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Aggregation in Fitness The Impact of Hussle on the UK Gym & Health Club Industry February 2020

Data provided by

Data & methodology audited by

Aggregation in Fitness |


Introducing the ‘Aggregation in Fitness’ report ‘Aggregation’ is a hot topic in the UK Fitness Industry, with operators on both sides of the debate. However, much of the industry remains undecided. One of the commonly attributed reasons for this is the ‘lack of data’ available for operators to make an informed decision. This report addresses this point directly through independently verified data, without subjective commentary. Therefore: • The methodology, data, and output of this report have all been independently audited and verified by Fusion Analytics. • The data in this report is unique to Hussle and does not represent other ‘aggregator’ models, nor does it seek to. • The data therefore also only accounts for the Hussle ecosystem, and is not representative of the overall market. • This report does not provide an additional narrative to wider market trends or provide context for these. • This report also makes no attempt to provide advice or guidelines on how to select or use an ‘aggregator’ model.

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Fusion Analytics Statement: Our assessment of ‘Aggregation in Fitness’ “The surveys have been conducted with a reasonable approach to ensure a fair view. Loss of data from incompletes, response rates, and outliers, all seem reasonable within normal operating parameters. There are some expected differences in the profile of demography and product types in; the customer base, the respondents, answers to specific questions. These seem acceptable. No specific weightings have been applied, besides the attempt to summarise the typical 100 Hussle customers. This description is included within the methodology. Results of the actual questions have been published alongside the interpreted answers. This means that any implied descriptions or trends can be understood in their full and raw format. Generally, the report focuses on clear trends documented within the surveys, without need of dilution or misdirection.”

The findings in the survey demonstrate clear trends in this new and innovative approach to the fitness industry, providing an overall net contribution of revenue and people.

The two product types enable both active gym members to use a wider range of facilities, often on top of what they currently use, and enabling non-gym members to trial a range of facilities in different locations. Howard Thompson, Director of Fusion Analytics Ltd

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Research objectives The objective of this report is to address the three key questions that are being debated by operators, analysed across three sections of the report, including: ‘Substitution’

– Do existing gym members cancel to use Hussle instead?

‘Intervention’

– Does Hussle acquire customers that traditional gym operators would have acquired anyway?

‘Incrementality’ – Does Hussle provide incremental value to the market?

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EXECUTIVE SUMMARY

“

At the heart of the dilemma for fitness club operators is this question of incremental vs. substitutional users. If an operator is confident that the aggregator is providing new, incremental users rather than substitutional users it might make sense to strike a deal with the aggregator Alex Birch, Partner at OC&C Strategy Consultants*

*Source: www.occstrategy.com

�

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Evidence suggests that incremental users and associated revenue brought to operators outweighs the loss of income from existing members Summary of findings Substitution • 1 out of every 100 Hussle users cancelled a gym membership to use Hussle. Intervention • 3-6 out of every 100 Hussle users were acquired by Hussle through potential marketing intervention. • 71% of respondents said they were unlikely or very unlikely to have visited the gym without Hussle, with 15% unsure. Incrementality • 21 out of every 100 Hussle users will go on to join a gym directly. • 22 out of every 100 Hussle users have a direct gym membership and use Hussle in addition. • 16 out of every 100 customers cancelled their membership for organic reasons but continued to use a gym through Hussle. • The average secondary spend per Hussle user visit is £2.80, with food & beverage the most likely purchase.

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Customers IN versus customers OUT of the Hussle ecosystem Customers IN to Hussle Hussle substitution/intervention per 100 people

Members (see page 17)

Non members (see page 17)

Hussle customer split per 100 people 2 people acquired by promotional intervention

61

39

93-96

1-4 people acquired by marketing intervention

1 person substituted their membership

4-7

Potential Potential or substitution Substitution interventionor intervention (see page 9-11)

Customers OUT of Hussle

Hussle Monthly Pass customers (see page 21)

Hussle Day Pass customers (see page 20)

Hussle customer split per 100 people

71

Converted new members per 100 people

26%

18

members per 100 people

New member conversion rate when leaving Hussle

29

9%

+21 New direct

3

Source: Customer Survey, Exit Survey, Day Pass Survey

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‘SUBSTITUTION’ Do existing gym members cancel to use Hussle instead?

