What Mountainside Fitness Did To Irritate Their Customers and What You Can Learn NOT to Do From Their Mistake

by , under Customer Service

Several years ago, I belonged to a gym called, Mountainside Fitness. I was a happy member there for several years… until they did something incredibly stupid, and that eventually cost them a lot of money.

 

I was one of the original members when the gym opened up, and I worked out there six days a week, faithfully, while training for my competitive bike and running races, and triathlons.

The gym was convenient for me… just four miles from home. Oftentimes, I’d ride my bike to and from the gym for a nice warm up before the workout and a gentle cool down afterwards.

The people who worked the check-in desk were always friendly, and for the most part, the members were nice, cordial and friendly. But management? Well, that’s a different story altogether.

Just like a lot of businesses, they ran the gym the way THEY wanted to run it, not necessarily in the way that would be in the best interest of their members. I won’t spend any time writing about all the things that shouldn’t have been allowed to happen at the gym… instead, I’ll focus on one very irritating point that caused several members to leave, and cost the gym considerable dollars that they weren’t even aware of.

When a person joins a group, an organization, or in this case, a gym when that enterprise first opens their doors, as a courtesy, the common practice is to “grandfather” that member’s rates so they’re not affected if there is a rate increase in the future. It’s just a nice thing to do to give thanks and recognition for a person who took a chance on you and got you to where you are today.

Some organizations practice that and others don’t. And that’s okay. What’s not okay, however, is when a member’s rate is increased to pay for equipment or services that don’t affect that member because he or she doesn’t use those things. Such is what happened to me at Mountainside Fitness in Mesa, Arizona.

Mountainside decided they needed some new state of the art bikes for their spinning classes to improve their daycare facility, to offer new and better “boot camps”, and to install some new software on their trainers’ computers. In order to pay for those things, Mountainside raised the membership fees for ALL members.

All that’s okay… for those who would avail themselves of those services. But NONE of those services applied to, or even interested me. I didn’t do their spinning classes or attend their boot camps. I don’t have children that would use their day care, and the last thing I need is for some wet-behind-the-ears “trainer” who took a certification class and who very obviously has spent very little personal time in the gym working on his or her own fitness, to put some numbers in a computer and let it spit out a workout and diet for me to follow.

Don’t get me wrong… I’m not saying I know everything. But having owned two gyms in Long Beach, California, having worked out since a sophomore in high school (52 years), and being a state, national, and World Games competitive bike racer, 5k and 10k running placer, and triathlete, I kinda know what I need to do, what results I’m looking for, and how I need to train to achieve those results.

Bottom line is… I didn’t need, want, or would use ANY of the things the gym raised their rates (for ALL) members to pay for. The amount of the increase? Just $1.50 per month. Not much, I know. But it’s $18.00 per year… for things I didn’t use and would never use.

Mountainside lacked a few pieces of equipment that I’ve used in other gyms and would like to have in this gym. But do you suppose they would buy that equipment for me and the handful of other hard-core members that would use it? And if so, would they “tax” the other non-using members to pay for it? I sure wouldn’t bet on it. So why should what they did to me and the others like me be okay?

So I did a little investigation, created a PowerPoint presentation, burned it to a DVD and passed it around to the others in the gym that were negatively impacted by Mountainside’s tactic. Well, I’m sure you can imagine the fall-out they had because of that.

Now please understand… I’m not a vicious person, and I wasn’t out to destroy Mountainside. But when a company does something like what they did and you attempt to meet with management to express your concern and they either listen to your side of the story and do absolutely nothing, or they don’t even meet with you, that takes things to a whole different level.

So what about you? What about your business, if you’re a business owner? What if you’re a consultant who works with business owners… what can you learn from my experience with Mountainside that you can use with your clients’ businesses?

You can never forget that your customers… the people who pay you the money that they trade their time (read: irreplaceable and un-recoverable part of their life) for, are your biggest assets. If your building burned down, all your delivery vehicles were gone, your equipment, stock and inventory were destroyed, you could somehow find a way to replace those things (insurance, loans, etc.), and be back in business within a reasonable period of time, and continue selling to your customers.

But if all those things just mentioned stayed in tact and it was your customers who disappeared, you’d be left with overhead and no one to sell to or any way of paying your expenses. So your customers have to be the most valuable asset your business has.

