The competition in the fitness industry is fierce (!): Studios need to keep customers coming in order to remain profitable and use their resources (staff, space…) efficiently. For customers, gym memberships are an investment, yet, it seems there is always something wrong: either contracts are too long/inflexible, the classes are not interesting… the list is endless! But maybe there is a solution…
Let’s check out Lymber!
Lymber is a San Diego-based startup launched in 2016 with the goal to make people exercise more often by providing them with “as they go” fitness offers (Lymber Fitness Inc, 2016). The Lymber app aggregates open class spots from currently about 180 (local) partnering gyms and offers them to interested customers. Lymber’s dynamic algorithm calculates the rates under consideration of factors such as instructor popularity and time/day of week; whether a rate will “surge” or drop as the class moves closer is a matter of supply and demand. Sounds familiar right? it is the same principle followed by hotels or transport providers such as Uber!
How does it work in practice?
Efficiency Criteria: Weighing Cost And Benefits
As you can see from figure 1, time and effort to use Lymber is very low for all participants. What about cost? Lymber does not charge a subscription fee from customers. It only makes money if its partnering gyms make money using their system (~25% commission fee), therefore it encourages repeat visits to your gym (Lymber Fitness Inc, 2016).
Customers pay for what they “use” only. In this way, they can explore multiple sports (yoga to spearfishing, now that is variety!) and different studios without extended commitment. Whether you are a bargain hunter or are looking to score a spot in the most popular class around town: this app opens up a whole new world of choice and flexibility! Through booking, customers co-create value by implicitly providing participating studios with demand and service valuation information they can use revise their service and pricing strategy in the future (Bertini & Koenigsberg, 2014) (Saarijärvi et al. 2013).
Studios maximize revenue without having to insanely discount their services and use their capacities efficiently by filling up empty spaces. Drawing on historical and real-time data, Lymber’s algorithm will propose the best prices to studios without taking away their control (remember the price floor and ceiling). At the same time, studios can attract new customers; potentially even some who end up joining long-term. Finally, don’t forget the importance of impressions on crowd dynamics: having more people in the gym implies popularity which can entice others to give it a try as well.
A critical forecast: What does the future hold for Lymber?
Naturally, the founders’ main goals are to attract more partners and more customers. But will it work? I believe Lymber is a very interesting approach for studios and customers alike. Yet, one also has to be critical: workout-aholics looking for a regular gym visit are better off with a sports-pass (San Diego Union Tribune, 2016). Next, surge prices and relative prices for membership and “Lymber lessons” have to remain reasonable. For a lot of people, fitness does not compare to hotels and transport after all. Finally, competition is already on the rise, similar business models are on the rise elsewhere (see Dibs, NYC). Should the system turn out to be successful, studios could also decide offer as-you-go offers in their own apps, cutting out Lymber as the intermediary. Whether Lymber will surge or drop, we will see!
Bertini, M. and Koenigsberg, O. (2014). When customers help set prices. MIT Sloan Management Review, 55(4), p.57.
Lymber Fitness Inc. (2016). Online: https://www.getlymber.com/ last accessed 27.02.2016
Saarijärvi, H., Kannan, P. K., & Kuusela, H. (2013). Value co-creation: theoretical approaches and practical implications. European Business Review, 25(1), 6-19.
San Diego Union-Tribune (2017). “The latest craze in fitness? Dynamic pricing”. Last accessed 27.02.2017, online: http://www.sandiegouniontribune.com/business/technology/sd-fi-lymber-app-20161220-story.html
San Diego Union-Tribune (2017). “Lymber wins local startup competition”. Last accessed 27.02.2017, online: http://www.sandiegouniontribune.com/business/technology/sd-fi-lymber-app-20161220-story.html