Let me explain what I mean....
I was reading a recent blog article by Jonathon Fields where he talked about various business models and how they impacted the quality and the character of the business.
The business model for your average mainstream gym revolves around automated monthly billing. ... New members sign up, often pay an up front fee, then agree to have their credit cards hit every month in advance. Depending on the contract, they may also agree to a minimum commitment (classically, a year) or a simple monthly payment structure. To end the monthly billing, a member must (a) wait until their commitment, if any, has run, then (b) send notice of termination by the precise channels laid out in the contract.
The alleged beauty of this model is that it shifts the burden of reselling and re-earning the membership fee away from the club and, instead, places the burden of termination on the member. Put another way, instead of the club having to resell members every month, the billing only stops when the member proactively says, “no more.”
Sounds like a killer business model, right?
But, here’s where it gets a bit ugly.
This same model also fosters:
* Widespread lack of innovation,
* Declining emphasis on remarkability and delight
* Exceptionally poor differentiation that requires non-stop aggressive marketing
* Uninspired, disengaged staff working for unsatisfactory pay, and
* A 40% annual drop-out that keeps the sales burden exceptionally high