How Does Your Fitness Facility Use Technology In 2017 ?

1. HOW DOES YOUR FITNESS FACILITY USE TECHNOLOGY? Survey Report, June 2017 Foreign Countries: 23 U. S. States: 33 For-Profit: 72% Not-for-Profit: 28% Decision-makers: 96% Responses: 1,594 clubs Copyright Fitness Industry Technology Council/ & MSS Network

2. Table of Contents 2. Category/size facility operated 3. Type facility operated 4. Wearable tracking device use  Mobile app use 5. Texting use  Social media use 6. Email use  Website use 7. Can consumers buy memberships online? 8. Can members buy programs online?  Can members buy training online?  Can members buy specialty classes online? 9. Can members schedule programs participations online?  Can members schedule trainings online?  Can members schedule specialty classes participations online? 10. What technologies does your club and/or your staff use? 11. What percent of marketing budget is your “digital spend”? 12. Does digital marketing provide customer insights? 13. Do you understand use of social media to market your club? 14. Do you use equipment-based or sensor-technologies systems? 15. Do technologies used “track” participations? 16. What payment options are available? 17. Is club/member management system Cloud-based? 18. Does your organization use technologies is sales, training, education? 19. Who manages technology in your organization? 20. Have you identified a reliable source for data analysis? 21. Do you have enough technology information to make good decisions about technology use? 22. What consequences if you do NOT embrace technologies? 23. How do RESPONDENT facilities use (or not use) technologies? 29. Net Scores & Best/Worst 31. Noteworthy 2

3. Introduction & Executive Overview July 7, 2017 Dear Fitness Industry Professional; With nearly 1,600 fitness facility respondents across 23 countries, and 33 U.S. states this technology adoption survey shares keen insights about the state of technology adoption in fitness facilities today. The report includes some comparisons to a prior research report concluded in 2015. Here are a few of the findings: • While 66% of Facilities Use Social Media Over 34% Say They Are Unsure How To Use It; • 60% of Respondents Spend Less Than 30% Of Marketing Dollars On Digital Advertising; • Over 50% of Facilities Are Using Cloud Based Club Management Systems; • 63% Of Facilities Report They Do No Have A Reliable Resource To Analyze Their Data; • Only 3 Out Of 10 Respondents Think They Have Enough Information To Make Informed Technology Decisions; and • 42% Of Respondents Show Little To No Concern About Falling Behind To More Technologically Savvy Competitors. The mission of the fitness industry technology council is to educate the industry regarding technology in order to increase adoption resulting in enhanced user experiences that will help growth the overall fitness industry space. The organization is made up of dozens of leading fitness brands and professionals, many of whom are adopting and creating new solutions for fitness customers and business models. We thank our supporters for their support in sharing this information with the industry as a whole. On a personal note, this research was compiled in concert with Michael Scott Scudder, a long-time colleague and dear friend who suddenly passed away July 2, 2017. This was his last substantial research work which we collaborated on and concluded in early June just before his death. We wish to thank Michael Scudder for his work and recognize the great contributions he has made to FIT-C and the industry at large. He will be sorely missed by many. Sincerely, Bryan K. O’Rourke President FITC 3

4. 4 What category/size fitness facility do you operate? NFP less than 5,000 ft2 NFP 5,000-9,999 ft2 NFP 10,000-19,999 ft2 NFP 20,000-34,999 ft2 Not For Proﬁt (NFP) 35,000 ft2+ FP less than 5,000 ft2 FP 5,000-9,999 ft2 FP 10,000-19,999 ft2 FP 20,000-34,999 ft2 For Proﬁt (FP) 35,000 ft2+ 0% 8% 15% 23% 30% 29.8% 17.7% 11.6% 16.7% 16.7% 16.7% 4.7% 5.1% 4.7% 5.6% Responses total more than 100% due to multiple sizes of facilities reported (companies operate more than one size of facility)

