BodyTech found the formula to achieve client renewals. With insights gained from ECLA, the Colombian gym chain is now operating in three countries.
BodyTech gyms had expanded from Bogota to another nine Colombian cities and set its sights on Peru. With more branches, its member numbers were soaring. But for some reason, clients didn't stick around: Only six out of every 10 renewed their membership.
Before founder and CEO Nicolás Loaiza ramped up expansion plans, he realized BodyTech needed to solve this dilemma. Along with Corporate Vice President Paola Rezk, he enrolled in ECLA to help figure out what was going wrong.
“We carried out a study of the company’s and the industry’s retention rates, and drew up a communication and contact plan with members,” Rezk explains.
The exercise also gave them a better understanding of who BodyTech clients are, dividing goals for joining the gym into four categories: Those who want to look good, those who want to feel better and join for health purposes, those who want to improve their performance in a sport, and those who go to the gym to socialize and meet people.
They reached the conclusion that client satisfaction had to do with attaining results based on these aspirations. The strategy that allowed BodyTech to increase its retention rate was to make gym personnel more attentive to the clients. The team hired physical therapists and nutritionists in addition to trainers to design specific exercise regimes.
BodyTech now measures its results by the balance between client satisfaction, the satisfaction with and performance of the staff, and the business’s growth and profitability. By 2013 the firm had opened 100 gyms, employing 3,000 people (1,800 in Colombia, 400 in Peru and 800 in Chile).
Loaiza and Rezk give a great deal of credit to insights they gained at ECLA. “The most important thing about participating in such a program is to have fun and enjoy everything that you do,” Loaiza says.
“Gyms were neighborhood businesses,” he says. “They closed at 9pm and at noon on Saturdays, and didn’t open on Sundays or holidays. We proposed opening a [more professional] gym that met the demands that we found in our market research.” BodyTech opened from 5am until midnight, 365 days a year. Potential clients also sought more cardiovascular exercise equipment and the company offered it.
The first BodyTech gym opened in February 1998 in a 2,400-square-foot space in the Bogota neighborhood of Chapinero, frequented by young, upper-middle-class students. The first figures proved better than the business plan's best-case scenario: Loaiza and Aycardi anticipated signing 1,000 members in the first half year, but in the first month alone figures reached 1,800.
Convinced that BodyTech "had hit the right muscle," the partners began to expand, first with more gyms locally, then nationally and internationally. The clubs today average 6,000 square feet. BodyTech’s member profile is between 30 and 50 years of age, but serves an increasing number of young people and seniors, Loaiza explains.
Given such growth potential, Loaiza and Aycardi knew they needed to strengthen the operations side of the business. Growth meant the firm needed a functional corporate structure that would allow it to regionally manage themes such as finances and human resources.
That's when Loaiza and Rezk signed up for ECLA. By sharing ideas with other Latin American entrepreneurs and heeding practical advice of the professors at Columbia Business School, they learned, for example, how to standardize processes and details to achieve a more orderly operation. Giving structure to the chain made each gym more efficient and less risky. “It also strengthened our appetite to grow into international markets,” Loaiza says.
BodyTech began in 1997 as a project that Loaiza developed with his partner Gigliola Aycardi as part of the MBA program from the Universidad de los Andes. The project combined their love for sport and the business opportunity they clearly saw.
“In BodyTech we found a way of working that was fun for us, and which was our way of recreation,” says Loaiza, a civil engineer who practices taekwondo and Olympic weightlifting. “I get up every morning thinking about exercise, which is what connects me to life. I train five or six times a week: I run a half marathon, practice mountain hiking, I cycle and, from time to time, play soccer.”
Loaiza had wanted to open a gym since his student days. “But it wasn’t a business back then, the market wasn’t as clear,” he says. Instead, he launched a company that made uniforms for firms and which became very profitable.
But the idea of opening a gym didn’t go away and when he analyzed the figures again after graduation, Loaiza realized that market demand had improved. He sold his uniform firm to start BodyTech.
“Everything has its moment and that was the moment for BodyTech,” says Loaiza, although he cannot pinpoint why that was the year the public began exercising and began to demand more gyms and better service than clubs then offered.
“Gyms were neighborhood businesses,” he says. “They closed at 9pm and at noon on Saturdays, and didn’t open on Sundays or holidays. We proposed opening a [more professional] gym that met the demands that we found in our market research.” BodyTech opened from 5am until midnight, 365 days a year. Potential clients also sought more cardiovascular exercise equipment and the company offered it.
The first BodyTech gym opened in February 1998 in a 2,400-square-foot space in the Bogota neighborhood of Chapinero, frequented by young, upper-middle-class students. The first figures proved better than the business plan's best-case scenario: Loaiza and Aycardi anticipated signing 1,000 members in the first half year, but in the first month alone figures reached 1,800.
Convinced that BodyTech "had hit the right muscle," the partners began to expand, first with more gyms locally, then nationally and internationally. The clubs today average 6,000 square feet. BodyTech’s member profile is between 30 and 50 years of age, but serves an increasing number of young people and seniors, Loaiza explains.
Given such growth potential, Loaiza and Aycardi knew they needed to strengthen the operations side of the business. Growth meant the firm needed a functional corporate structure that would allow it to regionally manage themes such as finances and human resources.
That's when Loaiza and Rezk signed up for ECLA. By sharing ideas with other Latin American entrepreneurs and heeding practical advice of the professors at Columbia Business School, they learned, for example, how to standardize processes and details to achieve a more orderly operation. Giving structure to the chain made each gym more efficient and less risky. “It also strengthened our appetite to grow into international markets,” Loaiza says.
ECLA also helped Loaiza and Rezk plan their international growth process. “It made us analyze the different markets in order to define which countries we wanted to enter, and define the stages and organizational structure that we would need,” says Rezk. “In retrospect, the business plan was not too far from what we managed to do.”
Analysis consisted of market research carried out with the support of Endeavor and Chile-based Boston Consulting Group, which concluded that Peru and Chile were the best countries to enter due to the price levels and a political affinity with Colombia. As they had already taken a first step into Peru, partner Aycardi moved there in order to consolidate the operation. BodyTech now has a presence in four Peruvian cities.
The company took a different approach to Chile. Partnering with local firm Sportlife in 2012 gave BodyTech operations in 17 cities. The chain hopes to open in two more countries in 2015, which could be Brazil and Mexico.
The muscle Loaiza and Aycardi and their team are working on now involves strengthening BodyTech’s corporate operations. “We are building a back office that links all the transactional operations of finances, sales and payroll in one platform,” Loaiza says.
After his participation on the ECLA program, Loaiza partnered with a couple of colleagues in Nazca Ventures, which supports Latin American entrepreneurs. Despite a thriving culture of start-ups, he says, this region lacks the support present in more developed countries, such as in the United States. “When you are an entrepreneur you want to rapidly implement everything you learn,” Loaiza says.
