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Transcription – Paul Bowman Show 207

Chantal:          Welcome and thank you so much for joining us on the show today.

Paul:                Great to be here.

Chantal:          Now, technology and digital innovation has been a popular topic on this show over the last couple of months and it’s obviously a space that you work in every single day. Can you tell us what it means to be a digitally transformed club?

Paul:                Yeah, it’s a broad old topic, isn’t it? But for us and our … Again it’s opinion based for us and myself, it’s … Digitally transformed health club is essentially a seamless integration of digital and physical contact for the member at 24/7. So, it’s about, essentially, we believe that fitness today must be on demand inside and outside of a gym. This is essentially what a digitally transformed club is able to deliver. But what it all comes down to is just making our product easier to consume. So for example, if they can’t attend a physical class because of work commitments, intimidation factors, let’s make sure that they’ve still got an on-demand class. If they can’t do a workout and they need inspiration, let’s make sure they can do a workout generator and be able to do that on part. So it’s just making sure that that brand presence is physical and mobile but always connected and integrated seamlessly.

Chantal:          So what have you found have been the biggest advantages then for the club owners who have actually introduced digital into their facilities?

Paul:                I think it’s a way of thinking. But I really want to make the point on the podcast is that being digitally transformed isn’t about abandoning bricks and mortar, it’s about taking ownership in the digital space as well as the physical one. The … It’s about choice and convenience for the user and we’ve got to put our member hat on here rather than our operators hat and it’s about being relevant to every single member, every potential end user by harnessing all the delivery channels that they choose to use which essentially is through their mobile phone right now. So the mobile phone economy becomes the key to delivering a digital experience. And that’s great because it’s a device that people are already comfortable with and using to run their whole lives. But I think it’s, for us, as an industry we also need to think about it as a portal from which many can access fitness content. And we have to meet our users where they’re currently engaging with digital fitness. So essentially it’s about making sure that when an operative …

So when you go into a club, make our content to be able to use … The physical experience is not there and just to understand my way of thinking and Wex’s way of thinking is, we know we benefit the live offering because we essentially grow the pool of people that are engaging with particular activities and we always think that that is the absolute hub, a physical delivery you can’t beat. We’ve been delivering that for years but the issue is, how do we get them all to that point? So … And we know that there’s been digital concerns. So you need to have a digital presence within your club effects … On the gym floor effects and your studios to ensure that they’ve got access to high quality content all the time and then of course also in their pockets. So even before they start to engage with the brand, they’re engaging with the value that the brand already creates.

Chantal:          On conversations that I’ve had with other people in this area, they’ve said to me that quite often the virtual streaming classes are used as a really great way to give members a bit of a taste of classes or even to, I guess, bring new members into understanding what a class is all about. Give them a bit of a trial if you like. Have you found that to be the case as well?

Paul:                Sure, right. And it kind of goes full circle. So we see an intimidated user, and I think as we’re virtual ready from a usership point of view … Kept off. Because the intimated user would go in, be a little bit overwhelmed. If you think about your first experience into any club, it’s a pretty intimidating experience. But if we can break that down through clear design on the interface being able to choose a clear content title that they might know because there’s celebrities that we’ve got on our platform with that far reaching ability. They control that. It comes towards that and then moves through confidence. So all of our research shows essentially is that the more confident the user is, the more that they will use the physical live products. And again, that’s how we get here. So the people that want to be [inaudible 00:04:44], that’s where technology comes in so well and I think that’s where the digital fitness operators that are out there like the [inaudible 00:04:53], all these.

They know that. If you talk to a content partner, NEL, from our point of view, they’ve been a strip as people drop off their services to go onto gyms. And then they go back into their products when they leave gyms but that’s the thing that we see is that essentially we want the clubs to be able to take that entire journey. So they’re offering that content which is available to them to offer right from the couch, so to speak. So they can download let’s say a Fitness First app and automatically get that content and then that same content is then on the screens in the club, again breaking down the intimidation factor, and then they’ll get more confident in regards to the full physical live delivery and that’s how we see the perfect mixing.

Chantal:          Paul, when I think about virtual classes in my head, the visual is a studio with a screen in the studio and having one or many people participating in that class. But a few times during our chat already, you’ve mentioned mobile devices. So just for anyone that isn’t familiar, perhaps they haven’t experienced virtual before, what you’re saying to us is that pretty much any device can carry this content, is that correct?

