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December 8, 2008

A Letter to LA Sports Club of Boston

[This letter is not from me... but rather from a friend of a friend, who is a member of LA Sports Club of Boston... It's quite entertaining and worth the read.]

Dear Kristin,
The holidays are my favorite time of year, and like clockwork every year for the past eight years I have been fortunate enough to usher in the holiday season with a letter from the Sports Club that cheerfully to the point of condescension announces in Orwellian double-speak that you will raise prices yet again while continuing to debase the quality of your service offering.

I've never taken the time to express my gratitude to you for "surpassing my every expectation" but I thought that given your kind letter, recent service "improvements", and price hikes, now might represent an opportune time to do so. I speak for all of your members when I say that we applaud your Herculean effort to "stabilize your costs" "despite the rising costs of doing business" in the face of the steepest drop in commodity prices in the past century. What is the secret managerial sauce that allows you to keep your operational cost base "stable" in the face of plummeting prices everywhere else in the economy? While simultaneously retaining your pricing power ("[ability to] hold this year's dues increase to the lowest level in 3 years") in spite of the worst economy in 100 years? At a time when all other purveyors of fine luxury products and services are being laid to waste and when many other gyms such as the publicly-traded Lifetime Fitness are taking the unprecedented action of slashing monthly dues by as much as 40% over the past several weeks in a last-ditch effort to retain members?

As a professional analyst of businesses, occasional professor of business analysis, and loyal SCLA member since before the club opened, I am eager to discover the answers to these burning questions. I watch with rapt fascination your business strategy of offering a now barely-adequate commodity product at ultra-luxury brand pricing into an increasingly competitive, saturated market against a macroeconomic backdrop that will soon be christened the Greater Depression. I commend the management of Sports Club LA/Boston for bravely forging ahead with this strategy and hold out great hope that through sheer force of will, managerial talent, and cohesive teamwork you will--for the first time in recorded history--successfully execute such a business plan. I'm also intrigued that you are reviving the outdated "cost theory of value": if a business' cost structure determined the price of its product, no business would ever suffer margin erosion of bankruptcy. Now, I understand that the full economic impact hasnt been fully felt in the Boston luxury market--yet--but the fact that the SCLA/Boston will succeed where all others have failed is remarkable to me as student of business and I would like to explore the topic in greater detail.

In fact, with your permission, I would very much like to document your strategy and its execution (as measured by net member retention, sales growth, profitability, and various return on investment metrics) as a business school case study and submit it to Harvard for publication at the completion of your five-year plan. Together we will make history. I have jumped the gun a bit and taken the liberty of documenting some of your superlative recent efforts to "continue to provide us with the highest level of customer service that we expect and deserve", many of which will someday surely be considered revolutionary even to seasoned management gurus trained under the likes of the legendary Peter Drucker:

* Outsourced Laundry: While Executive Members may complain daily to the locker room desk staff about your new environmentally-friendly outsourced laundry service (missing clothes, poorly washed clothes, and the fact that they now have to keep multiple pairs of clothes stuffed in their locker due to the new cleaning schedule), it provides great schadenfreude to us proletarians in the non-executive suite, so don't think for a second we don't thank you for this comedic value-add as we simultaneously save the environment and experience longer-than-normal wait times for locker keys.

* Outsourced Cleaning: Many members complain about your new environmentally-friendly outsourced cleaning program, such as my lady friend who slipped and fell on the wet basketball courts at night while shooting hoops due to your over-enthusiastic cleaning crew. These members claim that this is in fact a stealth cut in operating hours and service quality directly taxing those members who work out "late" at night, and that it dilutes the brand of the gym in addition to creating outsized legal risks for the gym's owners. The rest of us consider these members to be whiners. I for one am impressed that the cleaning crew has the fortitude to interrupt my exorbitantly priced private martial arts session at 10:15pm (with 15 minutes left in the session, and 15 minutes left until gym closing time) and graciously ask us to leave because they don't want to miss their bus ride home. Similarly, I am thankful that your new cleaning crew starts cleaning an hour or more before the gym floor closing time as 1) I receive a (free) extra cardio and agility workout by dodging and weaving around cleaning men, vacuum cords, and the like, and 2) it forces me to able to maintain my zen-like meditative state of concentration in the face of even the most distracting surroundings--such as loud vacuuming noises--while inhaling noxious cleaning fumes in the middle of an intense cardio workout. I can actually feel the enhancement of my Mind-Body "wellness" as I work out! Your gym is truly an oasis of serenity in the hectic desert of a world that we all live in.

