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Healthcare and fitness consumer habits have evolved rapidly throughout the COVID-19 pandemic, presenting clinics and studios with an opportunity to re-examine their value propositions and target specific segments.
Healthcare and fitness are “Yes, and” industries. While other goods and services compete intensely for a finite number of consumer purchases, consumers of healthcare and fitness services continue to use a widening array of services, tools, and solutions to help them look, feel, and function better. According to recent research conducted by McKinsey, the market for health and wellness products and services is growing by 5 to 10% per year. An even more fragmented market of complementary solutions is filling the white space around new movements, activity measurement, experiences, and more.
The COVID-19 pandemic, which forced large segments of the population to isolate (with their devices), has spurred the shift toward personalised virtual services and further highlighted the importance of general wellbeing. According to recent research, 40 percent of the population now consider wellness a top priority in daily life. The growing number of healthcare and fitness choices now seek to serve this need in increasingly diverse ways. Prior to the pandemic, the same consumer may have complemented their studio membership with a smartwatch, an at-home workout solution, and a few sports massage sessions. As life returns to some sense of normality, the question is how will consumer habits change—will their use of virtual solutions and equipment keep them away from clinics or studios or will they rush back?
The answer appears to be something in between. The healthcare and fitness industries are now more aligned than ever and together they are shifting from surviving the COVID-19 crisis to looking for ways to thrive in the next normal, building relationships that last and grow. Providers of both in-person and virtual services will need to reassess their value propositions, articulate their roles in routines, and commit to an approach that will win over the right consumers for their business. Specifically, providers of in-person services should consider a more hybrid approach that keeps consumers figuratively and digitally connected; and, of course, data security should be prioritised with such a high level of connectivity. Needless to say, those who can successfully earn consumers’ trust and a place in their routines will come out on top.
Nowhere to go but looking to move
The COVID-19 crisis has elevated consumers’ awareness of the importance of a whole-body approach to health and wellness, with 68 percent of survey respondents reporting that they prioritised their health more after the onset of the pandemic. These figures reiterate the need for healthcare and fitness businesses to be aligned in offering a multidisciplinary approach, allowing consumers to transition from service to service without changing provider.
As pandemic restrictions ease, we have observed consumers return to gyms and studios in those markets while continuing to use alternatives to the gym. In short, consumers are finding ways to continue to take part in fitness, and industry participants will need to figure out how best to serve consumers who now use a portfolio of options.
Attracting and retaining fitness consumers for the long term
Bricks and mortar clinics and studios are not dead, and at-home solutions are here to stay. This should be good news for the industry even though the breadth and quality of competitive offerings has increased; experience with drivers of membership churn shows that nothing helps drive retention more than sustained visits and diverse service offerings.
On-site: From in-person to hybrid
The pandemic has forced the £71 billion global health industry to change its operations to limit person-to-person interaction. As economies reopen, clinics and studios should re-examine their value propositions and place them in the context of consumers’ portfolio approach to healthcare and fitness, particularly embracing their potential as community hubs where members can focus on themselves.
Reaching wellness enthusiast and traditionalists can be important for clinics and studios. Wellness enthusiasts are likely to return; traditionalists who have not yet developed new habits may reincorporate clinics and studios into their routines once they feel safe.
Crucially, clinics and studios should cultivate communities to help meet consumers’ psychological need for belonging and mutual support. Community types can vary, from ones built around leaders or experts—clinicians/instructors—to supportive or competitive groups, but research shows that they all make members feel that they are taking time for themselves.
In addition to defining the optimal community type for the values of a clinic and its members, clinics and studios should clarify their value propositions for their target consumers—and, if necessary, adapt them. To fit into consumers’ portfolios of fitness habits, businesses could consider ways to partner with providers of complementary offerings. Depending on their value propositions and goals, a clinic and a fitness tracker may be good partners – providing clinicians with insight into physical performance between appointments.
Clinics and studios can also redesign memberships and pricing to offer more flexibility for members who are now exercising in multiple ways and to optimise retention and average revenue per user. Not only did the pandemic force some competitors to close, reshaping demand and price tolerances, but it also pushed the remaining businesses to offer hybrid memberships that opened the door to expanded models of price accessibility. Going forward, the industry can adapt traditional pricing analysis to optimize their pricing—identifying value, matching offers to consumer segments, and timing discounts. Like many other industries, healthcare and fitness businesses should commit the resources required to regularly pilot new pricing strategies and expand their offerings across both in-person and virtual services.
Unfortunately, the economic shock of the pandemic resulted in more than a million lost jobs by the end of 2020. Clinics and studios can reinforce the confidence of their staff by communicating their value propositions and staff’s roles in fulfilling those visions. Clinics and studios can also support staff in their work using technology to gather data and curate fitness resources for consumers in a fragmented market.
At the same time, clinics and studios can adjust the size of their geographic and real-estate footprint and consider opportunities to expand or contract in different areas based on their performance. Over time, M&A opportunities will emerge.
An increasing need for data security
Connected-equipment manufacturers and virtual service providers players to remain vigilant in protecting themselves and their consumers. One large wearables company was compromised in a ransomware attack in July 2020 that shut down its ecosystem for users, requiring days to recover. More recently, another connected-fitness-solution provider was found to have an exposed API that would allow hackers to gain access to customer data.
The potential for sensitive-information leaks or outright ransom attacks is proving a very real risk that can blindside an unprepared industry player, and data security should be a priority for companies that control consumer data. Indeed, a data breach is also a breach of trust and can jeopardise relationships with consumers.
At TM3, we have dedicated infosec and data security teams. All data is stored in ISO27001 accredited, highly secure and monitored data-centres around the world.
The COVID-19 pandemic has scrambled consumer habits, and the next phase in recovery is a prime opportunity for industry participants to reset. Selecting the right clinic, class and client management software alongside a target consumer segment and updating your value proposition could help you best-position your business for success in 2022. – Explore our slides, or start your 14-day free trial.