Paul:                Yeah. Correct. Yeah. So from a Wex’s standpoint, is it’s … Yeah. We’ve got every single device. We’re meeting the consumers where they are so if that’s on web, if that’s on mobile, if that’s on any screen technology. So essentially wherever there’s a screen, Wex, it can support the delivery of content.

Chantal:          Do you have any data around the most popular form of device where people would consume or is that too broad to measure at the moment?

Paul:                It’s really broad and it’s so subjective to a particular operator. So … Say for another operator, they might have a strategy where it’s only mind and body. So of course the usage is all going to be mind and body, so … But that’s the unique thing is you can tailor it to where you are and how you’re being positioned. So if you’re positioning yourself as a high intensity studio, well great. Then have the … Curate the content to be able to only deliver that. So it’s as broad as you want but also as flexible as you want as well.

Chantal:          Paul, if we were to think of ourselves as a studio owner who decided that they did want to embark on putting virtual into their club, can you give us a bit of an idea … Maybe paint us a picture of, first of all, what would that potentially look like and how much would that investment be, roughly?

Paul:                Yeah. So look, it’s essentially … Sorry. It’s starting from this, all you need is screens. So what we’re seeing is people are going from simple projector screens. A projector screen and a projector to a full blown LED wall. So that of course carries different costs and then you’ve got a player that sits outside the studio which is really the control device and then that hooks into the current speaker system that’s the operators hand. And really from a cost point of view, it ranges anything from 8,000 … There’s I would say the minimum kind of package to right up to over 100,000. And I think where people … Why people are spending more and more, I don’t know if you’ve seen it, but we’ve definitely seen it, is that people are constantly redoing their studios, especially their virtual studios because it directly correlates to usage. Some of the usage figures for studios that step maybe over that 50,000 USD marker, they’re by and large taking over 15% of their [inaudible 00:08:34] into these virtual studios.

So the experience has to relate to the brand. The example that we always give is, you can’t have a premium brand but then do a very, very cheap install. It just doesn’t make sense, it doesn’t correlate to the end user. So from a cost point of view, it can range. But what we were saying is tailor it to what you’re brand is representing and how it should look and feel.

Chantal:          And those cost examples that you just gave us, that, I assume, is for the hardware and the set up. Is there then if someone … If a club owner then wanted to have an ongoing content streamed into their studio, does that then become a monthly subscription fee or is it sold as packages? How’s that …

Paul:                No, you … I probably should have mentioned there at the start. Yeah, it’s an ongoing monthly fee. So that fee ranges anywhere from 99 USD to 200 USD. It all depends on what content you have, how you’re executing it. So for example, we have operators that are actually just doing their own content which we are just a platform that supports them. And then you’ve people that are using our entire content library and the fee for most of our services is around about 199 USD per month.

Chantal:          Right. So often when we’re talking about that kind of cross over between fitness and tech, the name Peloton often comes into the conversation. I’m sure you’ve found the same thing. It’s a brand that a lot of people are aware of and obviously they’re quite innovative in the space that they’re in. In your experience, Paul, what lessons can club operators learn from a business like Peloton?

Paul:                I think for us, I know the Peloton guys quite well, is that it … They just showed if you make it easy for the consumer to consume exercise, they will purchase. And doing that delivery through, of course, the bike and their live streamings, it totally makes sense. We launched, essentially, a live streaming abilities for operates take in the adoptions was really, really slow because it was … Okay, how do we as operators train our people to be able deliver to camera which is easier said than done … It’s the overall of execution strategies. So I think it denotes the question though is essentially Peloton showed us that by taking, essentially, what we deliver every single day but making that easy to consume through technology and especially using it through live streaming may … There was another revenue option there. So I do believe … I don’t believe people are just buying a bike, I think people are buying … Or I know that people are buying it for the live streamings.

And it’s something that often it just needs a think about in regards to … Well, actually, you’re creating great content day and day out, but they’re only capturing that within the four walls of the club where many they can only serve 50 people where actually 300 or 400 people want to actually take or consume that class. So why not through the use of technology stream that great talent and gives that option to one, create more revenue as an operator, but two, satisfy the users where they want to consume that content.