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‘Substitution’: Evidence suggests that a small number of Hussle users have cancelled direct gym memberships with operators to use Hussle as an alternative • 1 in every 100 people that use Hussle have specifically cancelled a direct gym membership to do so, representing substitution of market value. • Revenue is still generated for gym operators through this one user, albeit at a lower yield. • 21 out of every 100 Hussle users will go on to join a gym directly, meaning a positive net member movement of +20 per 100 users. • 16 out of every 100 Hussle customers had a direct gym membership and cancelled for organic reasons unrelated to Hussle. • Hussle enables these users to continue their fitness regime, representing ‘recovered’ market value that would otherwise have been lost to operators, albeit at a lower yield.

1 in every 100 people that use Hussle have cancelled a gym membership to do so

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‘INTERVENTION’ Does Hussle acquire customers that traditional gym operators would have acquired anyway?

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‘Intervention’: Evidence suggests that Hussle’s marketing intervenes in a small number of customer journeys • 2 out of every 100 Hussle users are acquired through a Husslefunded promotion, representing potential marketing intervention. • 4 out of every 100 Hussle customers were searching for a gym and came across Hussle. Some of these users may have found a gym regardless, thus representing potential marketing intervention. • As evidence shows that 71% of respondents were unlikely or very unlikely to have visited a gym without Hussle, this indicates that 3 of the 4 customers mentioned above visited the gym due to Hussle. • Combining funded promotions (2 people) and marketing (1 - 4 people), this means that 3 - 6 out of every 100 Hussle users represent potential market intervention. • Revenue is still generated for operators through these 3 - 6 customers, albeit at a lower yield.

Between 3 - 6 of every 100 Hussle customers represent potential market intervention

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‘INCREMENTALITY’ Does Hussle provide incremental value to the market?

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‘Incrementality’: As well as positive net member movement, Hussle also provides incremental revenue, secondary spend and referrals • 21 out of every 100 Hussle users will go on to join a gym directly. • 61% of users were not a gym member when they first used Hussle. 83% of this group are lapsed members with 82% having not been a gym member in the past 6-months. • On average, each Hussle customer spends a further £2.80 per visit in-club, with food & beverage the most likely purchase. • On average, each Hussle customer tells 2.7 more people about the gym they visited. • 92% of respondents said that Hussle had enabled them to visit a new gym.

21 out of every 100 Hussle users will go on to join a gym directly

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THE RESEARCH

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Research methodology Data responses from three separate surveys were used to form the basis of ‘The Aggregation in Fitness’ report. 1. ‘Customer Survey’ - This survey was sent to a random sample of active Hussle users across both Day Pass & Monthly Pass products. The purpose was to provide information around substitution, intervention and incrementality. 2. ‘Exit Survey’ - This is a survey question asked of all Hussle Monthly Pass customers as they cancel. The purpose was to ascertain the reason for their cancellation, including if they were ‘joining a gym directly’. 3. ‘Day Pass Survey’ - This was a single survey question sent to Day Pass customers to ascertain if they had gone on to ‘join a gym directly’. Points to note: • All three surveys were conducted between a similar time period (December 2019 - January 2020). • There were 2,557 respondents across the three surveys. • Respondents’ gender, age & product profile compared against Hussle total customer base is within acceptable tolerance. For the purposes of like-for-like data comparison and to make findings easier to digest, several results have been reported on an ‘index’ basis, i.e. ‘out of 100 people’. This has been calculated by taking the number of respondents to the question, divided by total research respondents, multiplied by 100. The methodology, data and output of this report have all been independently audited and verified by Fusion Analytics. Aggregation in Fitness | 15


THE STARTING QUESTION We first qualified the customer based on whether or not they were a gym member when they started using Hussle. This enabled us to segment different customer groups to assess three areas: ‘Substitution’ focuses on the 39% of respondents that answered ‘Yes’ to this question to assess the impact of Hussle on existing members. ‘Intervention’ focuses on the 61% of respondents that answered ‘No’ to this question to assess incrementality and intervention. ‘Incrementality’ assesses added value through net member movement, additional revenue, secondary spend and referrals.

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Were you an active gym member when you first used Hussle?

Member - possible substitution

Non member - possible intervention

Why are they using Hussle? Yes - Gym Member (39)

No - Non Member (61)

29 22 16 1

Source: Customer Survey

Using Hussle in addition to direct gym membership

About to churn for reasons unrelated to Hussle i.e non-use, location 1 Member cancelled to use Hussle

18 4 3 2

5

Required the use of multiple fitness facilities

Traditional gym membership does not suit their needs Came across Hussle whilst searching for a gym Recommended to Hussle Attracted to Hussle because of a promotion Others

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‘SUBSTITUTION’ Do existing gym members cancel to use Hussle instead?

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Existing members: If you cancelled your membership, why?