5. 5 What type fitness facility do you operate? Responses total more than 100% due to multiple sizes of facilities reported (companies operate more than one size of facility) Athletic club (multiple services, child care, and sit-down food & beverage Fitness + classes and other limited amenitites (child care, no sit-down food & beverage) Fitness + classes ONLY (no childcare) Fitness ONLY (no classes, no childcare) Goup ﬁtness studio Personal training and/or small group training studio Other 0% 10% 20% 30% 40% 14.0% 27.4% 21.9% 7.0% 23.7% 34.4% 32.6%

6. 0% 18% 35% 53% 70% 2015 2017 64% 50% 42% 30% Wearable Tracking Devices Mobile Apps Does your facility or your  staff use/integrate with… 6

7. 0% 25% 50% 75% 100% 2015 2017 95% 91% 60% 73% Texting Social Media Does your facility or  your staff use? 7

8. 0% 20% 40% 60% 80% 100% Email 2015 2017 96%94% 0% 20% 40% 60% 80% 100% Website 2015 2017 95%96% Does your facility or your staff use? -1%+2% 8

9. 0% 13% 25% 38% 50% 2015 2017 43% 31% 9 Can consumers buy memberships online? +39%

10. 2017 2015 33% 37% 24% 34% 29% 42% Programs Training Specialty Classes Can members buy online? +2% +45% +42% 10

11. 2017 2015 36% 40% 30% 38% 42% 43% Program Participation 1-2-1 Small Training Groups Specialty Class Participation Can members schedule online? +11% +27% +2% 11

12. TOP 3 ▪ Email ▪ Web sites ▪ Social media MIDDLE 3 ▪ Mobile apps ▪ Club/member management software ▪ Texting BOTTOM 3 ▪ Diet/nutrition software ▪ Customer Engagement software ▪ Net Promoter Score software 12 What technologies does your club and/or staff use?

13. Average percent-of- budget “spend” for all clubs: 27% 60% of facilities spend less than 30% on digital marketing Digital  spendWhat % of your advertising/marketing budget is allocated to digital marketing? 6.5% 24.2% 19.1% 9.8% 10.2% 9.8% 20.5% More than 50% 40 - 49% 30 -39% 20 - 29% 10 -19% Less than 10% We don't do any digital marketing 13

14. 14 Digital  marketing Average percent-of-budget “spend” for all clubs: 27% 60% of facilities spend less than 30% on digital marketing Does it provide you with customer insights (age, sex, income demographics, interests, etc.)? 6.5% 27.4% 66.1% Yes No Not sure 2/3 of facilities say their digital marketing provides them with customer insights

15. 2/3 of facilities think they know how to use social media for marketing Social  mediaDo you think you understand how to use social media networks to market your club? 23.7% 10.7% 65.6% Yes No Not sure 15

16. 16 Feedback  systems Average percent-of-budget “spend” for all clubs: 27% 60% of facilities spend less than 30% on digital marketing Do you use equipment-based  and/or sensor technologies feedback systems? 0.9% 56.3% 42.8% Yes No Not sure Slightly more than 4 in 10 facilities use some type(s) of technological feedback systems

17. 2/3 of facilities  say their technologies track  user’s workouts Tracking  technologyDo the technologies you use track users’ workouts across equipment, class participations and/or training sessions? 8.2% 27.8% 63.9% Yes No Not sure 17

18. 18 Payment  systems Average percent-of-budget “spend” for all clubs: 27% 60% of facilities spend less than 30% on digital marketing What payment options are available to your members/clients? EFT thru club/member mgmt software provider EFT in other ways In club i.e. cash, check, CCs Other methods i.e. Paypal, Apple Pay, etc. Invoice to members Other 0% 20% 40% 60% 80% 7.0% 24.2% 14.4% 77.7% 14.9% 75.8% 3/4 of facilities use EFT or payment in club Less than 15% of facilities use “digital payment” methods

19. 13.5% 30.2% 56.3% Yes No I'm Not Sure Slightly more than 1/2 of facilities report that their club/member management software is Cloud-based Management  softwareIs your club/member management software system Cloud-based? 19 18

20. 41.9% 58.1% Yes No Nearly 6 in 10 facilities use technologies for sales, staff training and education 20 Technology Does your organization use technologies to assist in sales, staff training and education, and understanding of programs and club benefits?

