Attracting & Engaging a Regional Chain Account KEVIN LAFERRIERE

1. Attracting & Engaging a Regional Chain Account KEVIN LAFERRIERE

2. Understanding the Multi-Site Operator and their Needs

3. The Evolution of the Industry • 1970’s -1980’s • 1990 – 1996 • 1997-2001 • 2001-2006 • 2007 and forward

4. The Evolution of the Industry • 2007 41.5 million members vs. 2006 42.7 • Revenues are up 6% to 18.5 billion • The dues ceiling has been reached for both member acquisition and existing members • Ratio of club cancels with one program vs. multiple • It’s not just the programming, we’re finding that there’s a link between the progressive mindset of a business owner evolving their programming and their ultimate long term sustained success.

5. The Evolution of the Industry • The ratio of health club patronage consisting of members to non member exercisers increased from 54.7% in 1998 to 67.1 % in 2007, a 9 year increase of 12.4% • The focus must be on what brings (ie. purpose) the non members to our clubs

6. Compression • The U.S health club industry added almost 16,000 commercial clubs on a net basis between 1990 and 2007 • 12,500 net new clubs occurred between 2000 and 2007. • With a decrease in 1.2 million members the pace of club growth has surpassed that of new members. • Much of the unit growth has occurred among the smaller format studio or express clubs. • With this in mind you must drive your experience in the opposite direction. Don’t try to move towards their offerings or exceed them, differentiate.

7. Retention • You can’t get new members you must retain them. • The Dollars spent on sales, wages, marketing and offers would be better spent on retaining the member.

8. Stand for Something • SO, everything points to the fact that most commercial health clubs are defined by what they’re not more than what they are - an absence of negatives.

9. The Key Influencing Factors • 1. Convenience • 2. Affordability • 3. Busy time constraints • 4. Interest in a particular service or activity.

10. Profiling • We’re speaking to them because they offer GF. Therefore they’re not the small clubs. • Understand their competitor’s model better than you understand theirs. • Don’t use your needs analysis to identify what’s stopping them from purchasing. • Don’t understand your consumer, the club owner, understand their consumer, the member. • It’s not process driven, it’s experience driven.

11. Relationships = Experience • There is little real club loyalty because the club member relationship is typically weak. • AND clubs have done a lousy job at differentiating themselves. The messaging is all the same, the spiel is all the same…

12. Have Members Previously Belonged to Other Clubs? Nearly Half of LFF Members Previously Belonged to Another Club • Prior experience with other clubs gives LFF relevant points of comparison, particularly as three-fourths stayed with their prior club for more than one year Prior Club Membership F CF Length of membership at most recent club F F F F Q25. Prior to joining your current club, did you belong to another health/fitness club?Q26. How many different clubs did you belong to prior to joining your current club?Q27. How long were you a member at your previous club? A, B, C = statistically significantly higher than corresponding letter *Caution: small base sizes

13. Not the What, it’s the Why • There is more satisfaction in working out than real enjoyment • Group classes work so well to motivate women because they make it fun and provide positive reinforcement. • The club experience should aim to reinforce the emotional benefits at all of its touch points. Make the members feel good

14. Opportunity • From a consumer perspective, there is a glaring opportunity for a fundamental attitude shift.From beingSALES focusedto beingMEMBER focused. • An opportunity for our clients to assume a leadership position in the industry. To really stand behind their club’s beliefs and mission statement.

16. Equipment matters (variety and quality), BUT it’s the INTANGIBLE that makes a difference. • Satisfaction seems to correlate to a specific PERSONAL connection to the people in the club. • The YMCA stands alone as a family oriented option. The gold standard for a welcoming, accessible atmosphere

17. What Other Clubs Are Members Most Likely to Join? The YMCA is LFF’s Primary Competition • 3-in-10 LFF members would join the YMCA, if they did not belong to LFF. Interestingly, LFF is the top choice among current Y members, indicating members see a good degree of similarity between these two clubs Top Clubs Most Likely To Join (if did not belong to current club) LFF Bally Total Fitness Gold’s Gym YMCA – 29% Bally Total Fitness – 15% Gold’s Gym – 12% Curves/Shapes* - 14% Lifetime Fitness – 10% LA Fitness* - 6% Gold’s Gym – 18% YMCA – 16% LFF – 13% LA Fitness* - 13% Curves/Shapes* - 10% Lifetime Fitness – 7% 24-Hour Fitness – 5% YMCA – 36% Bally Total Fitness – 21% Curves/Shapes* - 12% LFF – 9% 24-Hour Fitness – 8% LA Fitness* - 5% Curves/Shapes YMCA Other YMCA – 27% LFF – 16% Bally Total Fitness – 15% LA Fitness* – 15% Gold’s Gym – 11% 24-Hour Fitness – 5% LFF – 22% Gold’s Gym – 18% Bally Total Fitness – 14% Curves/Shapes* - 11% 24-Hour Fitness – 9% Lifetime Fitness – 7% LA Fitness* - 5% YMCA – 27% LFF – 16% Gold’s Gym – 15% Lifetime Fitness – 11% Bally Total Fitness – 9% Curves/Shapes* - 6% 24-Hour Fitness – 5% Q11. If you did not belong to your current club, which other club would you be most likely to join? A, B, C = statistically significantly higher than corresponding letter *Only asked in FL markets

18. The Future • A health club operator’s ability to: • segment the consumer market, • identify a core membership base, and • orient its clubs around satisfying the needs of a distinct member population • will be the key differentiator of whether the operator successfully grows its business • orstruggles.

19. The Future • The greatest challenge facing clubs caught in the middle is the development of new offerings that appeal to new members without alienating the existing ones. • The future for skilled and sophisticated health club operators is very bright