lens
So advocacy is one big one and that takes place at the state level, the county level, and even the mayor, local level. The second one is definitely to educate others in the industry. I mean, many small operators don't have the access that some of us do to even what's going on. They're not in the flow of conversation. We've helped a lot of people with just, "Here's our opening playbooks. Here's what other states are doing. Here's where you can get resources, etc." So really provide education on what's happening where we are and then I think the thing we'd love to get to down the road is kind of relief and recovery. We're still focused on reopening. Which would come in several forms. Obviously one relief would just be helping businesses out financially because many of us got excluded from any relief so far but if you think about recovery for us, going back to advocacy, fitness is an essential business. It is. It does save lives.
How can we be included in a healthcare conversation and part of primary care and be in those conversations versus now, in many states, we're lumped in with the casinos and the bars. We need to put ourselves in a different category because we are in a different category and so I think the long-term goal for the alliance is to make sure that ... We play a really important role in keeping the country healthy. How do we make sure that our leaders, the media, etc, understand that and we're in the right conversations? Not being shut down because the bar is being shut down. Which has been one of the biggest challenges we've had.
JVD: Yeah. Francesca, I know you all put out an amazing document on that and it's something that we'll send out as a part of this if you're okay with that.
SS: Being lumped in with bars is horrible. I made a pitch to our deputy mayor. I said, "Please beg the mayor to stop the sentence, restaurants, bars, and gyms." And I have a whole points list, real quick. We wear masks, they don't. They're drinking, they're there for socializing. We're here for exercise. You can social distance very easily in a club. I mean, I don't care how fast you run on that treadmill, you're not coming over near me. You know? You're staying in one spot. Last, we're not busy. If we're not busy, we can't be the problem. You know? I think it's an easy argument. They're not sophisticated, they cannot do nuance. I'll tell you, one of the problems is setting expectations. We are not going ... This is going to be an uphill battle. It's going to be a long time. We're very late to the party and you take Chicago for example, the president is fighting with the mayor. That's brutal situation, right? I don't know if you guys are following that too
Two, we have a gang warfare in this town like you can't believe. People getting shot all the time. That's a big problem. We have the violence and the looting. What do you think they're going to do about health clubs? We're just not on the agenda. It's a hard fight just to get heard. But we need to. You can't just give up. You've got to keep trying and you keep working until the next person and as their thinking evolves, and as more data comes up, like Jeff gave me some great data the other day and somebody, Blair, your data on infections. As we continue to chip away at the education of the Department of Health people who make these decisions, who lump us together.
That is a necessary and difficult, hopefully not Sisyphean, task to try and get into their brain and into their mind share. I think we have to do it. Otherwise, we're being passive and we're just going to get ran over because we're easy to throw out. We're easy to throw out. We have bad operators. We have bad actors in the industry. Period. The end. They love to point to them.
BM: Right. We are paying for the sins of our past here. You know what I mean? A good deal of it. They aren't looking at the health club of today when they have a perception about what's happening. Not only that, they aren't looking at the health ... Look, it's always been bad behavior in a health club to get over crowded. It's always been bad behavior in a health club to have a member not clean something up. That's always pissed people off. It's always been bad behavior in a health club to not be clean and hygienic. That's always been. Before COVID. We have reacted to this because of the fears of our customers and because we are a subscription-based business and we have done a better job than any industry because we're about recurring revenue.
SS: And we know our customers. There's a lot of these arguments to make and one of the things that was smart about teaming up with IRMA, Illinois Retail Merchants Association, they have Costco they represent and they have the local corner store they represent. So it's really the same kind of problem. They have bad actors. You can talk ... Politicians are not that stupid. They understand that there are some bad actors. They can react stupidly when public pressure really comes onto them. The time to get their attention is before you absolutely need it. It's late but now is the time to reach out, bring them in, show them your cleaning protocols, and to do this, you need to develop a network of people in your alliance, in your state who somebody knows somebody. You've actually got to get off your tush and meet somebody.
BM: That's right.