21. Who manages technology in your organization? IT manager on staﬀ " for IT managemetn Our club owner Our club manager /marketing manager echnology manager" nology management 0% 8% 15% 23% 30% 5.12% 13.49% 5.12% 11.63% 19.53% 18.14% 26.98% Only 45% of facilities employ professional management for their technologies 21

22. 63.3% 36.7% Yes No Slightly more than 1/3 of facilities think they have “reliable sources” for data analysis Have you identified a reliable, trustworthy source for analysis of the data accumulated by your technology systems? 22 Data  analysis

23. 3.3% 36.3% 30.2% 30.2% Yes No Not sure Technology NOT signiﬁcant in our business Only 3 in 10 facilities think they have enough information to make good decisions about technology use Do you think you have enough information/ education about technologies development to make good decisions on technology use in your business? Technology  development 23

24. 15.8% 26.1% 33.0% 25.1% Greatly Concerned Somewhat Concern A Little Concerned Not Concerned 42% of facilities show little or no concern about technological competition Are you concerned that your business may fall behind competitors if you DO NOT embrace technologies at a greater level than at present? 24 Technology  use

25. How do all respondent facilities  use (or not use) technologies? Pre-tax Proﬁt Average Use equipment or sensor tech Enough info for tech use 25% 30% 37% 58%56% 43% 66%66% 27% 0% 25

26. How do respondent facilities by  category use (or not use) technologies? Pre-tax Profit Average Digital marketing provides customer insights Use equipment or sensor tech Use tech for sales, staff training, education, club benefits Enough info for tech use 32%31%34% 56% 49%49% 66%64% 20% 3% 24% 32% 38% 60%59% 42% 66%68% 29% 8% For-Profits Not-For-Profits Pre-tax Profit Average Digital marketing provides customer insights Use equipment or sensor tech Use tech for sales, staff training, education, club benefits Enough info for tech use 40% 49% 54% 69% 51%51% 74%74% 28% 0% 23%27% 34% 56%58% 41% 64%66% 27% 8% U.S. Clubs Non U.S. Clubs 26

27. How do respondent facilities by  category use (or not use) technologies? Pre-tax Profit Average Digital marketing provides customer insights Use equipment or sensor tech Use tech for sales, staff training, education, club benefits Enough info for tech use 23%44%37%49%63%53%63%72%28%9% 26%21%29%60%45%55%55%64%27%9% 19%22%31%72%38%41%59%84%26%9% 28%33%35%74%58%42%63%67%28%7% 29%32%36%60%54%47%70%66%26%8% 35K+ Clubs 20,000- 34,999 sq ft Clubs 10,000-19,999 sq ft Clubs 5,000-9,999 sq ft Clubs Less than 5K sq ft Clubs Pre-tax Profit Average Digital Marketing "Spend" % Digital marketing provides customer insights Understand Social Media Marketing Use equipment or sensor tech Club/member mgmt software is cloud-based Use tech for sales, staff training, education, club benefits Reliable data analysis source Enough info for tech use Greatly concerned if do NOT embrace technologies 21%34%39%53%71%53%74%71%33%12% 47%13%40%80%33%40%33%60%23%12% 36%30%38%62%46%54%54%70%29%6% 20%28%26%57%54%42%65%64%24%5% 29%35%44%69%61%44%71%72%29%8% Athletic Clubs Fitness + Classes (FCL) Clubs, addtl svcs Fitness + Classes (FCN) Clubs, no svcs Fitness ONLY Clubs Studios/Boutiques 27