Chantal:          You raise a really good point, Paul. Because we’re talking about delivering fitness within a studio, that’s the example that we were talking about, but in reality, one of the biggest challenges that we face in the fitness industry is reaching those non exercisers, reaching people that aren’t even in our clubs. In your opinion, what do you think the key is to encouraging and engaging with that group because I know it’s a huge percentage of people that are inactive. In your opinion, what do you think we can do to actually get them moving and get them to consume fitness on a regular basis?

Paul:                Yeah.. We’ve done study after study and there’s and as I mentioned earlier is, it’s all about how we drive people through confidence. And their confidence could be completely shot. They could be completely intimated by the gym industry. So the gym industry is not going to be able to capture that person but we know if you took the survey off the street and said, “Okay, How many …” There was a survey done essentially every hundred people that you interviewed, 79% of them will have a fitness goal. But of course, we’re only seeing 12 to 15% of people have gym memberships and that’s where the digital fitness … The truly digital fitness operators know well and that’s what they’re targeting to ensure that they’re easy to consume, they can talk to them directly on the couch and give them a snippet of what they do in a really, really un-intimidating fashion and so we … because we’re at a great position where we kind of see those both worlds and so if you think about that user journey in regards to, Okay.

Let’s say each body was able to take someone that was really unconfident to do videos at home. But then there’s no linkage to the physical because of course Beach Body doesn’t have clubs, but of course the gym industry does. So that’s what we’re always arguing is if we really want to penetrate those … That huge pot of people that are, essentially are, just to unconfident to actually use gym facilities. Let’s meet them once they’re at [inaudible 00:13:53] where they are with our brand and then ensure that there’s tailoring … We’re personalising that journey as much as we possibly can and then slowly layering their confidence into the physical experience and we’ve had operators look at as, “Okay, let’s just hit them with the guest pass as soon as possible.” But it’s the worst thing you could do. We need to make sure that they’re using value on the technology, they’re running workouts, they’re streaming content and then at a certain point, that’s when you engage them to try out the club.

Ensure that that club, that mobile to virtual or screens in the club experience is reasonably consistent and that’s where a lot of operators are looking at creating their own content so it is completely consistent. And then keep building their confidence to go right through to what we do amazingly which is deliver amazing physical classes. Day in and day out.

Chantal:          You just brought up something which was club operators were now starting to produce their own content and I know that we’re seeing more and more of that and do you know, when I think about virtual and you know … I’ve personally been involved in virtual-

Paul:                Course?

Chantal:          Creating classes for a number of years now so there really is those two different deliveries, isn’t there? There’s the pre made content classes and then there’s the make your own type of variety and from my understanding, Paul, I believe that now, just recently actually, Wexer has announced a partnership with two of the largest group of clubs in Europe. So can you tell us just a little bit about those partners and also tell what you think club operators worldwide can learn from this partnership that you’ve gone into?

Paul:                To understand … So the two operators that we have partnered with in a significant manner is Basic-Fit and McFIT which are the two largest operators in Europe. And essentially, they’re … They … The vision that I’m presenting in regards to meeting people on the couch, keep build their confidence and consistently build them into the physical experience, they needed to have the quality control of content and they wanted to have that control so both of them in this … It’s significantly, it’s their own production studios. They also have the ability to live stream as well, in time. But they’re currently creating at least over 30 titles per month for their users both in mobile technology and the screen technology in their clubs. So, and again, that whole piece is to be able to control that journey and truly try to impact the users that haven’t been to clubs before and try and bring them in to either a Basic-Fit or McFIT and both of them of succeeding significantly in doing so from a usage point of view within their clubs.

But also attracting people that have never ever been members before.

Chantal:          That’s phenomenal. I would love to hear more about that as the partnership continues, Paul, and I’m sure there’ll be plenty of press around that, so … Look, to finish off with today, can you share with us three things that you believe that you believe that we will see in the digital fitness space over the next couple of years?

Paul:                So yeah. I guess our big bit we do is cut off in the mixer is that we believe in hyper personalization of how we consume products and services. We just have to look at the other industries. I recently just bought my entire groceries on Google Home and it even recommended things that I’m running out of and it’s just like, “Wow. That technology has come a long way.” But we as a fitness industry, what are we doing to hyper personalise our offering? And I think that, if I’m honest, I think we’re actually getting beaten by the true digital fitness operators right now in regards to personalising that experience. We’ve talked a lot about seeking [inaudible 00:17:51] of the user and how you create a member journey for it. But it’s so hard to deliver constant relevant material all the time and that’s why we invest so heavily in our analytic systems. So we can actually understand those users because we’ve got … Now tracking over 122 [inaudible 00:18:10] which originally when I was back in operator state, we only had six that we used to do.

