Segmentation Campaign Shapes Up As Success for Fitness ClubA health club company in Massachusetts has found that targeting the right people with direct marketing campaigns can pump up its prospect database.
In June, the company, Fitness Management Systems, decided to tailor its direct marketing campaign to a group of people who have a proclivity to use a health club and netted a 2.8 percent response rate for the monthlong campaign as a result.
"Before this, our list was sorted purely through demographics, as opposed to profiling that helps us target specific people who are fitness-minded," said Paul Baldrate, vice present of sales and marketing for the company, which operates four health clubs, two in Worcester, one in Plymouth and one in Jordan.
Fitness Management turned to Red Hot Marketing, Atlanta, a full-service marketing company focused on increasing traffic in health clubs. The year-old company created a segmentation program called Lifestyle Matched Direct Mail specifically for this industry. In general, the program categorizes specific groups of people based on behavior and spending patterns.
"We were able to zero in a little bit more accurately on the sub-markets that our clubs cater to, and the response was very strong," said Baldrate, who will send out another postcard that will hit homes on October 1. "June is typically the kick-off to our summer season, and we had our best summer ever, and we are expecting a great end of the year. We are really in good shape."
The segmentation program is based in part on data from Claritas, San Diego, and its Prizm lifestyle segmentation system. Prizm assigns every neighborhood in the United States to one of 62 clusters. Each cluster describes the predominant demographics and lifestyles of the residents of that neighborhood. Red Hot Marketing first looked at the 62 clusters in the Prizm system and found that 32 have a high inclination to exercise at health clubs. Given this information, Red Hot Marketing worked with Trone Advertising, Atlanta, which took the 32 clusters and put them into five groups. For example, one group, called "Lookin' Good" includes eight clusters. Baldrate used another group called "My Wellness," which includes the baby boomer and mature market who have more discretionary income than other groups and who put more of a focus on health and fitness as reasons to join a health club versus purely aesthetic reasons.
"As a result of the Lifestyle Matched research and focus groups, we know that there are five basic motivators that make people likely to join health clubs, including distinct emotional, social and health concerns," said Brian Smith, president of Red Hot Marketing.
Then, Red Hot Marketing outsourced its concept to See Janet Reed, a lifestyle segmentation and marketing company, which designed specific direct mail advertisements for each of the five groups -- using targeted visuals, colors and fonts based on buying patterns of each group.
Once the target market is identified, Red Hot Marketing provides the artwork and sends the audience a direct mail campaign. The company also does the mailing and fulfillment.
The front of the 5-inch-by-8-inch postcard showed people exercising at a gym and featured the copy "A Little Vacation from Everyday Life." The back described the benefits of exercising and joining the Fitness Management Systems health clubs and contained a coupon offering a free summer membership. The addresses and phone numbers of the gym locations were listed, along with the company's Web site, www.accessfms.com.
Smith said that each health club it works with usually sees two or three great segments out of its five groups. On average, Red Hot Marketing sends about 5,000 to 10,000 mailings per campaign. Baldrate, however, sent almost 20,000 post cards. Smith said the whole campaign can be turned around in seven to 10 business days.
The segmentation program has two pricing options. If a customer uses a resident list, the price is 31 cents per direct mail postcard. If he uses a more precise list -- which Red Hot Marketing calls a lifestyle select list -- it costs 49 cents per card. For the resident list, Red Hot Marketing developed a list inhouse using a carrier-route/walk-sequence list from the U.S. Postal Service. For the lifestyle select list, which Fitness Management Systems used, the company uses a consumer list overlaid with Prizm select data.
Smith said that, in general, the response rate for the resident mailing is 1.5 percent. The response rate for the lifestyle select is about 2 percent to 3 percent.
Smith decided to start the company because "corporate and individual fitness club managers and owners often don't know how to effectively market to prospects. ... There was a big need for there to be more of a science behind [the] marketing programs."
Smith said his company has produced huge results for more than 150 of the nation's leading health clubs. One of the reasons many clubs are using the services is that "many of these clubs don't have the budget to put together the research needed to market to prospects correctly. But by working with 200 or 300 clubs nationwide, the cost is broken down among those clubs, so it is affordable for us to absorb those costs."
In addition, Smith said, the health and fitness club industry has enjoyed exceptional growth in recent years and is now responsible for $23.2 billion in annual consumer spending, and "targeted marketing will contribute to even more growth for the industry."