KOKO FITCLUB

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KoKo FitClub

Industry

Over the past decade, the fitness centers and wellness industry has rapidly

increased within the US market. According to an annual survey conducted by the

International Health, Racquet, and Sportsclub Association (IHRSA), the number of U. S.

health clubs, gyms, and other fitness centers has increased from 30,022 in 2006 to 32,150

in 2013 ("58.5 Million Americans Utilize Health Clubs", 2013). In addition, IBISWorld

reports that from 2008 to 2013, U.S. health club memberships increased from 47.7

million to an estimated 52.6 million ("Gym & Fitness Franchises in the US Market

Research", 2014).

Background

In 2007, Mike Lannon and Mary Obana founded Koko FitClub. With Lannon’s

experience as a digital entrepreneur and “a team of MIT engineers, software developers,

leading exercise physiologists, and designers,” they created the Koko SmartTrainer, the

first strength machine to apply digital technology to fitness ("Our Story").

Koko FitClub is a franchise model with locations in twenty-eight states. Owners

do not need fitness expertise, or even to be on site at all times. During staffed hours,

Koko FitClubs can fully operate with a single part-time employee. Workout times at

Koko FitClub focus on convenience; therefore, workouts are based on thirty and fifteen-

minute intervals. (A. Rabb)

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In the Austin area, there are seven Koko FitClubs. In Northwest Austin, there are

three gyms, located in neighborhoods West Parmer, Cypress Creek, and East Whitestone.

They are owned by Robert Reisch. In Southwest Austin, there are four locations

including Circle C Ranch, Lakeway, Onion Creek, and Steiner Ranch, co-owned by John

Rabb, Alexa Rabb, and Josh Godwin.

Operations/Organizational Structure

Alexa Rabb is primarily responsible for the four Southwest Austin locations: She

manages the clubs and marketing strategies while John and Josh act as silent partners.

Koko FitClub features five cardio machines (two treadmills and three elliptical

machines) as well as five of the previously mentioned Koko SmartTrainers. On a

member’s first visit, he or she will go through a body assessment program called “Koko

FitCheck”. FitCheck collects a member’s vital body data in order to create a unique

workout plan for each member. Members are given a USB dongle that contains their

FitCheck information, which properly syncs their workouts with the SmartTrainers and

cardio machines. As a supplement to FitCheck, members are given their own customized

website that displays in-depth information about their future workouts, current program

progress, FitCheck data, as well as customized nutrition plans.

`Although Koko FitClub is primarily focused on digital personal training, there

are personal FitCoaches on site to assist members with any issues or questions regarding

their workout. (A. Rabb)

Koko FitClub offers trial memberships as well as tiered membership programs to

both current and potential members. Regardless of the tier, members are given 24/7

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access to the facility. Each member’s USB device is programmed with restrictions to

prevent members from using gym equipment that is not linked to their membership plan.

Koko FitClub Membership Options

30 Day Trial (30 for $30) $30 for one month

Cardio Only $39/month

Six Strength Training Sessions + Cardio $79/month

Unlimited Strength Training + Cardio $99/month

Competition

One major category of Koko FitClub’s competition is large, 24-hour gyms with a

variety of workout equipment, a wide range of classes, personal training, and amenities.

These gyms not only have many different types of workout equipment but also offer a

large number of cardio and weight machines to accommodate members. In addition, these

gyms offer a wide range of workout classes ranging from yoga to aerobics. Classes are

offered throughout the week and at different times throughout the day providing

convenience to members. For example, Lifetime Fitness offers amenities including spa

services, lockers, showers, saunas, steam rooms, childcare, and recreational pools

(Lifetime Fitness).

Niche gyms such as yoga studios, cross-fit gyms, Pilates studios, barre gyms,

Zumba, and martial arts gyms are all competitors of Koko FitClub. Like Koko FitClub,

these gyms offer specific, targeted fitness routines.

