Les Mills International, the global fitness brand with iconic classes including BODYPUMP and BODYCOMBAT, is embracing the new at-home economy. Les Mills’ Chief Marketing Officer, Anna Henwood, speaks to WARC’s Anna Hamill as part of WARC Marketer's Toolkit 2021 about the future of fitness, building a test-and-learn culture and scaling up direct-to-consumer offerings during COVID-19.
Les Mills is interesting in that it creates its own equipment as well as its own class experiences. What type of verticals are you working in in terms of your brand? What does the monetisation model look like?
The club customer is where dominantly the revenue comes from, but it's obviously been hugely disrupted this year. We'd already started a bit more in the adjacent vertical space, like corporates looking for a health and wellness solution for their staff, hotel gyms, and even in-home services and apartment complexes. We partnered to set up a virtual bike, which is a bike with a screen that casts out our programmes. That's a small percentage of our revenue and it's growing, but the core revenue was from the club customer paying a license fee (to access Les Mills programmes).
Over the last six months, the revenue that we're getting from at-home offerings versus our core business is becoming a lot more even. The direct-to-consumer offering has massively accelerated – that’s a monthly subscription for someone at home with the Les Mills On Demand app. Then (sales of) equipment have just gone crazy the last four to five months.
- Fitness brands with existing digital offerings have been better placed for the direct-to-consumer boom as a result of COVID-19.
- Livestreaming is a major opportunity for experience-oriented brands to engage consumers who are spending much more time at home.
- Create a team structure which is flexible and future-focused to adapt quickly in a high-volatility environment.
How has COVID-19 and the impact of the pandemic on consumer behaviour directly and indirectly impacted your brand? What changes are you making to respond to that?
I would argue the change is maybe the biggest in the fitness space. (The category has) had chains closing, and bankruptcies. We've had this massive acceleration in at-home fitness, and then Apple and other big players are looking to come into the fitness space. There's been an explosion of offerings available. At the same time, there's a complete disruption of normal fitness – what does a fitness routine look like now?
Those that were positioned well before COVID-19 happened have done well – brands that have been on that digital transformation journey, looking into apps or memberships that include (options) outside of their four walls. For players like Les Mills and others in the space who had a digital offering already, it really accelerated that growth.
A big shift that we're seeing now is how those two worlds are coming together. Les Mills is now acting as a bridge for our club partners to accelerate their digital offering. Before, those were two things. Now they are really one thing… That's the massive change: truly making ourselves an omnichannel brand, one that's not just operating in B2B or in D2C, but a fully connected eco-system.
How much of that support and product evolution have you done in the last few months, simply as a response to the pace of change?
Livestreaming was completely because of COVID-19. With group fitness, the reason it's so successful is because people are pack animals and we like to work out in groups. The research we did showed that you worked out harder and had higher satisfaction with your workout when you worked as a group. That was missing for people at home, but what livestreaming gave you was that connection to your instructor, and a connection to those people who you work out with. That gives you accountability, but it also gave you better enjoyment. Livestreaming in particular was one that we turned on quickly. We’d already ran seminars and live trainings for instructors. We pivoted that all digital, and we ended up with thousands more touch points with our customers than before.
It's a real lesson that we're going to take into the future. The customer experience is really high quality, and you can reach so many more people and connect with them. The online trainings and livestreaming are completely new, and the acceleration was more in Les Mills On Demand and how we connect them into clubs and the affiliate model.
So you’re identifying major category trends which are likely to be permanent, and the importance of getting in early on those types of things.
Yes, for sure. Livestreaming was one where, for a while, we just weren't sure where it was going. We ran livestream workouts through our Facebook group. We didn't promote it at all, and we had almost 100,000 people join that group.
Live, you might get 2000-3000 people check-in to that workout, but one of our BODYCOMBAT workouts has had over 100,000 views since. At the start we were really not sure about it, but it’s not just the frequency of that workout being used but the different experience of it. It’s that shout out, that emoji, that experience of being together. When you can’t do that live, that makes for a really powerful livestream. We think that will be around to stay. It’s something that globally – particularly for our brand – is really appealing to people.
A lot of the experiences and products that people traditionally went out for are now moving into the home. What would your advice be for brands who are looking to transform their own offerings into something that translates in an at-home environment?
