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ePublication of Australian Fitness Network

As the competitive landscape changes, so too are the areas of business you need to monitor and measure, says Reece Zondag.

Every business operator worth their salt will be aware of the role that Key Performance Indicators (KPIs) can play in their business. Indeed, even businesses that fail have KPI’s – though perhaps they are not reacted to properly or are not the performance indicators that the business should actually be tracking.

By definition, KPIs are indicators of your performance as a business that you consider to be ‘key’. Here’s the catch though – there’s so much to measure that it can be difficult to determine what is truly ‘key’. You’ve got to get it right.

Why bother?

A good place to start when addressing a topic like this is with the question ‘why?’ Why bother with all these numbers and measurements? As I see it, there are two big reasons to bother measuring the performance of your business.

Firstly, looking backwards to determine that the decisions you made in the past are paying off and achieving what you set out to achieve. In doing so you may well identify the levers you need to push and pull to improve the performance of any areas of your business.

Secondly, to predict your likelihood of success for the future. What situations have to be present for you to be successful today, this week, this month or this year? If A + B + C were present at the start of the past three years when success was achieved, and they are all present at the start of this year, then it indicates that success may reasonably be predicted again. Again, a result of identifying indicators of probable success is that you may see some levers you need to adjust before it’s too late. What can I do to manipulate the environment around me to ensure that I am more likely to be successful – the social environment, the economic environment and the competitive environment?

Industry origins and future

Our industry is still relatively young. It was founded, essentially, by people who were passionate about sharing their love of exercise and fitness with others, while somehow, hopefully, also making a living from it. My definition of making a living is getting a fair return on your investment of time and money. That return will be measured in satisfaction and money: otherwise, frankly, you might as well go and work for someone else and get paid an hourly wage.

Once others (others being non-fitness people) saw that fitness could actually make a very good return on investment, they wanted a piece of the action too. We saw the entrance, for example, of private equity firms into our industry. They merged and acquired their way to growing some huge businesses that just happened to be gyms – as opposed to having a gym that happens to be a business. In very simplistic terms, their sole measurement for success was how much more they could sell a business for than what they paid for it. This is not to criticise their involvement in the industry – quite the opposite in fact. They forced our industry to get serious about operations in order to be competitive.

Well, the competitive landscape is changing again. And with it, so too are the areas of business we must monitor and measure. There are new and sometimes unforeseen threats to our businesses now. These threats are emerging at ever-increasing speeds and our ability to foresee their impact on our business through measuring performance has become an essential skill.

Unique business: unique KPIs

Your business is unique and, as such, you’ll need to determine your own set of KPIs, which may evolve over time. To make sure you’re on the right track, ask yourself the following questions.

  • As well as the ‘key’ things you should measure, what are the contributing factors to these indicators that should also be measured? For example, as well as the number of new members joining your club in January, what percentage of your annual marketing budget was spent on the New Year member-drive and how many competing clubs do you have in your member catchment area? How does this compare to previous years?
  • What are the financial indicators you should measure, and what are the somewhat more subjective indicators that may contribute directly to the financial indicators? Perhaps, for example, positive financial indicators are the result of your team delivering exceptional customer service. In which case, what KPIs will enable you to accurately measure customer service?
  • What information should you share with staff in order to create and maintain an appropriate level of engagement? What performance indicators should you be using to ‘adjust’ the behaviour of your staff?

It’s worth making the effort to uncover the answers to these types of questions. Seek out some good advisors if you don’t already have them, find out exactly what the ‘good’ players in the market are doing in this space, and KPI your way to greater success in 2014.

Reece Zondag
Reece is former CEO of Les Mills New Zealand, a ten gym chain with more than 50,000 members. Founded in 1968, the club sizes range from 12,000 to 2,400 square metres. As CEO he oversaw the maintenance of the group’s enviable retention rate of almost 70%. With a huge focus on ‘assisted exercise’, the clubs aim to have as many members as possible ‘touched’ by the expertise of a fitness professional. His new venture is

Benefit from Reece’s wealth of management experience at the FILEX 2014 Business Summit, where he will be presenting:

For more information on Reece’s session and the Business Summit check out where you can also register for the convention or the all-inclusive Business Gold Pass package that includes access to the essential Business Summit and Business Breakfast events.

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