The recent shutdown of True Fitness gyms nationwide has certainly riled many of their customers. It has also shown how unbalanced the bargaining position is between large businesses and their customers. Many times, the customers’ position is nothing short of precarious.
Despite the obvious anxiety and dismay all around, there can be positive takeaways from this unfortunate incident.
- There is something to be learnt from the speed, secrecy and coordination in the simultaneous closure of True Fitness’s clubs in Malaysia and Thailand. It shows a well-oiled corporate machinery that is capable of achieving precision in an operation that is both broad and secret. Such capability is certainly impressive but one wishes that this competency had been undertaken for more positive purposes.
- This episode cements the principle that it takes only one bad episode to destroy a brand and credibility that needed one thousand positive episodes to construct and build. More than ever in today’s fast paced high competition environment it is of utmost importance for businesses to realise that brand is, at its core, frail and fragile. Close attention must be paid to ensure that it is not destroyed. A destruction of brand leads to a destruction of trust which will eventually lead to a failure of the business.
- This event has also showcased the effect of poor corporate communication. Business closure notices pasted on closed shutters of the gym branches are prime examples of bad communications.
- The publicity that is now coming to CHi Fitness can be positively capitalised and utilised for its benefit. With True Fitness casting Chi Fitness as the saviour of now former True Fitness members, CHi Fitness can reap the benefits of the natural referral flow of stranded True Fitness members. This episode provides an opportunity for Chi Fitness to enhance its brand name as the publicity now highlighted on it provides a great leverage to elevate its presence in the industry.
- True Fitness’s website boasts of 200,000 members across 5 countries. There would be fewer members in Malaysia but it would remain a significant and sizeable portion of the market. That market is now up for grabs. What would the other fitness companies do and how fast would they react to it? The approach needs to be appropriate given the negative backdrop surrounding the incoming customers to the market and the action needs to be swift with the right strategy and correct tactics deployed.
- With 3-year memberships running in excess of RM3,000 and lifetime memberships as high as RM9,000, the losses to the subscribers are significant. Regulators should take note and consider regulations that would govern long term membership arrangements that involve prepayment of money in exchange for services performed only in the future. A structured rate of discount that escalates in proportion to the length of the membership should be put in place. This should be applied across the board and made transparent to transactions like this. This would give the customer the benefit of the present value of prepaid money. Further safeguards should be considered in the form of placing a portion of the upfront money in the hands of trustees or independent parties. The cost for this should be borne by the company.
- To alleviate the hardship of customers, banks should relax their policies, process and procedures. This is because many customers would be approaching their banks to either halt direct debit arrangements on credit cards or to terminate easy payment schemes that are very likely to have been provided on sizeable forward membership schemes. The typical 45 day wait period for banks to undertake investigations before taking action looks like an eternity in instances such as this.