We already knew that 85% of people who were working out at gyms also worked out at home, from research we had done last year. So it's not necessarily a new trend, but its changed. What will be interesting is seeing what the balance looks like long term, now gyms have re-opened.
What I would really recommend is for brands to create that connection, from their instructors to the members, and use digital in that way. It's not a competition between the channels, it is complimentary.
For us, nothing will beat a live experience. There is just something unique and special about it. We do huge events with 3000-4000 people, and that’s mind-blowing… My advice is around really understanding the role that those different channels play, and the different customer experiences across the board.
Has the role of marketing changed within your organisation? Do you feel like you have more influence than before?
Yeah, it's interesting. These wise words occurred to me when COVID-19 started: ‘never waste a crisis’. I think for every CMO of a global organisation, the challenge is going to be having their people spread all over the world, bringing them together and having them work as one unified team.
COVID-19 flipped that on its head immediately for us. We were focused, and we were there to do a job… It became really clear right away what we needed to do and how we needed to work together.
We work with a tonne of agility, and we’re really creating impact as a marketing team. We split ourselves into four ‘pods’ or ‘squads’ – each one had a clear purpose... Right from day one, we wanted to look to recovery. We wanted a team that was looking to say, ‘okay, when things get back to normal, when gyms re-open, what does our response look like as a brand?’ It was so successful in terms of effectiveness and the velocity of work we were putting out.
When we got out of the ‘sprint’ and we knew we were heading into a marathon, we reoriented the teams into market-based pods, and again, one pod was for Les Mills On Demand. And this time, instead of it just being the Auckland team (Les Mills’ headquarters is in New Zealand), we looked at the global marketing team as well. So we now have one deeply-connected global marketing team…they are oriented around this same goal, and oriented around the customer. Compared to six months ago, that's a massive shift in the way that we are operating as a business. It has truly become a global strategy, with local execution and thinking.
Marketing has been a catalyst for change in the business… We're really pushing the rest of the organisation along in terms of taking that approach and being more connected with our markets…. this team coming together and being that huge change was a massive achievement and probably the one I'm most proud of in the last six months.
In terms of Les Mills’ creative processes your approach to data, or how you’re making decisions what has been the biggest change been? Is there anything from that period that you will be looking to implement or move to in the longer term?
The biggest change has been with the teams – we don’t actually use a lot of agencies, as we have a lot of in-house expertise. What’s changed as a result of all that is a much more ‘test and learn’ mentality, and faster decision making. We did more MVPs (minimum viable products) in the last four months than we've ever done in the four years I've been here… We didn't have time to sweat something for 12 weeks, we just had to get it out there and see how it went.
Coupled with that is our deeper connection to data. We have been implementing a data lake and a data warehouse for a while, but we accelerated that work around Les Mills On Demand and the direct-to-consumer business. That data that we get on a daily basis about subscribers, acquisition, attribution etc and how that's all going is new, and something that we want to bring into our B2B business so we can make some smarter decisions. It sounds really old school, but we just didn't have that data historically because of the way that the business had been set up in the past. That’s already helping us make better decisions.
Are there any lessons or challenges or opportunities within the D2C business that you think is going to redefine the fitness category moving forward?
The biggest opportunity is that connection between D2C and B2B, and connecting those two worlds together. Clubs that don't have a digital offering now, they're losing share of wallet basically, because the customers will be paying someone else for it. What I think is unique about what we can offer is basic stuff like quality assurance and safe programming, but also the ability to have that experience in multiple locations.
We’ve got the On Demand product, we're driving massive consumer demand there. People are doing BodyPump and BodyCombat at home, and then these things turn up in the fitness club and they can do BodyPump and BodyCombat (there as well). Our clubs can offer Les Mills On Demand to their members as part of an affiliate programme received in the membership bundle. They can offer those live classes in the club, they can livestream, and they can really be that full-service provider for their members. That, for me, is a massive opportunity with direct-to-consumer fitness.
We saw a huge spike in the demand from the direct-to-consumer audience since March, 10x the demand that we've had previously and it's flattened out to about 3x. The demand spiked, but it's stayed higher than it was as well. We have more than tripled our subscriber base from where we were in March… We were able to put our foot down on acquisition, we have great relationships with Facebook and Google. Instead of pulling away from media, we pushed harder into media over April, May and June. That obviously really helped us as well – much lower cost per acquisition and a great way to capitalise on that demand and that softer advertising market.