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Posted in Cycle, Clubs

The sport of cycling has enjoyed a massive upswing in popularity in the last five years – and nowhere is demand more obvious than in the rapid growth of boutique cycle studios.But who exactly is paying top dollar for cycling?

At a time when industry reports suggest that average customer spend is slowing and typical fitness facilities are dropping in profits1, cycling boutiques like SoulCycle and Flywheel are bucking the trend: earning more than twice as much per customer, generating thousands of attendances, and fast becoming the industry’s most lucrative spaces.

In September 2015, riders at SoulCycle New York forked out $34 for a 45-minute class, or $850 for 30 rides2. Over at Flywheel, prices were similar: $34 for a 45 to 60 minute class or $600 for 20 rides3.

Who are the customers behind indoor cycling’s boom and what can the rest of the industry do to gain a piece of the action?

The most important customers your business has ever seen.

A Nielsen: Les Mills Future of Fitness White Paper (2009) observed that future consumers will expect experiences that deliver “what I want, when I want it, and where I want it”4.

With the emergence of millennials that future customer has arrived. People like Elizabeth Cutler and Julie Rice of SoulCycle, have been ahead of the curve in recognizing and responding to their needs – enjoying staggering returns in the process. Now owned by Equinox, SoulCycle has opened 45 locations in the United States, with plans to open 50-60 studios worldwide by 2016.

According to the International Health, Racquet & Sportsclub Association (IHRSA), the average fitness club has a way to go to attract this critical customer group: “the average age of customers in US/typical fitness clubs is 40.7 years old”5.  The good news is that there is a huge opportunity to do so. The Nielsen: Les Mills Global Consumer Fitness Survey (2013) shows that 81% of millennials either exercise or would like to (vs. only 61% of their baby boomer parents)6.

Here are five other relevant facts about what is calling “the most important customers your business has ever seen”7:

—         Born between the early 80s and late 90s, millennials are the children of the “baby boomers” of the 1950s. Now aged between 18 and 34 years, millennials are the largest generation in history, numbering 80 million in the United States alone7.

—          Worldwide, they are become increasingly powerful consumers. It is estimated that their total nationwide annual spend will top $200 billion by 2017. In the United States, the largest millennial one-year age cohort is now only 23 – meaning their influence will be felt for many years to come8.

—         Highly social and “always connected”, they expect to do everything online. They’re passionate about values – including the values of the brands they do business with7.

—          Typified by people like New York marketing professional Alison Dougherty – who used to pay $30 a month for a health club membership but is “much happier now that her fitness expenses average $500 a month”9 – millennials seek services that satisfy their demand for variety, social atmosphere, specialized group classes and amenities.

—          For these consumers, “getting/staying in shape” ranks higher than “getting/maintaining health” and they are prepared to pay a premium for it. They are looking for assisted and social exercise, authentic experiences, atmosphere and an opportunity to connect with “like-minded” people in their workouts6.