I still have my membership The location no longer matched my needs It was too expensive I wasn't visiting enough It wasn't flexible enough The facilities didn't match my needs

I cancelled my membership for Hussle I got bored / change of scenery Others

0%

Source: Customer Survey

10%

20%

30%

40%

50%

60%

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Conversion to gym membership based on Hussle Day Pass customers

Day Pass Customers

Have you joined the gym directly?

Yes No Already a member

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Source: Day Pass Survey


Conversion to gym membership based on Hussle Monthly Pass customers

Monthly Pass Customers

Why are you cancelling your Monthly Pass?

Joined the gym directly It's too expensive I'm not using it Other

Source: Exit Survey

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‘INTERVENTION’ Does Hussle acquire customers that traditional gym operators would have acquired anyway?

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All non-members: Have you ever been a member of a gym before?

How long ago?

35.0% 30.0% 25.0%

Average 17.7 months since they were last a member

20.0% 15.0% 10.0% 5.0% 0.0%

Less than 6 months ago

Source: Customer Survey

6-12 months ago

1-2 years ago

More than 2 years ago

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Non-members that have had a direct membership in the past: Why did you cancel your last gym membership?

I wasnʼt visiting enough Itʼs too expensive The location no longer matched my needs The facilities didnʼt match my needs It wasnʼt flexible enough Gym closed down I wasnʼt hitting my fitness goals I got bored / change of scenery Other

0%

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5%

10%

15%

20%

25%

30%

35%

Source: Customer Survey


Non-members that have never had a direct membership: Why do you think you have never been a member of a gym before?

50%

40%

30%

20%

10%

0%

I don始t want to be locked into a long term contract

Source: Customer Survey

I have other fitness interests outside of the gym

It始s too expensive

I haven始t found a gym membership that suited my needs

I始m not sure how often I would go

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All non-members: Why did you choose to start using Hussle?

Traditional gym membership doesnĘźt work for me I can access a fitness facility near home, work or elsewhere I can access multiple fitness facilities when travelling within the UK I was searching for fitness facilities and I came across Hussle I wanted to conveniently trial a variety of fitness facilities I was recommended to Hussle by someone I know I have access to multiple fitness brands Hussle was running a promotion campaign I like to mix up training styles and fitness equipment Other

0%

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5%

10%

15%

20%

25%

30%

Source: Customer Survey


All Respondents: Has Hussle enabled you to visit a new gym?

How likely is it that you would have visited without Hussle? 40% 35% 30% 25%

71% said very unlikely or unlikely

20% 15% 10% 5% 0%

Source: Customer Survey

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‘INCREMENTALITY’ Does Hussle provide incremental value to the market?

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All respondents: Which other services do you purchase during your gym visit through Hussle? 40% 35% 30% 25% 20% 15% 10% 5% 0%

Food & Drink

Padlock

Towel Hire

Classes

Court Bookings

Personal Trainer

Other

How much do you spend? 60% 50%

Average spend £2.80 per user per visit

40% 30% 20% 10% 0%

£0

Source: Customer Survey

£1 to £5

£6 to £10

£11 to 15

£16 to £20

More than £20

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All respondents: How many people have you recommended to visit the gym after using it through Hussle?

On average there are 2.7 referrals per customer

25%

20%

15%

10%

5%

0%

None

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1 person

2 people

3 people

4 people

5 people More than 5 people

Source: Customer Survey


CONTRIBUTORS About Fusion Analytics Fusion Analytics Ltd (Fusion) is an independent data consultancy that supports organisations manage, manipulate and interpret data. As part of their remit they often support research managers correctly calibrate market research results to ensure that they are robust and correct.

About Hussle Hussle is an online fitness marketplace which launched in February 2011, targeting busy urban individuals that require flexible access to gyms, health clubs and swimming pools to enable a healthy lifestyle. Hussle sells two types of pass which provide access to participating operator venues. Day Passes which enable single visits to specific venues, and a no-contract, monthly pass called the Monthly+ which provides customers with the multi-club access they require. Fitness operators work with Hussle to increase awareness of their facilities, generate incremental revenue through direct sales, benefit from membership conversion, and to drive secondary spend.

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If you would like to discuss this report in more detail, please contact research@hussle.com

Š Sandcroft Avenue Limited trading as Hussle 2020. All rights reserved.

32 | Aggregation in FitnessCompany no. 06849691. VAT no. 101 5698 33

Profile for hussleHQ

Aggregation in Fitness  

An independently verified report into the impact of aggregation on the UK fitness industry

Aggregation in Fitness  

An independently verified report into the impact of aggregation on the UK fitness industry

Profile for husslehq
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