28. How do all respondent facilities  use (or not use) technologies? Can peple buy online? Wearables used? Texting used? Email used? Websites used? Net Promoter Score Member mgmt software used? 63% 25% 20% 53% 95% 38% 96%95% 59% 64% 42% 62% 67% 28

29. How do respondent facilities by  category use (or not use) technologies? Can peple buy online? Wearables used? Texting used? Email used? Websites used? Net Promoter Score Member mgmt software used? 56%22%22%37%88%29%97%93%51%62%39%58%69% 67%27%22%50%98%40%96%95%64%65%45%62%66% For-Proﬁts Not-For-Proﬁts Can peple buy online? Wearables used? Texting used? Email used? Websites used? Net Promoter Score Member mgmt software used? 57%11%31%57%94%23%94%100%66%71%54%71%60% 64%27%19%45%96%40%96%94%59%64%41%59%67% U.S. Clubs Non U.S. Clubs 29

30. How do respondent facilities by  category use (or not use) technologies? Can peple buy online? Wearables used? Texting used? Email used? Websites used? Net Promoter Score Member mgmt software used? 42%21%7%37%93%30%88%95%49%67%57%65%63% 76%19%17%45%98%36%100%95%62%64%40%62%57% 45%21%0%37%100%47%89%92%55%76%50%59%66% 60%28%28%56%95%40%95%100%63%63%28%63%74% 74%24%33%54%97%43%97%94%59%73%50%68%74% 35K+ Clubs 20,000- 34,999 sq ft Clubs 10,000-19,999 sq ft Clubs 5,000-9,999 sq ft Clubs Less than 5K sq ft Clubs Can peple buy online? Wearables used? Texting used? Email used? Websites used? Net Promoter Score Member mgmt software used? 76%19%17%45%98%36%100%95%62%64%40%62%57% 60%20%20%47%100%27%100%100%60%60%27%67%67% 66%18%14%48%96%26%96%96%64%60%52%58%66% 60%21%25%51%94%35%96%95%58%63%40%58%69% 71%31%38%54%99%50%97%94%67%78%49%71%72% Athletic Clubs FCL Clubs, addtl svcs FCN Clubs, no svcs Fitness ONLY Clubs Studios/Boutiques 30 0%

31. +1 point for result above the average +2 points for best in category -1 point for result below the average -2 points for worst in category Net Scores & Best/Worst HIGHEST ▪ TYPE: Athletic Clubs with large footprints use technologies most fully and rank highest (+26) with no “Worsts.” ▪ SIZE: 35,000ft2+ clubs rank highest (+11) with no “Worsts.” ▪ FOR-PROFITS (+10) outrank NOT-FOR-PROFITS (-12) with no “Worsts.” ▪ INTERNATIONAL clubs (+12) outrank U.S. clubs (-5). LOWEST ▪ TYPE: Clubs that offer Fitness + Classes with limited additional services (child care, juice bar, etc.) rank lowest (-18) with 2 “Worsts.” ▪ SIZE: 10,000-19,999ft2 clubs rank lowest (-13) with 5 “Worsts.” MOST PROFITABLE ▪ Studios/Boutiques (12% average pre-tax profits), which use technologies considerably more than traditional membership clubs. ▪ Fitness-only clubs (12%), though they score worst in 6 technology-use categories. 31 NET SCORE For-Profits 10 Not-For-Profits -12 4 Worsts All U.S. Clubs -5 All Non-U.S. Clubs 12 6 Bests 2 Worsts 35K+ Clubs 11 1 Bests 20,000- 34,999 sq ft Clubs 8 2 Bests 1 Worsts 10,000-19,999 sq ft Clubs -13 2 Bests 5 Worsts 5,000-9,999 sq ft Clubs -1 3 Bests 1 Worsts Less than 5K sq ft Clubs -7 1 Bests 4 Worsts Athletic Clubs 26 6 Bests Fitness + Classes (FCL) Clubs, addtl svcs -18 2 Worsts Fitness + Classes (FCN) Clubs, no svcs 0 2 Worsts Fitness ONLY Clubs -5 5 Bests 6 Worsts Studios/Boutiques 8 5 Bests 1 Worsts