JVD: Let me just sum this up because I want to make sure we have about 11 minutes left and if we get to a few Q&A. To sum this up, what I'm hearing you all say is if you broke it all into three big buckets, we'd be obviously impacting whether you call it lobbying or influencing state authorities. Whether it be governors, city mayors, county board member, etc.
SS: That's the thing. County Executive, Mayor, Governor.
JVD: Yep. Also, club accountability. I've seen this in a lot of these alliances that I've talked to. Just creating some level of accountability and again, when you do that, it's challenging. This is a rabbit hole. It is challenging to franchise ... We talked a little bit about this, and Steven, I've seen this on our calls. Asking or accountability but knowing gyms are really struggling and sometimes they're doing things because they're just trying to survive. Right? I think that's another really big bucket and then obviously the influence and impact we can have with our own team members and our members. Moving on. What are ... I'll let you answer one or the other from a time standpoint. Either talk about one of the accomplishments you've felt like you've had, or one of the challenges you're facing right now? I'll kind of open it up to the three of you. For one or the other.
BM: I'm going to jump in with accomplishment because it'll be quick. We were able to engage within 48 hours of forming. We were brought into the conversation and we were asked to rewrite the phase two guidance quickly. We could tell it was urgent on their part. By the time we rewrote it, I got a phone call that night that said, "You're going to get news tomorrow that you're not going to like." Inslee made the announcement that they were going to roll back some and for fitness, the new guidance for phase two would be that you could only have five people in your building, no matter the size of your building. Imagine that in Midtown Athletic Club or Pro Club that has 400,000 square feet. We pushed back quickly. They reengaged with us. We got them to adopt and come out, and the governor to come on and say stand by, that's not going to be the guidance for fitness. We're working. They came out, we got something better. 300 square feet, per member. That was a major victory. Now we are in there working on what can happen for phase three.
FS: Yeah, I would say we had an accomplishment and now it's a challenge, but I do think that the first round in California, essentially the standards that were released in California were written by the California Fitness Alliance with a few modifications. We submitted several versions to the Governor's office. The final version that was released was quite similar to what we had submitted. We were part of this fitness round table before reopening. We were able to get reopened in June. We were able to delay, we didn't get closed down again with bars and restaurants. I feel like we upgraded a little bit. But then 13 days later we got shut down with churches. I feel like we're in a better crowd than we were before but we're still closed. What we're trying to figure out, and honestly, we're probably going to be one of the states that, sadly, is piloting this is, how do we not get shut down when that's the tactic that people are going to use? It happened in Arizona.
It happened here. Miami, fortunately, it happened and then got reversed really quickly. But we are going to have more surges. There is no question. My hope is we figure out, we haven't figured it out yet, but we're working to figure out a roadmap that will then prevent other states from having gyms and fitness centers plugged into the immediate shutdown category. We are not there yet. Open to any feedback and suggestions people have. We are working quickly to figure out some solutions. I do think they're very aware of the fitness alliance. We get the call on things before other people do. We're aware of what's going on. We have established a presence but in terms of achieving our goals, which is getting back to business, we took a step backwards but my hope is that we get there quickly and provide a roadmap for other states that may be on the fence for shutting down again.
SS: I would recommend that everyone read a book called The Biggest Bluff. It's fabulous. It's about a psychologist who learned to play poker professionally to understand how to control yourself and deal with the facts of understanding all you can understand about the situation and then having chance throw you a bad card. It's helped me calm down tremendously. The facts are, we do not control this situation. All we can do is look at our chip pile, try and keep it as big as we can as we play through the various hands, understand the landscape as best we can, be sources of intelligent information, be providers of intelligent information, and try and get to the right people so that we are in the game as long as possible. If we can get to the point where they understand that obesity, I don't know if you saw the Bill Maher piece. Now, he's not necessarily the most credible guy, and I've got to find the data, but if you're obese, your percentage of dying is multiples. We help with the obesity crisis. We are part of the solution. Not just really part of the problem.
