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Go Digital or Bust

19/03/2021

To digitise or not to digitise is no longer the question. A successful digital transformation will, for many gyms, be the difference between success and failure in this coming era. Over a year into the crisis, we can now see why some companies are doing better than others – some even doing better than before. Why? Because these are the companies that already successfully implemented digital transformation and platform-based business models, or those that were quickly able to adopt digitisation. So, to put it frankly, gyms that do not digitally transform will be left behind and will cease to exist. Still not convinced? The story of Netflix versus Blockbuster acts as a warning to all gyms that are still reluctant to change. 

Netflix vs Blockbuster

Perhaps the most concrete example can be found in the story of Netflix versus Blockbuster. Blockbuster was a ‘brick and mortar’ American-based provider of home movie and video game rental services offered primarily in video rental shops. Netflix launched as the world’s first online DVD-rental store and 
recognised that the Internet was the future.

Feeling unable to compete with Blockbuster at the time, they approached the global giant to acquire their company for $50 million. Their pitch failed, and it is reported that they were laughed out of the building. But by 2004, Blockbuster eventually saw Netflix’s rise and attempted to hop on the online streaming bandwagon. It was too little too late. Blockbuster went bust in 2010 and Netflix ultimately had the last laugh and is now reportedly worth $125 billion. But their story is not an isolated one. Major companies such as Polaroid and Lego saw their industry completely disrupted by the invention of the Internet and the rapid development of digital technology as well. 

Polaroid had to leverage their strong brand name and enter into strategic license agreements with companies that manufacture modern product categories that aligned with their values. But in the end, they were able to create Polaroid-branded cameras and accessories, including sunglasses, tablets, televisions, and other digital media. Their change in strategy switched them from obsolete to relevant again, all the while staying true to their brand identity and company values. 

Lego is another example. Digitalisation of games resulted in the toy company becoming antiquated. Instead of ignoring the signs and avoiding the digital movement, the company embraced the change. And far from killing it off, the Internet played a vital role in turning it into one of the world’s biggest brands today. By digitally evolving alongside their physical product line, Lego’s profits quadrupled, outstripped Apple’s at one stage, and their sales topped $1billion for the first time in North America. 

The two ROI’s: Return of Investment versus Risk of Inaction

Our industry has been narrowed to a very thin business model, and the coronavirus has only made it even clearer how vulnerable gyms are. Platform-based architecture can create open, scalable, intelligent and connected platforms that leverage open APIs and datasets, service catalogues, integration frameworks, microservices, collaboration tools and solutions that allow for agile implementation according to your company’s agenda. 

Partnering with a company that understands your services, platform models and how to build agile systems that align with your company’s vision and ROI (Return of Investment) is key. But customers are also looking for services that can reimagine, reform and perform in the new normal – they need a service capable of providing them with fitness content, no matter what.

It would be a huge miss if gyms do not respond to their customers’ wants and needs and go back to or remain stuck in their old ways of doing business post-Covid. Worse still, the ROI (Risk of Inaction) is what will ultimately lead to many gyms’ demise. The time to act is now.  Operators may understandably be overwhelmed, uncertain and afraid. But it doesn’t have to be all doom and gloom. 

At FunXtion we stand alongside you. Our digital solutions can improve customer retention rates by helping your gym members to continue their fitness journey no matter the circumstances, and can ultimately improve their engagement and loyalty to your brand. Rather than ‘take over’ gyms, FunXtion provides an alternative service that can work alongside the 4-walls of your gym facility – that embraces your brand and its values. We are on a mission to not only support gyms throughout the Covid crisis, but we are endeavoured to catapult them out of the pandemic, stronger than ever.

Author – Ernst de Neef