Planet Fitness’ INSANE Business Model

Summary

• Planet Fitness has a clever business model by targeting the 92% of people who don’t regularly use gym equipment. They understand that most people just want to sign up and not actually go.

• They strategically eliminate heavy weights, squat racks, and chalk because these items are used by the frequent gym-goers, the 8% that tend to actually use the gym. By doing so, they discourage these users from joining.

• They charge $10 a month, offering pizza as an incentive for members. This way, members might feel they've gotten their money’s worth even if they don’t work out.

• The average Planet Fitness aims for around 10,000 members. This large membership base allows the model to be profitable even when few members use the facilities regularly.

• This business model shows how critical it is to know your customer and design your offerings around their typical behavior rather than traditional expectations.

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How To Take Action

I would suggest implementing a smart business strategy by clearly understanding who your customers are and what they truly want or, more importantly, what they actually do. Like Planet Fitness, they recognized that many sign up but don't use the gym. Identify what your customers regularly use or don’t use and adapt your offerings around that behavior.

A good way of doing this is by minimizing costs on services or products that are less utilized by your core audience. For instance, if you’re running a café, focus more on quick snacks or drinks if that’s what sells, rather than elaborate meals that remain unpopular.

Moreover, consider a low-cost pricing strategy that attracts a large customer base. Offering a deal that seems like a no-brainer, such as a low monthly fee, makes your service sound attractive, just like how Planet Fitness uses $10 memberships. This draws in numbers, even if not everyone is active regularly.

Lastly, create incentives that keep your customers feeling satisfied, even if they don’t fully utilize your service. It’s about making them feel positive about their purchase, such as through loyalty rewards or minor perks, similar to how Planet Fitness offers monthly pizza as a treat. The idea is to increase perceived value without hefty costs.

By focusing on these tactics, you can create a business model that’s economical yet highly effective in maintaining customer engagement and satisfaction.