Future of Fitness: CEO Insights from Insider’s Webinar
Athletech News dropped in on Business Insider’s panel discussion with Tonal CEO Aly Orady, Echelon CEO Lou Lentine, and Physique 57 CEO Jennifer Maanavi. The conversation, facilitated by Insider reporter Bethany Biron, addressed the future of connected fitness and perspectives on the post-COVID fitness landscape.
Below are Athletech News’s 5 key takeaways from the Future of Fitness webinar.
1. Getting the product in front of the customer is critical.
Product testing is a key indicator of a customer’s likelihood to purchase. In the fitness industry it is no different. According to Tonal CEO Aly Orady, the best way for a customer to understand Tonal is to experience it in the same way you have to “drive the electric car to really feel what it is like.”
Today, Tonal has 80 locations in the United States, including 40 at Nordstroms, where you can try the product first hand.
According to Orady, there is more than a 50% chance that you will buy a TONAL if you try it.
Echelon CEO Lou Lentine reports his company is generating about 60% of their business through placement in major retailers. He points to partnerships with companies like Best Buy, Costco and Walmart, which are set up to sell and understand their customer, as a primary driver of his incredible growth. Lentine said at the Future of Fitness online event that he anticipates beating sales projections by 30-40% this year.
2. Community continues to be an integral part of growing any fitness business, whether it be a physical product or a virtual fitness program.
For Echelon, organic communities are gaining in strength and helping to drive their business. Lentine is seeing more and more groups participate at a local Echelon studio. These groups create communities and give his team the opportunity to engage with loyal users to gain valuable product feedback. Community has become so important that Lentine and his team have discussed the possibility of building a community aspect into their app. Facebook communities have also provided valuable consumer insights and free access to uncensored feedback enabling companies to adjust strategies and offerings.
For Physique 57, community is at their core. As a fitness company based in physical studios, much of the Physique lure was the familiarity of their local studio and the bonds made with instructors and fellow classmates. It was common for Physique classes to be social engagements for friends or colleagues before or after work. Continuing to foster that community in a fully remote model has been challenging. At the Future of Fitness, CEO Jennifer Maanavi pointed to the strategic hiring of a marketing manager during 2021 to help drive meaningful events and social experiences that did not rely on being in the studio.
3. Financing options and scaled pricing choices make services accessible to a wider audience.
Not everyone has $1,000 for an Echelon Connect Bike or $3,000 for Tonal. Payment plans have been an integral tool both companies have used to make their products accessible to customers. Both Lentine and Orady also believe that as physical well being becomes more mainstream, consumers are beginning to justify these higher costs. Physical equipment in their homes is being viewed as an essential, no longer a luxury.
Physique 57 strategically offers a variety of options including in-person classes, on demand programming, virtual live classes and instagram live to appeal to various audiences. Their on demand option that includes 300+ workouts is offered at $24.99 a month, much more digestible than a single in-person class in a New York City studio at $38. Giving consumers options to programs at various price thresholds is important not only to Physique 57, but to all boutique studios and gyms.
4. Gyms must evolve now.
Traditional brick-and-mortar gyms must entice customers to return. They need to provide an experience one can not get at home. While many people might maintain gym memberships, the frequency of their visits will be limited as they continue their at-home exercise in a post-COVID time. Offering gym members a free supplemental virtual offering in addition to their existing membership is not enough.
Orady said at the Future of Fitness event that he believes that gyms must produce a “richer suite of services” that will delight their customers. For Echelon, where most of their products currently end up in homes, Lentine has formed a dedicated staff of 5 sales people focusing entirely on selling to gyms. However, with the financial instability of gyms he believes he will be lucky if 10% of Echelon equipment are placed in gyms this year (Echelon recently launched a commercial line). That said, he does believe connected fitness within the gym providing valuable insights to users and gym owners will be a critical way that gyms can continue to evolve to provide their customers an elevated experience through state of the art equipment and technology.
5. Digital programming consolidations are a possibility.
With the plethora of digital offerings available, all three Future of Fitness panelists anticipate not all players being able to sustain their operations. Unlike Echelon and Tonal users who pay for physical hardware, digital apps allow customers to ‘jump around’ moving from one offering to another. This goes back to the need for a strong community to keep even the most loyal customers engaged and connected. The challenging model of virtual programming via an app makes smaller fitness players susceptible to customers moving on to the next latest workout trend. For Physique 57, Maanavi argues that her competition is expansive and includes everything from YouTube to free content and of course to Peloton.
For the many instructors who want to start their own businesses, it is challenging. Lentine anticipates that it might cost upwards of $50 for a business to acquire one customer and “if you are only charging $10 a month for a subscription,” it is going to be difficult to sustain the business. Many of these smaller players will struggle to compete against larger ones like obé, Equinox+, Peloton and Apple Fitness+. Orady also envisions consolidations and acquisitions of some of the smaller players as a way for them to survive.
Looking Forward
After the Future of Fitness panel discussion, we connected with Maanavi to gain additional thoughts on the future of the industry. When asked what lies ahead, she said, “The greatest opportunity for the fitness industry and our country’s health, is to encourage those who don’t exercise to simply start moving their bodies. When it comes to beginners, we actually don’t even need to use the term ‘exercise’. Let’s call it ‘movement’ to help the 77% of Americans who don’t exercise feel more excited to make a change. That can be our collective goal. Remember the wildly successful ad campaign ‘Got milk? Now it’s time for ‘Let’s move!’”