The question you must answer is, “What am I doing to make it easier, more beneficial, more advantageous, more fun, more serving, and more profitable for my customers to buy from me and not my competition?”

Consider: “What can I do to make my business so remarkable, so unusual, so special, so what-my-client-wants-or-needs, that they can’t help but talk about me, refer or recommend or endorse me, and want to buy from me?” (Remember, “remarkable” means “to be able to remark” or tell others about you.)

Try putting yourself in your customers’ shoes. Call your business. Pretend you’re a prospect looking for information. What do you hear? That’s exactly what your prospects and customers hear. If it doesn’t reflect what you want or expect, change it. Hire a “secret shopper” to go into your store or business and see how they’re treated. Give them a checklist of things you want them to observe. Have them buy something, then a few days later have them take it back for a refund. What was their experience? If you’re a consultant, do some of these things for your clients. You can learn a lot, and from that education you’ll have a ton of things you can work with your clients on.

Running a business can be a nightmare… or it can be some of the most fun you can have. Consulting with business owners can be the same way. If you have the necessary training and tools, and work with clients who are teachable and truly want to grow their businesses, you can have a wonderful, long-term, profitable business… and you can do it by working just a few hours a day, and a few days a week.

Mountainside Fitness did a dumb thing… and it came back to bite them. They don’t know how much, but whatever it was, it didn’t do anything positive for their bottom line. They’re still in business this number of years later, but they lost out on some income… pure profits… that they didn’t have to. Learn from their mistake and don’t do those things in your business or those that you consult with.

Martin Howey, CEO
TopLine Business Solutions

 

 


5 Comments for this entry

  • Mr. Martin Howey,
    (name in the correct order this time. smile)

    My name is William Malkovich and I am the CEO of Mountainside Fitness. Our Public Relations company stumbled across your video critique and forwarded it on to me. I must say that while I believe there are some math errors and other omissions, your overall analytical analysis was impressive. So often a customer response is framed in a emotional space so it’s refreshing to see your logical approach. While price increases are never pleasant, they are a necessary part of a sustainable business model. If analyze through an activity based costing model you would see that at the point of our decision to raise rates, the cost of maintaining a customers to the standards required by our brand, were greater than what we were charging. I would be remise if I failed to point out that several of our competitors listed in your competitive analysis, have since gone out of business.

    While criticism is biting it’s also a compliment to see our company grow to a size that others use it for business and analytical purposes. With success comes criticism and with the addition of several new locations I am sure that attention, both positive and negative, will also grow. While in business school we did case studies on most of the world’s largest companies. We analyzed and modeled every nuance of each decision and found that even the brightest collective of minds from time to time make tactical errors. One need to look no further than the infamous acquisition of Snapple by Quaker Oats to see that absent a true understanding of a company’s brand, proper analysis and execution is often impossible. I would welcome the opportunity to take you to lunch and shed some more light on your case study. Perhaps I could help you round it out a little more and even give you some insight into why we made that decision and why we continue to make similar decisions. I would also welcome the opportunity to hear from you about ways in which we could have better articulated our message to our customers. Maybe I could even have you give your presentation at our next executive meeting. I am one that believe you can never learn enough and I would welcome the opportunity to better understand your position.

    While I do hope you are open to grabbing lunch someday, I really just wanted to compliment you on the case study and thank you for making Mountainside Fitness a part of the academic experience.

  • Martin Howey says:

    My response to Billy…

    Thanks for your note, Billy…

    My overall experience with Mountainside was positive. It was the price increase for things I never used, nor would ever use, that got me. You can speak all day long trying to justify why “the cost of maintaining a customers to the standards required by our brand, were greater than what we were charging.” But the truth is, it cost you nothing to “maintain” me as a customer. I came to the gym, used the weights, and went home. No towels, no showers, no electricity for the cardio equipment. So I’m wondering what the maintenance “cost” was that I was generating.

    Perhaps some of the gyms in my video have gone out of business. That’s okay, the video is now three years old, and the examples I used were current at the time I made the video.