And we are not a place where young people congregate to go meet each other. It's a place where young people go to get healthy. As we keep that message going, we keep at that message, and we keep it at the right level. You can't get to the right level until you form the association or the alliance and start talking to them. [inaudible 00:51:47] and others want to put out this letter to all the members because they're so frustrated going through the system, and many of you will hear about it soon, where we're appealing to your members. Personally, I don't think that's the best way to do it but maybe that will work. But we need to get into the public consciousness that gyms are places to be healthy. We need to be healthy. we need to follow the rules. we need to do the cleaning protocols. Get the message out. Then you know what's going to happen? You're going to draw a bad card every once in a while.
California is going to have a surge and they're going to close you down. You just have to think through how to play around that. Our best thing is to try and get it so we don't get there. It's not so easy.
JVD: No, and that's a lead-in to our next slide and we'll be really brief on this one because we have limited time. I think we're talking about, you've mentioned a few times in here, data. Steve, you mentioned it. Francesca, you mentioned it. Blair. We live in this world, right? What's interesting, I think, is having some data to back these things up. Sometimes it comes from not just from the individual club, right? This can be data that is seen as not self-serving, so to speak, right? But just real good information. One of the things that we've been trying to do is sharing data, obviously servicing a lot of facilities across multiple segments, we've been sharing data on check ins, membership statuses, trying to get that information out to people, revenue, and again, that's something we publish on a weekly basis, monthly basis. I think even little pieces of data, if you are from a state and you need a certain piece of data that's helpful, definitely reach out to us as an organization, we're happy to provide that.
Steven, you know, this week we were kicking back and forth data on age range check ins. There was a thought by Mayor Lightfoot that young people are flooding gyms and that's what's causing the spike in Chicago. That isn't the case. We saw the data actually showed that about 14% of all check ins, both nationally and Illinois, were in that age range and it actually was almost exactly the same as last year at the same time. Again, the data speaks volumes. Another set of data, and Blair, I'd love for you to touch on briefly, I think we have a lot of hard data on that kind of information. Obviously through MXM. You're getting some similar data but then you're also getting the human element of the data, the emotion, the impact of people, on their lives. If you could, in about a couple minutes, just give us a highlight of some of the data you're seeing on your side.
BM: Well, right now, for clubs that have reopened, we have about 295 clubs, about 100,000 pieces of feedback on clubs that have reopened. I'll tell you that the difference went from, we have about 200,000 pieces of feedback during the shutdown. The clubs that utilized our feedback system for shutdown. What we see as clubs reopen and when we look at our text analytics, the biggest topics, the two biggest topics were wipe and equipment during the shutdown. With almost 85% negative sentiment. At the reopen, the single biggest topic is love with about 80% positive sentiment. What we're seeing, it's like a microcosm of a really good operational customer experience management program where you do these improvements over time, and you see the emotionality of the customer shift over time.
This happened like that. People were coming in and they feel safe, they feel cared for, they feel like you're respecting their personal space, and so the data so far on reopening is phenomenally positive. I will make one point about it and then I'm done. As we see, there's two metrics that if they erode, so does the likelihood to be a member in six months. Number one is the behavior of other members cleaning and sanitizing the equipment. If that's eroding. The other one is ease to social distance. As those two erode, those are leading the likelihood to continue. But it's been incredibly positive.
JVD: Yeah. No, that's helpful. I just want to reiterate, I know Blair, you're happy to provide data. We are as well. However, we can come alongside with information both from a state level, because obviously it varies from state to state. Also, from a national level. I know there are a lot of people, and I'm seeing some chat and Francesca, I appreciate you offering up your services. One of the things that's come through in the chat is wanting to get more information. So obviously we have three experts here who are a resource. One of the things we're going to do is we're going to try to consolidate some of this information. For those of you, we'll try to bring a lot of this together, give you one landing spot. This whole group, obviously, absolutely is willing and interested to be a resource but I know they are probably slammed as well. I think one of the takeaways for all of us as we've talked about this is: how do we start to consolidate this information across states?