Koko FitClub prides itself on convenience and personalized workouts. However,

personal trainers, home gyms, and other personalized, in-home training systems such as

P90X also offer these services, making them all competitors. Precious Health & Fitness

and Complete Fitness Design are local personal training gyms that offer customized,

time-efficient workouts.

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Gold’s Gym also poses a huge threat to Koko FitClub. While Gold’s Gym is only

open 24 hours on weekdays, they offer their members digital training options, among

many other amenities. There are seven Gold’s Gyms in the Austin area and three

locations near Koko FitClub at Circle C. (Gold’s Gym)

1. 24 Hour Fitness

2. Anytime Fitness

3. Austin Fitness Center

4. Black Swan Yoga South Side 5a. CrossFit Austin

5.b Brodie Park CrossFit

5c. CrossFit Bullet Proof

5d. CrossFit Trigger Point

6. Curves 7. Evolve Personal Fitness & Gym

8a. Gold’s Gym (701 W. Ben White Blvd., Ste. 165)

8b. Gold’s Gym (4404 W. William Cannon Drive)

8c. Gold’s Gym (801 E. William Cannon Drive, Ste. 105)

9a. Koko FitClub (5701 W. Slaughter Lane, Ste. A120) 9b. Koko FitClub (11215 S. I-35, Ste. 104)

10. Lifetime Fitness

11. Pilates South Austin

12a. Planet Fitness (7100 W. Hwy. 290)

12b. Planet Fitness (1807 W. Slaughter Lane Ste. 480) 13. Premiere Lady Fitness and Spa

14. Pure Bikram Yoga South Austin

15. Say Om Yoga

16. South Austin Gym

17. Total Wellness Austin 18. YMCA of Austin-Southwest Family Branch

19. Yoga Yoga Westgate

20. Precious Health & Fitness (personal trainer) 21. Complete Fitness Design (personal trainer

About Circle C

Koko FitClub is located in a strip mall at 5701 W. Slaughter Lane at Circle C

Ranch (Koko). Circle C is predominantly known as a wealthy family-oriented

community comprised of households with an average annual salary of $110,000. The

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residents in this area are primarily Caucasian and highly educated, with more than 59.4%

of the population having obtained a college degree or higher. According to the Census

Bureau’s American Community Survey, the population for Circle C Ranch was 34,391 in

2012. From this population, over 17,776 are female and 16,615 are male. Koko FitClub is

surrounded by various shops, which include The Coffee Bean and Tea Leaf, ATX Bikes,

BurgerFi, and the AT&T store, among others. There is no designated parking for Koko

FitClub members because the gym shares its parking lot with other local businesses

located inside the strip mall. (U.S. Census Bureau)

Current Market

The current market audience for Koko FitClub is mostly females between thirty-five

and forty-five years old. However, there is a diverse membership. While the youngest

member is fourteen years old, the oldest members are in their eighties. In addition, there

are a small number of families who use the club.

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The majority of Koko FitClub members are extremely short on time: They balance

full-time careers with familial obligations. Finding time for themselves is difficult and

not always a priority; however, they are dedicated to achieving their fitness goals.

Desired Market

The potential customers for Koko FitClub should include people who work non-

traditional schedules, but still reflect Koko FitClub’s overall audience of older adults,

who prefer to achieve their fitness goals through self-motivation rather than working with

a trainer. Professionals, who work nights, such as nurses or doctors, are an ideal untapped

market, as are individuals for whom Koko FitClub offers specific, specialized programs.

These programs focus on medical conditions including: seniors and individuals with

diabetes, arthritis, those recovering from breast cancer, and those with back pain.

(Bouchez, C.)

Current Advertising

The current advertising strategy for the Koko FitClub Circle C Ranch location

involves a combination of traditional and nontraditional media efforts, word-of-mouth,

and social media, with a total average budget of $500,000 per year.

