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With a capacity of 1,120 rides per week during 28 classes, Les Mills Auckland City’s RPM studio currently is at 89% capacity. In its 7th year of operation RPM is enjoying the prospect of having to add even more shoulder slot classes to the timetable to meet demand. And attendees are happy to pay each time.
It’s been a wild ride to achieve this success. Lou McDowell, the independent owner of the RPM operation in Auckland City, lost NZD100,000 in the first 6 months of operation. When Lou set up the world’s first dedicated RPM studio in 1999, she hit a wall. People would not pay a fee of NZD 7.50 per ride, so numbers were low. With insufficient advocates of RPM in the club, word of mouth was non-existent and RPM was perceived as ‘too hard’. |
- > 1,000 RPM rides per week
- 89% capacity
- 28 classes per week
- NZD 6 per ride
- Year 7 of operation
- Year 1 low numbers
- Price and marketing changes drove Year 1 turn-around
- 12 months for members to accept pay-per-ride
- Regular in-club promotions now lead strong growth
- Instructors incentivised to increase class numbers
- Hassle-free price increase in year 5 from NZD 5 – NZD 6
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It was time to change the game or get out. Lou’s got guts, so in late 1999, she took the risky decision of relaunching RPM with a lower price per ride of NZD 5 and revamping the marketing approach from the ‘calorie killer’ to the ‘feel good fat burn’.
She made sure it was impossible to ignore RPM in the club. Using new POS material, banners, posters, organizing a free open weekend plus using reception for bookings (rather than an in-club shop), RPM went from an average of 250 – 300 rides per week in the first 6 months of operation, to hitting 500 rides per week within 3 months of relaunch!
The charge per ride stayed at NZD 5 for four years and numbers gradually went up to 800 rides per week. Then two years ago the fee was increased to NZD6 per ride…..without a glitch. It had taken members 12 months to accept that RPM was a ‘pay and ride’ experience, mainly due to club staff consistently explaining that bike maintenance made it necessary to charge each time.
With Lou on her third generation of bikes in 7 years, members are getting better rides due to good equipment management. In the first 5 years repairs and renewals were punishing on profits, until Lou sourced a bike she finally was happy with. Two years ago she purchased 40 new Danish Bodybikes and now spends 50% of the upkeep that was necessary for previous equipment. With maintenance savings, she has way more profit to re-invest in the business and has committed substantial resource into a huge range of promotional activity and rewards for top performing Instructors.
Lou makes sure there is always an RPM promotion ongoing to deliver either retention or new rider acquisition. A critical part of her strategy has been working with her world-class Instructors on growing their class numbers, with stellar success.
RPM’s Instructor Challenge began in 2004 with Lou bringing her Instructors together and sharing her vision of being the best RPM studio in the world. The Challenge was for each Instructor to take their lowest performing class, use NZD 200 provided by Lou and promote the class in 8 week periods over 6 months. The winner would receive a trip for 2 to Sydney based on which Instructor delivered the highest percentage class growth during staggered 8 week promotions. Weekly attendance went from 800 to 900 by the end of the 6 month race.
The Challenge was so successful that Lou repeated it in 2005 over 12 months, with the reward of NZD 2000 for the winner. Not surprisingly 2005 saw RPM hit the golden goal of 1,000 rides per week. Party Time!
Check this out. 2006’s target is 1,100 rides per week, and in March, the weekly count was already 1,097 rides!
Lou has supercharged RPM’s growth by giving budget and ownership to Instructors to create their own success, driven by a shared goal they believe in. Even better the Challenge compliments Lou’s numerous other promotional strategies with the result that in year 7, RPM is hitting targets way ahead of deadline.
Lou believes success has come from i.) a dedication to delivering extraordinary member experiences provided by an elite group of Instructors (including 2 New Zealand Olympic cycling representatives) ii.) a programme which brings the buzz of the pack ride to any member who wants to ‘hit the road’ and iii.) never resting on RPM’s laurels when competing for mindshare with other Group Fit programmes which are free to members. Lou has taken some major risks and put in the time to enjoy RPM’s continuing success 7 years on. Congratulations.
RPM is an independently owned business managed out of Les Mills World of Fitness in Auckland, New Zealand which is part of the Les Mills Chain.
Phillip says….
The power of this case study is showing it is feasible to charge for RPM before it is established in-club and still enjoy growth over time. We also see global licensees charging for RPM in other ways such as ‘booking your bike’ in advance to ensure you get the ride you planned for, when time slots are over subscribed.
Lou’s relentless promotion of RPM demonstrates the power of keeping Group Fit top of mind with members, as outlined in Key Element 6 of the Group Fitness Management System. Promotions keep Group Fit fresh and help to keep existing members happy and recruit new members into the studio.
Further the Instructor Challenge is a superb example of performance-based pay based on an agreed team goal for growth. Building on the competitive nature of her Instructor Team and the desire to recognize excellence, Lou shows the power of implementing Key Element 3, Recruit and Keep World Class Instructors.
By way of further background, at Les Mills World of Fitness, we contracted out our first two RPM rooms because we believed that the fundamental appeal of cycle classes would result in demand for a 200-bike room if we made them free. This would have been unaffordable from both a space and maintenance perspective and charging extra for them was the only way we could see of limiting demand. However we were afraid that our members would not accept our charging them for a class and felt this would be more acceptable from an independent contractor. After the first two bike studios were opened, we abandoned this approach and have successfully charged members fees at our other clubs.