There's all this good information so we've already talked to IHRSA. IHRSA is doing some work on this already. Hopefully we can start to get a collection point. Right? And if something were really motivated as an organization to be a part of this hopefully again as we started is a springboard to bringing more of that together. But ultimately, hopefully the message you've all heard today is you've got to get involved. Right? Each and every one of us has to get involved in some ways, as daunting as this seems at times, we all experience that. You've just got to take a step forward. Right? In these moments, just having the courage to step forward knowing you're not going to know everything. It's okay. Hopefully you've heard that today. But take an action. Do something. It's really the way that we recover. In closing-
FS: Jeff, sorry, can I just make one comment too? I think part of collaboration and getting involved is having a mindset of greater good. I think one of the things, and we were developing the standards in California, as we're thinking about action steps now, nothing is going to be perfect and I see pushback in our own industry of people who are like, "I don't want to do that." Or, "My members don't want to do that." And it's like, "Look, you're not going to have any members if we don't move forward." So I do think that there is an 80/20, 70/30 mindset and really think about this from a future of the industry and health of our members and our team lens. There are going to be compromises every single one of us has to make in the short term and honestly probably over the long term.
But I really would encourage people to think about why we're in this industry when you do get involved versus holding strong and fighting for, "Well, I want to do it this way, otherwise I'm not going to participate." Because I think one of the amazing parts of the California Alliance was how we literally sat down and we're like, "Okay, that's not going to work for Orange Theory. We can't put that in the standards and we will not." Then there's other things that it's like, "That's not going to work for In-Shape. Is there something else we can compromise on?" And that's a critical part of getting involved, a willingness to compromise and focus on the big picture.
JVD: Yes. Absolutely. I think we have frozen Francesca. I know we are running here just a couple minutes past. I just want to close by thanking each of the panelists for taking the time. We did have a question in the part of what we were going to talk about asking them what motivates them to do this given the amount of responsibility they have? I think that answer to me is pretty obvious. These are passionate people. About serving other people, right? Not just in their own club communities but across their states, across our industry, and it's really powerful. I just want to, again, thank all of you for your time not only today but in your leadership. Thank you for offering to be a resource. Hopefully we don't bury you with requests now. Again, we're going to work to consolidate some of this information but thank you again. Any last parting words before we close from our panelists?
SS: I would say this: The health club industry is filled with entrepreneurs. We all have a lot of energy, a lot of passion, a lot of strong thoughts and I think we're right. But I will tell you this, and we all know this, nothing ventured, nothing gained. If you don't take a step forward and just call a local state rep, alderman, city mayor, something, you won't get started. Until you take that first step, you don't know where to go. All you can do is get mad and yell at the TV and that's not going to work.
JVD: And we're all doing that.
BM: I would just say leaders need to step up and lead right now.
JVD: Could not agree more. We have a little phrase in our office here. We have a bison running towards a storm and I don't know if you guys have all heard of that. When there's a storm coming in, cows run away and they get caught in the storm much longer and bison run in. It's a really interesting visual of charging in and then ultimately the hope is as you charge in, you get through the storm faster than if you just stay on the edge of it and let it overcome you for a longer period of time. Thank you panelists. Thank you all for joining. We appreciate it.
One of the things we say here at our organization is, we are a resource, we feel like we're providing some air cover but the real heroes are the people on the front lines, that's all of you, operating clubs, trying to figure this out on a day-to-day basis. I'm like Blair, I kind of see it on both sides. I'm inspired by the people in my organization that run my club business just like I am by all of you for really, again, to me it's on the trenches, on the front lines day in and day out fighting the fire. Thank you all. We do have some resources here that we will send out to you as well, where you can see the different alliances and then again, some of the reporting. We will try to consolidate some more of this information so thank you everyone and have a great day.
FS: Thanks, Jeff. Thank you for the partnership. You guys have been a great support. I really appreciate it. Thank you for this and everything you guys are doing because it is a collaboration across all of us. It's not just the operators. I’m really grateful for that. Thank you.
Thi sis a
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