    Your examples of Quaker and Snapple of “a true understanding of a company’s brand, proper analysis and execution” have absolutely nothing to do with my experience at Mountainside. While your “branding” may be important to the public’s perception of who and what you are, and to new prospects looking for a gym, it had no effect or relevance to me. Your gym was local to me. The price I was paying was satisfactory. But a gym (for my purposes) is a gym… as long as they have the equipment and hours that I need. LA Fitness on Gilbert and Southern was the same distance from home as was Mountainside. So the “branding” of Mountainside was of no concern to me.

    You mentioned studies done in “business school.” My business has over 1,100 marketing and business development consultants working in 36 countries. We deal with real-world businesses with real-world problems and challenges. People come to us with MBAs or PhDs in marketing and business, and they’re blown away with the practical way we handle business problems. In many cases, it’s the exact opposite of what they learned by some professor who has an advanced degree and some book learning, but no practical in-the-trenches business experience. And often the case studies they use are presented in the way that makes a certain point, but the practicality of what they teach won’t work in the real world.

    All (or at least, most) of what you say has some merit… for your overall market positioning. But for ME… and that’s all I’m concerned about… it has NO merit. For you to raise my fees for things I would never use made absolutely no sense. I would have loved to have a couple of pieces of equipment that other gyms had (even other Mountainside gyms), but the location I was a member at didn’t have. Would the boot camp or spinning customers have appreciated their fees being increased for those things… equipment that they would never use? I don’t think so.

    All that said, I appreciate your response. This “case study” of Mountainside has generated a lot of comments from our consultants and clients, and helped me illustrate what not to do if you want to retain customers or clients on a long term basis. Grandfathering those who got you started and brought others to your enterprise is a common practice in all types of businesses… gyms included. It’s the “Dance with who brung you” concept. Some businesses call those people “charter members” and they show their appreciation by taking care of them. Alas, such was not the case with Mountainside.

  • Martin Howey says:

    Billy’s response to my response…

    Arrogance and an unwillingness to acknowledge another’s perspective is often a cover for insecurity and ignorance. One of my professors at “Harvard Business School” taught me that.
    ================

    My Note: In researching Billy Malkovich, I found that he attended ASU, but no reference for Harvard Business School.
    ================

    Here is my final response to Billy…

    Understandable… and what you’ve just demonstrate is a perfect example.

    Your unwillingness to acknowledge my perspective of an original customer who helped get you to where you are, but was taxed with a price increase for things they didn’t or wouldn’t use, just proved it.

    Congratulations to your Harvard professor for pointing out what would later become a hallmark trait for you.

  • Your research is poor at best. wmalkovich@pld12.hbs.edu. feel free to contact me on my school email address.

  • Martin Howey says:

    Billy…

    You wrote:
    Your research is poor at best. wmalkovich@pld12.hbs.edu. feel free to contact me on my school email address.

    My response:
    Yeah, it probably is poor… if you’re looking at it with today’s eyes. But if you paid attention to the video you’d have heard that the research was done over 4 years ago. (At 4:00 into the video, the second line of the slide shows “Today’s Date: July 2007”) The current date is September 16, 2011; 4 years and 2 months later.

    So the research was current at the time the video was made. Naturally, things change over time so the data from the research, understandably, would also change. Whether the research is still current today is not the point.

    What I was illustrating was what was current at the time I put that together. As mentioned, the video was made 4+ years ago, and I just revived it to make a point to our consultants about how to (or not to) treat paying customers who got a business to where it is today. And then I offered a handful of questions to consider when working with their consulting clients.

    What Mountainside did, regardless of how “current” the research is today, or was then, was dumb. You don’t penalize your clients (especially those who got you up and running from the beginning) for something they don’t use, or never will use.

    For example, it doesn’t cost anymore to service a client that pays you whatever (say, $15 per month) than someone who pays you $30 per month, and who comes to the gym, knows what they’e doing, uses the equipment, and then goes home without using any water, towels, or electricity (other than the lights and air conditioning) which are on no matter how many people come to the gym. And the rent? It’s a fixed cost that, once again, is the same no matter how many people come to your facility.

    The bottom line is, Billy… you don’t penalize (read: screw) your customers because you can. It’s not right; it’s not fair; and people resent it and will take their business elsewhere. Business goes where it’s wanted, and stays where it’s appreciated. It’s difficult to feel appreciated when you’re penalized for things that don’t pertain to you. And when there are other options, penalization causes defection. Alas, such was the case with me and several others.

    Martin Howey

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