So it’s shown how much … How different we all are and I think we just have to expect that we’re all different and engage in systems that have the flexibility to scale and so hyper personalization is critical for me. Then the second big thing is live streaming. So I thought our industry would have started executing this a little bit quicker. It was a big bit for us probably about three years ago but I think it’s going to come to fruition definitely in the next two years. So operators actually using their content to start live streaming, we’re seeing that more in the boutique space right now. And of course Peloton is proving it works as well. And then the third thing for us is that we believe that the future of customer service will be powered by artificial intelligence so that meaning the basic functions like reporting, dashboards, predictive and then machine learning. So I’m not saying that every … You’re going to come into every single club and have a machine that can welcome you but I think artificial …

Smart clubs will be starting to use artificial intelligence to take out all those menial processes that they currently have in operations right now.

Chantal:          Wow. What an incredible future. And I just wanted to circle back to the first thing that you talked about which was the persona types and data collection and apologies for not knowing the answer to this questions but how are you … How do you collect that data?

Paul:                So, we’ve got our own proprietary system and then we also work with a partner called Localytics that connects to both our screen technologies and our mobile technologies. And we’ve done that essentially so we can start understanding the predictive behaviours. So as a way of example, we know if we’re sending a workout to a female 30 to 35 that has said that she’s a beginner. We need to … It’s obvious, but we need to ensure that we don’t go straight away into a viper workout or essentially we need to stay actually with equipment that’s less intimidating. So for example, it sounds so ridiculously simple but working out on a … You start with a treadmill and then slowly build their confidence as you go through. So that’s how our system can actually progress you. Does that … Hopefully that makes some sense.

Chantal:          Yeah, no. It absolutely does. And so what I’m trying to understand is so if I’m a new club that decides to go down the route of taking on virtual fitness basically-

Paul:                Sure.

Chantal:          I would have … I would gain access to get probably what I imagine is a more in depth understanding of my members than perhaps I would have ordinarily.

Paul:                Totally. So yeah. So we … Essentially what we’ve got a lot of coverage doing now is connecting our data directly into their data science layer. But of course if you don’t have science layer you can just use our technologies so you know … What we call a MyWex which essentially gives you all the data that you need in terms of how people are consuming our technology but then you overlay that with particular swipe technology or the rest of it. We most recently just put … We’ve been working with partners to create a people counting system. Because I’ve always thought that it was mad that we’re still relying on group exercise instructors to count their own numbers. So we have that now-

Chantal:          Tell me about it. I do it every day.

Paul:                Yeah, I know. I can … You know. So what we’ve done is essentially, it’s 99 point … I think 4% our [inaudible 00:21:50] will now essentially be [inaudible 00:21:52] you’ve got to make sure it’s constantly updated and the camera’s not moving but the … So that’s counting every single person. We’re trying to move into technology where it can facially recognise and then we integrate in CRN because imagine if we have an overview that we actually know where that member is going with time. That’s where we can truly personalise that experience. We’re doing things with beacons now based off if they walk past our screen, that can automatically push a particular content title to them based off the rules that we’ve put in place so we know that that works but we really need to be able to understand where they’re going and give them real time options. Whether that’s a dynamically price PT option or if that’s a particular content option.

So what we’re trying to always do is essentially get to a point where we’re always giving them a physical option and essentially a digital option so they can choose if … Where they are from an intimidation scale. Imagine if we can get that right.

Chantal:          Honestly I’m listening to all of this and just going, it is incredible. And if was a club owner right now, I would just want to … And I didn’t already have virtual in my club, I’d just want more information, I’d want to know everything that I need to do to jump on this because it really is progressing so rapidly and thank you so much for taking the time to come on and share all of that information with the FBP family, Paul. So thanks for joining us today.

Paul:                Well, thank you very much and as … Please reach out to any of my team or myself directly if you want any more information.

Chantal:          Excellent. And we will of course put all of Paul’s contact details and the details for Wexer in today’s show notes. So, that is all for today. Paul, thank you once again for joining us.

Paul:                Thank you Chantal.

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