The Les Mills System: the Nuts and Bolts
There are several parts to Les Mills fitness, including Les Mills Gyms, Les Mills NZ and Les Mills International. The Les Mills International system is complex and dynamic and this article merely provides some features of their system in order to help a student understand service systems generally, and especially aspects of service systems that are common to all. It is an educational resource, and may not be completely accurate as businesses are in constant flux. This article focuses on Les Mills International, but aspects of their systems are in all branches of their business.
Education and organisational learning systems
Instruction and teaching are central to what Les Mills does. For each new release, they have about 3 months trialing and then teaching fitness classes in order to produce 'world-class’ fitness classes. The create video classes and distribute them through their system and release them in mass events such as those you can see on Youtube, and shown in Part 1 of this article of a BODYSTEP® release. The training includes producing modules to train teachers, instructor training and management training in GFM (Group Fitness Management). For extension, reading see an article about training and group fitness instructors here.
Relationship with Owner of the Club and Marketing
Like all successful franchise service operations, Les Mills has tight control over its image and processes. They "write the rules on studio design, recruitment of staff, measurement of performance, marketing, and staff training" according to Phillip Mills (Go Global talk, 2005). By doing so they instill their brand through the behavior and conduct of their staff, including the vision and values that underpin their organisational culture. They produce a wide range of promotional material, and are constantly developing and thinking about ways to build 'community' for their customers, as a community, as Phillip explains in the video above, is a strong motivating factor to join and stay involved in fitness and health initiatives. For managers and instructors resources, they need to promote, manage and run classes are all available online. They can access adverts, guerrilla marketing material, as well as order popular décor items, decorative posters, clothing and so on. "Our branding is in people’s faces" said Phillip Millsin his Go Global talk.
Music as technology
Licensed music is what gives LM its competitive edge according to Phillip Mills, “With the cooperation of the NZ music industry” (although I have to say NZ music didn't feature much in the sessions I attended). In 2005 LM was the only company worldwide to have rights to distribute the top forty music tracks. "We can distribute just about anything”, and they "pay millions of dollars in royalties". Along with the music is the choreography which is centrally important to the ways that people interact with the music. Tia De Nora has written a scholarly book that includes research with group fitness participants on the ways they use music in fitness sessions (De Nora, 2000).
Going Global
Les Mills keep calling themselves a small NZ company, although it is hard to understand how they can still call themselves that, except it is part of their origin story and culture. They were limited by capital constraints and so opted initially for an independent owner-distributor model. They considered growth through other models as there are bigger margins to be made in owning the whole business, but they couldn't afford it. In their first growth spurt internationally they did 'take over' a couple of organisations.
Their business model uses licenses. Clubs pay LM agents a monthly fee per programme, and agents are paid on a sliding scale. Percentages are also divided up according to sales of training, music merchandising, and equipment and other tangibles. One lesson learned by LM is not to undercharge for their service. They offer high-end programmes and need to charge a premium for them.
For LM agents are crucial to success. Initially LM recruited the 'best' agents in each country they expanded into and “Networked, networked, networked”. According to Phillip Mills, most agents in this initial growth phase were great but there were a few were "dodgy" ones. LM made mistakes but they learnt from those mistakes. One issue was that they learnt existing retailers did not make great agents as they could be protective and competitive. Best local agents had the commitment and local knowledge.
However, sometimes local agents did not have had the same commitment to quality or buy-in that is expected of a LM agent, and so it was sometimes necessary to remove agents. An agreement process was essential - service contracts needed to be developed and adhered to.
So, for instance, commercial contracts needed to include:
Their business model uses licenses. Clubs pay LM agents a monthly fee per programme, and agents are paid on a sliding scale. Percentages are also divided up according to sales of training, music merchandising, and equipment and other tangibles. One lesson learned by LM is not to undercharge for their service. They offer high-end programmes and need to charge a premium for them.
For LM agents are crucial to success. Initially LM recruited the 'best' agents in each country they expanded into and “Networked, networked, networked”. According to Phillip Mills, most agents in this initial growth phase were great but there were a few were "dodgy" ones. LM made mistakes but they learnt from those mistakes. One issue was that they learnt existing retailers did not make great agents as they could be protective and competitive. Best local agents had the commitment and local knowledge.
However, sometimes local agents did not have had the same commitment to quality or buy-in that is expected of a LM agent, and so it was sometimes necessary to remove agents. An agreement process was essential - service contracts needed to be developed and adhered to.
