Virgin want to use IoT to make its service more holistic and improve customer retention

Virgin Active is embarking on an ambitious redesign of its facilities that uses the Internet of Things to improve the service it offers to customers and reduce subscriber attrition rates, explains Andy Caddy, chief information officer of Virgin Active.

“Five years ago you didn’t really need to be very sophisticated as a health club operator in terms of your IT and digital capability,” Caddy says. “But now I would argue that things have changed dramatically – and you have to be very smart about how you manage your relationship with customers.”

The health club sector is one of the most unique subscription-based businesses around, in part because the typical attrition rate is around 50 per cent – meaning by the end of the year the club has lost half of the members it started out with, and needs to gain new subscribers by at least as much in order to grow on aggregate. That’s quite a challenge to tackle.

Much of how Virgin Active intends to address this is through more clever use of data, and to use cloud-based software and IoT sensors to help better understand what its customers are doing inside and beyond the gym. The company’s vision involves creating once consolidated view of the customer, collating information stored on customers’ smartphones with health data generated from wearable sensors and gym machines being used by those customers.

The company is already in the process of trialling this vision with a new fitness club at Cannon Street, London, which opens later this month. Originally announced last year, the club, which Caddy says is to be Virgin Active’s flagship technology club, uses RFID chip-embedded membership wrist bands that can be used to do everything from entering the gym and logging cardiovascular data from the machines they use to buying drinks at the café, renting towels and accessing lockers.

“Now we start to see what people are doing in the clubs, which gives us a richer set of data to work with, and it starts to generate insights that are more relevant and engaging and perhaps also feeds our CRM and product marketing,” he says. “Over the next few months we’ll be able to compare this data with what we see at other clubs to find out a few important things – are we becoming more or less relevant to customers? Is customer retention improving?”

Combine that with IoT data from things like smartwatches that are worn outside the confines of the gym, and the company can get a better sense of how to improve what it suggests as a health or fitness activity from a holistic standpoint. It also means more effective marketing, which beckons a more sophisticated way of handling data and acting on it than it already does by Caddy’s admission.

“The kinds of questions I want to be able to answer for my customers are things like: What’s the kind of lunch I can eat tomorrow based on today’s activity? How should I change my calendar next week based on my current stress levels? These are the really interesting questions that would absolutely add value to [a customer’s] life and also create a reasonable extension of the role we’re already playing as a fitness provider.”

But Caddy says the vendors themselves, while pushing the boundaries in IoT from a technical standpoint, pose the biggest threats to the sector’s development.

“We want standards because it’s very hard to do anything when Nike want to talk about Fuel and Fitbit want to talk about Steps and Apple want to talk about Activity, and none of these things equal the same things,” he explains. “What we really want is some of these providers to start thinking about how you do something smart with that information, and what you need in order to do that, but I’m always surprised by how few vendors are asking those kinds of questions.”

“It’s an inevitable race to the bottom in sensor tech; the value is all in the data.”

Companies like Apple and Microsoft know this – and in health specifically are attempting to build out their own data services that developers can tap into for their own applications. But again, those are closed, proprietary systems, and it may be some time before the IoT sector opens up to effectively cater a multi-device, multi-cloud world.

“We’re lucky in a sense because health and fitness is one of the first places where IoT has taken off in a real sense. But to be honest, we’re still a good way from where we want to be,” he says.