In Fitness Industry, Vertical Platforms Cater to Specialized Operations
This post is the latest in our “Vertical Challenge” series. It’s our editorial focus for the month of October, including topics like vertical-specific strategies and the pros and cons of zeroing in on local business categories. See the rest of the series here.
Online appointment booking platforms are a dime a dozen, used by businesses in a huge range of industries. But among fitness businesses, specifically, general use booking platforms aren’t very common. That’s because fitness businesses are more likely to use vertical-specific tools designed to meet the needs of specialized operations.
Perhaps more so than any other industry, health and wellness has shown a great desire for verticalized technology solutions. Although verticalization isn’t limited to the health and wellness industry, fitness studios and related businesses are much more likely to use technology platforms designed specifically for their industry.
One of the most well-known technology companies operating in the fitness space is MINDBODY. MINDBODY’s digital marketing software has transformed the way fitness studios and other wellness businesses connect with clients since launching in 2005. MINDBODY managed to bring online scheduling into the mainstream and gave boutique studios access to the types of digital marketing tools that were once reserved for larger fitness chains.
As MINDBODY’s presence within the health and wellness space has grown over the past decade, other technology solutions have started trying to capture the same market. Today, businesses in the health and wellness industry have thousands of vertical-specific technology platforms to choose from.
What makes the fitness space well suited to verticalized marketing, and how can newer players in the technology space break in with so much existing competition?
The fitness industry itself is becoming more specialized, as evidenced by the rising number of niche fitness studios catering to specific types of workouts. Large chain gyms are seeing decreasing enrollment, while smaller studios focusing on yoga, barre, HIIT, and indoor cycling are thriving.
While the fitness industry as a whole is growing at 6% per year, boutique fitness has outpaced that, driven by millennials and members of Generation Z. According to data from IHRSA, boutique fitness memberships expanded 74% from 2012 to 2015, compared to 5% for health clubs. Although that research is now a few years old, insiders like Patrick Armitage, vice president of marketing and sales at the studio management platform zingfit, say they continue to see steady growth.
“As fitness brands continue to tailor and expand customer workflows, we expect vertical software to get increasingly specific,” says Armitage.
‘A Niche Within a Niche’
Zingfit is one of a number of technology providers in the fitness space that effectively operate within a niche of a larger vertical. Zingfit specializes in working with boutique studios and gyms, where clients regularly pay upwards of $30 to $40 per class.
As The New York Times recently described, “taking a group fitness class, it turns out, is one of the few things you can’t order from Amazon.” Boutique fitness studios now make up a big part of what’s been called the “experiential economy.” Verticalized technology solutions, like MINDBODY, zingfit, and others, give these businesses access to the sorts of online marketing and back-end management tools that they need to achieve a high-end, upscale vibe. Clients who are paying $30 for a barre workout or $40 for an indoor cycling session expect certain amenities, including the ability to schedule and pay for their classes online, pre-order their protein smoothies, and rent cycling shoes through a studio’s branded mobile app.
“The world is bifurcating and while, at first glance, what we do might appear to be a niche within a niche—the smart boutique fitness brands understand how our industry is bifurcating and have created brands built on experience and hospitality,” says Armitage.
Client engagement is a factor at play in the verticalization of SaaS platforms, as well. Many brands, both inside and outside the fitness industry, are striving to achieve a higher level of engagement with their clients, and vertical-specific platforms are one of the ways to achieve that.
“As recently as five years ago, most growth-phase brands treated online engagement as an afterthought; they spent enormous efforts curating the in-store experience but left digital interactions to the tech folks. Today, brands have been awakened to not only the importance of digital impressions but also to the possibilities of using digital experiences and transactions to delight customers; by offering additional services such as book-a-spot, rent-a-mat, preorder-a-smoothie, book-a-friend, check-out-your-metrics, etc.—all of which heighten the experience and reduce the friction between the brand and its clients,” says Armitage.
Even though interest in verticalized platforms is rising, the phenomenon can hardly be considered new. Street Fight was covering the topic back in 2013, in this article about how b2be Sports & Wellness, a gym in Southern California, was using MINDBODY as a CRM tool and offering rewards to clients who referred their friends.
Zingfit hasn’t been in the industry as long as MINDBODY, or some of its other competitors in the fitness space. The company got its start in the Hamptons, home to a plethora of high-end boutique fitness brands, and later grew its digital offers to expand beyond online class scheduling. Zingfit’s back-end SaaS platform now provides for more enhanced experiences on the front-end, giving boutique studios the tools to develop professional digital branding and enhance client engagement.
“Bifurcation in the fitness business is accelerating—gyms and studios that offer a traditional kind of workout and ‘feel functional’, and businesses seeking to build brands—focused on building tribes, offering hospitality to their clients and by cultivating incredible shared experiences,” Armitage says.
‘The Era of Choice’
Verticalized technology platforms understand the nuances of the industries they serve better than general use platforms, and that allows companies like zingfit to tailor their offerings based on current demand or unfulfilled needs in the industry.
“When it comes to verticalization, there’s a bit of a tradeoff. The pros in vertical specialization include having an edge in product focus,” writes Street Fight’s Mike Boland. “But verticalization reduces market size by fragmenting a total addressable market into smaller chunks. A counter example of successful ‘horizontal’ players are companies like Google, Yelp, and Square. The services they offer to local businesses are basic needs (like payments) that cut across verticals.”
Armitage believes that verticalization helps zingfit avoid distraction, which sometimes happens when technology companies start chasing other verticals or areas of the market.
“When you start to understand the unique needs of each boutique fitness modality—for example, boxing, bootcamp, pilates, cycling—combined with the growth of the industry, there is clear whitespace for innovation,” Armitage says. “We believe monolithic software platforms are a thing of the past. In this era of choice, it’s better to go an inch wide and a mile deep than an inch deep and a mile wide.
Stephanie Miles is a senior editor at Street Fight.