So, for instance, commercial contracts needed to include:
- performance minimums (fees that they charge; the number of clubs covered);
- exclusivity in a product category (to eradicate copy-cat problems; enforceable restraints of trade; engage expert international legal advice);
- obligation to sell to all reputable companies (minimum number of dedicated sales staff; dedicated sales manager);
- Standard procedures around quality;
- Reporting requirements (benchmarking; monitoring compliance)
In general, according to Phillip Mills, “He who drafts wins” (the agreements that is). It was essential to politely enforce all agreements, and if waivers were given they had to be in writing.
Living the Brand
As inferred earlier, LM requires a strong adherence to Brand values, an adherence that people that work for LM seem to fully comply with. The LM package is 'world-class', and so LM invested in the top creative agencies in NZ for sales and pitch documents. All LM representatives, affiliates and employees must represent this world-class brand. As Phillip Mills puts it, it is required that you put your “skin in the game”. Commitment comes from the investment, both in terms of dollars, but also in physical and emotional commitment.
Fitness instructors, for example, represent the brand, but they also deliver the experience. They are the most visible customer service representative for participants. It is the instructor that participants 'look up to' both literally (they are almost always on an elevated stage) and figuratively (as a model of a fit person to aspire to in looks and fitness). Instructors co-produce (see Note 1 below about what this means) with participants the group fitness experience - everyone in the class is enlisted into the same enterprise.
Fitness instructors, for example, represent the brand, but they also deliver the experience. They are the most visible customer service representative for participants. It is the instructor that participants 'look up to' both literally (they are almost always on an elevated stage) and figuratively (as a model of a fit person to aspire to in looks and fitness). Instructors co-produce (see Note 1 below about what this means) with participants the group fitness experience - everyone in the class is enlisted into the same enterprise.
LM has a strong, perhaps even alarming, brand commitment - "they would die for the cause" said Phillip at the Go Global event. Nevertheless, people buy into LM and they have an almost evangelical fervor about them. Becoming a LM licensee requires one to undergo a life-changing event. In terms of achieving this commitment to the brand LM has employed a variety of techniques: e.g. 'Life-changing staff training' using tools like theater, motivational psychology, personal development, team building, and cultural rituals in order to create passion, enthusiasm and the commitment of staff. “We became a virus” says Phillip and took over hearts and minds of staff. "We took their attention". Its not all hard work: they also focus on having fun, delivering great conferences, and creating great teams. They also use celebrity endorsements and have a very strong NZ flavour in their brand. See the video below of their own haka performed in Stockholm in 2010 'gifted' to their participants. This is also an example of using a cultural ritual to enhance the community, a Customer Relationship Management (CRM) technique. More information on this is available here.
Best Practice
How does a top fitness business stay at the top? By comparing itself to the best and learning from industries that are perceived to be the best in the world, even if they have ostensibly nothing to do with the fitness industry itself. In the video below Philip describes what he was learning during a recent study tour in the U.S.
Other Issues
LM continuously offers its licensees techniques to help them grow their businesses. For instance, the recent announcement of the Clubcount system. This announcement says: "CLUBCOUNT™ is new web-based software that will keep track of your numbers for you. This means you will have numerous ways to report on, and evaluate, your success in Group Fitness. All you need to do is take a quick headcount for each class, grab a few moments to enter the class attendance into the software and CLUBCOUNT™ will take care of the rest..." CLUBCOUNT™ enables clubs to understand Group Fitness attendance trends over time, create timetables based on proper information, and identify top instructor performers (instructors become minor celebrities).
Another recent innovation has been their 'Globesity' initiative, which has been launched with the publication of a book and is LM's sustainability initiative. The following video explains how this works:
Other Links of Interest about Les Mills
Les Mills was recently nominated for a NZ International Business Award.
Les Mills on Facebook
Notes
Note 1: Service work production processes are different from those in manufacturing, and so the labour process itself is different. In service work, the consumer and the producer are involved in a reciprocal and instantaneous exchange of production at the same time as consumption occurs. Labour is produced with the customer – they are co-producers of its meaning or, in another way of putting it, the customer is a partial employee (Halbesleben & Buckley, 2004). The value of the labor is in its synchronicity.
Notes
Note 1: Service work production processes are different from those in manufacturing, and so the labour process itself is different. In service work, the consumer and the producer are involved in a reciprocal and instantaneous exchange of production at the same time as consumption occurs. Labour is produced with the customer – they are co-producers of its meaning or, in another way of putting it, the customer is a partial employee (Halbesleben & Buckley, 2004). The value of the labor is in its synchronicity.
De Nora, T. (2000). Music in everyday life. Cambridge: Cambridge University Press.
Halbesleben, J., & Buckley, R. M. (2004). Managing customers as employees of the firm: New challenges for human resource management. Personnel Review, 33(3), 351-372.
Personal notes from Phillip Mills talk on Thrive TV (http://www.thrivetv.com, now no longer operating). The presentation was given as part of the Go Global Conference held in Auckland in 2005.
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