GAINING FASTER INSIGHT TO SUPPORT BUSINESS GROWTH BY INTEGRATING FINANCIAL AND OPERATIONAL ANALYTICS
Dealing with the challenges of growth
Like most businesses in the health and fitness industry, Go Health Clubs’ success largely depends on its membership: the more new members it can attract, and the more current members it can retain, the greater its revenues and profits are likely to be. Even its auxiliary revenue streams—such as the retail of nutrition products, equipment and clothing, and rental income from third-party personal trainers who run classes in its gyms—are indirectly driven by membership: the more users each gym has, the more potential customers there are for these parts of the business.
As its business grew, Go Health Clubs identified a need to evolve its approach to financial and operational performance management. A new analytics platform from IBM is helping the company plan and budget more accurately, and gain new insight into sales and membership—helping senior leaders guide the business more effectively.
Go Health Club’s successful management of the membership equation has led to considerable growth. In the last three years, the company has acquired two new clubs, 10,500 members and boosted its annual revenues by AUD$5 million. Go Health Clubs has also launched two new brands: Yogabox and Arena Fitness MMA.
At the same time, growth has created new challenges for the organization, as Head of Operations Stefanie Nicholson explains: “We were reaching a point where the kinds of systems and processes that we had relied on in the past were reaching their limits. We had always relied on each club reporting its own key operational metrics, such as net membership movements, average yields and sales team performance—but as we got larger, this was becoming less and less practical. We were starting to find inconsistencies in the data that were difficult to track down, so it took a lot of effort to produce figures that we could be really confident about.”
When Clint Keble joined the company as its new CFO, he saw many of the same issues on the financial side: “We were using spreadsheets to consolidate figures from each club and produce profit and loss statements for the group. With 30 or 40 general ledger items per club, and differences in the way each club structured their chart of accounts, it was difficult to get the data together, and even more difficult to build a budget. Looking to the future, if we continued to expand, we were going to run into real problems.”
The company aims to keep its group management organization as lean as possible, but its existing manual reporting processes raised a risk that it would need to keep increasing headcount as the business continued to expand. To scale more efficiently, the company began looking for a smarter way to deliver the analytics its decision-makers needed.