* Industry-Leading Hours of Operation: I am grateful for your early closing hours, particularly on weekends, in that they frequently force me to use the (free) 24-hour gym with brand new equipment and (free, superior) 24-hour lap pool in my apartment conveniently located one block behind the Sports Club LA. The (free) gym and (free) pool in my apartment building would otherwise go to waste. As a side benefit of switching from swimming at SCLA to swimming in the (free) junior Olympic pool in my apartment building, I now achieve superior workouts as I never have to wait for a lane in my apartment complex!

* State-Of-The Art Boxing Closet: The Sports Club LA is a pioneer in the trend towards ultra-realism in the martial arts, and as such, the speedbag and kickboxing bag are truly state of the art. The speedbag is so state of the art, in fact, that while every other gym in the country uses a double mount to keep the bag from wobbling, the SCLA speedbag utilizes a single mount. When you are boxing, your opponent will likely wobble, so why shouldn't the speed bag too? Adjusting the height of the bag is a workout in and of itself. Similarly, instead of installing the brand new water kicking bag that has been sitting around in storage at the gym for a month or so, the SCLA in its infinite wisdom has decided that its members need to toughen up on the old bag that is held together by electrical tape. My lacerated shins and knees will thank you for the realistic stress you are placing on them when I move to Thailand to compete as a professional kickboxer. The pungent, cheap boxing gloves are also additive to the gritty realism and the mental toughness training I receive at your fine establishment.

While there are many positives to working out in the Sports Club LA, as enumerated above, I do have several minor requests that would greatly enhance the quality of my wellness experience. Please consider this constructive criticism:

* Would it be possible to repair and/or add additional Octane elliptical machines? I only ask because my not-inexpensive private trainer assigned interval training for me on those particular machines, and there is only one such machine that isn't broken (my mistake--"Improvements In Progress"), and this sole functional machine is frequently in use.

* Would it be possible to properly grease the seats and chains of the ergometer machines on a regular basis? Ditto for greasing the weight machines which, as an aside, look eerily similar to the ones in place when I joined 8 years ago? How about fixing broken pins and worn out grips?

* Despite my requests for new speed jump ropes when the old ones go "missing"--requests which have been studiously ignored in the past--would it be possible for you to occasionally spend the $50 in the future to buy replacement speed ropes in bulk?

* Would it be possible for you to hire someone in high school to come in and fix your "enterprise" software such that it can calculate how many private training sessions I have left so I don't have to play guessing games several times a month?

* Would it be possible to pay greater attention to the boxing bags (keep them filled with air, etc) and have additional speed bags on hand so we don't need to wait weeks for replacements?

* Can you provide me with a list of specific improvements to the quality of service that I can look forward to in the coming year? If you've run out of ideas, your succesful new laundry and cleaning programs have inspired me to suggest outsourcing the private training staff to India.

* Finally, when I inquire about spending a small fortune to purchase a 20-pack of private martial arts training sessions and one of the fitness managers tells me he will call me back to answer my questions, I'd greatly appreciate it if he actually honored his word and called me back.

Of the many lessons that I've learned about capitalism during my career, the seminal one is that the free market giveth and the free market taketh away. That is to say, capitalism lavishes riches on those entrepreneurs who most successfully cater to the needs of their customers, and capitalism unceremoniously weeds incompetent businesses and managers out of the market gene pool by the business equivalent of a violent, painful death. I'm confident that your keen managerial foresight will serve you as a guide through this "challenging economic time" and that your vision for the gym will be judiciously rewarded by the market in the coming months.

Happy holidays, and thanks for the bicoastal guest pass! I would be honored to use the guest pass to help the Sports Club lower its acquisition cost per new member with free targeted marketing!

Seth Daniels

CC: Gym Management and Millennium Partners

BCC: Everyone I know at the gym, with my permission to forward the letter and encouragement to contact management with your own personalized gratitude for their recent improvements to the gym.