In the past, Koko FitClub has run short-term print campaigns with city and

regional magazine outlets like Austin Woman and Austin Monthly, as well as hyper-local

newspapers like Steiner Ranch Community Impact. (A. Rabb)

Distributed monthly, both Austin Woman and Austin Monthly boast an estimated

readership of 100,000+ individuals. Reader demographics and psychographics for both

magazines are in line with Koko FitClub’s target audience: Austin Woman’s readership is

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93% female. Of which, 73% are between 30-60 years of age and 60% earn $100,000+

("Austin Monthly Media Kit ", 2014). Austin Monthly readers are, “financially

successful, well-educated, well-traveled professionals who are in the prime of their lives

and at the peak of personal consumption ("Austin Woman Media Kit " 2014). However,

the spend for six-month campaigns at both magazines was found to not be in line with the

return on investment, and was stopped. (A. Rabb)

Steiner Ranch Community Impact is a hyper-local community newspaper that

focuses specifically on the Steiner Ranch neighborhood, where Koko FitClub Circle C

Ranch is located. Since consumers often workout near where they live and work (for

convenience and to save time), Community Impact is considered one of the more

important media vehicles for targeting these individuals. Koko FitClub has run multiple

print campaigns in Steiner Ranch Community Impact with greater success than the other

print campaigns they have tried. (A. Rabb)

In the past, Koko FitClub has attempted several nontraditional outreach tactics

such as door hanger campaigns targeting residents that live near the Circle C Ranch

location, sponsorship of local community events, vehicle wraps and direct mail outreach.

These tactics have had limited success, in terms of membership conversion, and a number

of them - sponsorship and vehicle wraps - won’t be continued in the future. Direct mail

outreach is a tactic that Koko FitClub is still willing to utilize. (A. Rabb)

Current Promotions, Public Relations and Events

The Circle C Ranch location maintains a fairly active Facebook Page account

with 169 “likes” and 79 check-ins to the location itself (As of October 15, 2014). On

average, content is posted weekly and editorial strategies include: promotion of member’s

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fitness achievements like “Perfect Workouts” and lanyard milestones; KokoFuel, the

nutritional component of the fitness program; as well as general promotional videos and

tips, with some originating from the national Koko FitClub blog. (“Koko FitClub

Slaughter Ln - Circle C”)

Facebook offers extremely targeted advertising that is often beneficial for small

businesses due to locality, geo-targeting and inexpensiveness. As such, Alexa has taken

advantage of the benefits with multiple Facebook campaigns, and sees Facebook as a

viable advertising outlet for future use. (A.Rabb, “About Advertising on Facebook |

Facebook”)

While the following social media properties aren’t the primary focus in Koko

FitClub’s current social media strategy, it’s worth mentioning that the Circle C location

does maintain a presence on both Yelp and FourSquare. Since Alexa did express interest

in increasing check-ins on the Circle C Facebook Page, it should be noted that both of

these social media properties have check-in capabilities as well:

• Yelp: 7 Reviews; All ‘5-Stars’

• FourSquare: Total Visitors - 21; Total Visits - 208; No comments

Apart from those previously discussed, the Circle C location does not manage any other

social media presences. (“Koko FitClub Foursquare”; “Koko FitClub Yelp”)

As visualizing the uniqueness of the Koko FitClub model can be daunting without

actually using the technology, several promotional campaigns have been utilized to

increase divisibility. Since promotional offers encourage service use among members

without the typical cost associated, most have proven to have high conversion rates to

membership when the promotion is over. (A. Rabb)

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30 Dollars for 30 Days is an ongoing promotion that encourages consumers to

become members of Koko FitClub for 30 consecutive days, at a cost of only $30. This

promotional offer is the most successful, with a conversion rate to membership of 70%.

(A. Rabb)

For consumers not interested in making a full one-month commitment (or longer),

Koko FitClub offers a one-time free guest pass. Guest pass users schedule a visit to the

gym where they’re introduced to the program structure, technology and benefits. There

are no obligations associated with the guest pass; the idea is to introduce the idea of a

digital gym to the consumer. ("Koko. A Digital Gym in Austin.")