32. Noteworthy DIGITAL MARKETING SPEND. ▪ Average digital-marketing spend as a percent of marketing budget is 27%. ▪ Lowest is Not-for-Profits at 20%; highest is Studio/Boutiques at 33%. CUSTOMER INSIGHTS. ▪ General agreement among 2 out 3 clubs in all categories that technology use is providing customer insights. SOCIAL MEDIA MARKETING. ▪ Most feel they understand social media marketing, though there is a fairly wide range of usage. EQUIPMENT/SENSOR TECHNOLOGY USE. ▪ Equipment-feedback and/or sensor technologies are used by only abut 4 in 10 clubs. CLOUD-BASED CLUB/MEMBER MANAGEMENT SOFTWARE. ▪ On average, more than half of clubs use Cloud-based software for management of members. ▪ Studios/Boutiques far outpace all other types of facilities in this category; Fitness-Only clubs lag way behind. USING TECHNOLOGIES FOR SALES, STAFF TRAINING AND EDUCATION. ▪ As evidenced by nearly 60% of facilities using tech for training and education of staff, this is a category that will likely see increases in the future. 32

33. RELIABLE DATA ANALYSIS SOURCE. ▪ One of the two categories where use percentages were lowest. ▪ Responses indicate that there is a huge across-the-industry need for professional data analysis to help drive business decisions and strategies. INFO FOR TECHNOLOGY DECISIONS. ▪ The lowest-percentage of users category. Indications are that an industry-wide effort to educate facilities on various types of technologies is past due. NON-TECHNOLOGY USE CONCERN LEVELS. ▪ The widest range-variance category. ▪ Overall concern that is clubs don’t use technologies they may fall prey to competitors is evidenced in only 25% of clubs. ▪ But the least technological concerns are shown in the club categories that have the lowest Net Scores. ▪ International clubs, which score substantially higher on overall technologies uses, also exhibit far greater technological concerns than do U.S. clubs. CAN PEOPLE BUY ONLINE? ▪ In general, 2 of 3 clubs have provided technologies for consumers to be able to purchase online. ▪ Larger-footprint clubs lead the way in this category; laggards are 5,000-9,999ft2 clubs and Studios/Boutiques. 33 Noteworthy

34. CAN PEOPLE SCHEDULE ONLINE? ▪ Generally, more than 60% of clubs enable online scheduling. ▪ Athletic Clubs and International clubs lead the way. ▪ Not-for-Profits and Fitness + Classes clubs bring up the rear in this category. TECHNOLOGIES USED, HIGH MARKS: ▪ Email (96%), Social Media (95%), and Web sites are by far the most-used club technologies for contacting members and marketing to members/prospects. ▪ In the second tier of technology use are Mobile Apps (64%), Club/Member Management software (63%), Texting (59%), and Customer Relationship/Customer Engagement management softwares (53%). ▪ Use of Mobile Apps and CRM/CEM show the most significant gains, compared to 2015 data. Use of Texting shows the greatest decline in use when compared to two years ago. TECHNOLOGIES USED, LOW MARKS: ▪ Integration with Wearables (42%), use of Blogs to communicate (38%), Nutrition/Weight Management software use (25%), and use of member-feedback Net Promoter Score software systems ran lowest. ▪ Wearables integration is up from the 2015 survey, but still not at the level anticipated. ▪ Of note is the extremely low or even non-existent use of Net Promoter Score software systems in clubs under 20,000ft2. 34 Noteworthy

35. (JUNE 2017)   All data collected, analyzed and reported by:   Michael Scott Scudder & Bryan K. O’Rourke

How Does Your Fitness Facility Use Technology In 2017 ?

Bryan K. O'Rourke

How Does Your Fitness Facility Use Technology In 2017 ?