In the past, a discounted membership has been offered on Groupon. However,

with less than a 12% conversion rate, promotions on Groupon have proven to be the

exception to the rule in terms of conversion rate success. This promotional tactic has

since been abandoned with no future plans to re-establish it. (A. Rabb)

Challenges

This case study analyzes Koko FitClub utilizing information gathered in an interview

with Alexa Rabb as well as secondary research. With current variables in place, Koko

FitClub faces a number of logistical challenges. Koko FitClub is a new gym concept that

does not fall into traditional categories. Challenges arise when communicating the

concept of a digital gym such as Koko FitClub, to a desired target market. With no prior

foundation of how a digital gym works, average consumers are not aware of the features,

benefits and level of technical expertise needed. Overcoming these problems introduces

further challenges, including the building’s physical layout, number of machines and the

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building size. These conditions threaten the goal of increasing to 300 memberships due to

a potential increase of traffic at specific hours.

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Bibliography

58.5 Million Americans Utilize Health Clubs. (2013, May 8). International Health,

Racquet & Sportsclub Association. Retrieved October 17, 2014, from

http://www.ihrsa.org/media-center/2013/5/8/585-million-americans-utilize-health-

clubs.html

A. Rabb, personal communication, September 29, 2014

About Advertising on Facebook | Facebook. (n.d.). Facebook. Retrieved October 15,

2014, from https://www.facebook.com/advertising/

Austin Monthly Media Kit. (n.d.). Retrieved October 15, 2014, from

http://www.austinmonthly.com/AM/Advertise/

Austin Woman Media Kit. (n.d.). Retrieved October 15, 2014 from

http://www.austinwomanmagazine.com/advertise

Bouchez.. (2005). Fitness After 50: The Gym Goes Gray. In WebMD. Retrieved Oct. 16,

2014, from http://www.webmd.com/women/features/fitness-after-50?page=3.

Gym & Fitness Franchises in the US Market Research. (2014, February 1). IBISWorld.

Retrieved October 12, 2014, from http://www.ibisworld.com/industry/gym-fitness-

franchises.html

Gold’s Gym. (2014). Gold’s Gym. Retrieved October 19, 2014, from

http://www.goldsgym.com/find-gym/296-austin.html

Koko. A Digital Gym in Austin.. (n.d.). Koko FitClub. Retrieved October 12, 2014, from

http://circlec.kokofitclub.com/

Koko FitClub Foursquare (2014, October 15). Retrieved from

https://foursquare.com/v/koko-fitclub/4f4a30bfe4b04a4130aee291?ref=atw

Koko FitClub Slaughter Ln - Circle C (2014, October 15.) Retrieved from

https://www.facebook.com/pages/Koko-FitClub-Slaughter-Ln-Circle-

C/287939084619755

Koko FitClub Yelp (2014, October 15). Retrieved from http://www.yelp.com/biz/koko-

fitclub-austin-6

Lifetime. (2014). Lifetime: The Healthy Way of Life Company. Retrieved October 15,

2014, from https://www.lifetimefitness.com/en.html

Number of health clubs & fitness centers in the U.S. from 2008 to 2013. Statista. Retrieved

October 9, 2014, from http://www.statista.com/statistics/244922/us-fitness-centers-und-

health -clubs/

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Our Story. (n.d.). Koko: The Making of a Digital Gym. Retrieved October 1, 2014, from

http://kokofitclub.com/our-story

U.S. Census Bureau (2012). 2008-2012 American Community Survey. Retrieved October

16, 2014, from

http://factfinder2.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF

Weldon, Keli and Oliveri, Joe: “Southwest Austin fitness centers”. Community Impact

Newspaper. May 23, 2013 http://impactnews.com/austin-metro/southwest-

austin/southwest-austin-fitness-centers/