When a business is driven only by dollars, the results are rarely beneficial to customers. For years, this had been the case at Bally Total Fitness.
Numerous customers have accused the national health club operator of misleading sales and membership cancellation practices. Some, due to questionable sales tactics, unwittingly found themselves locked into a multiyear contract. Additionally, the company has been the subject of various accounting controversies dating back to the early 1990s, which include illegal billing, cancellation, refund, and debt-collection practices. To make matters worse, the SEC in 2008 filed financial fraud charges against the company alleging that in 2001, Bally overstated stockholder equity by $1.8 billion and understated its 2002 and 2003 net loss by more than $90 million for each year.
Naturally, these unscrupulous practices came with a steep price tag. The company, which operated 440 facilities at its peak, filed for Chapter 11 bankruptcy protection in 2007 and again in 2008. Subsequent to these filings, the company sold off many of its facilities to competitors. LA Fitness, for example, acquired 171 locations in 16 states for $153 million. Today, Bally is a fraction of its former self, with only 60 facilities.
While Bally can't erase its dark history, a new focus on customer service might help improve the health of its customers as well as its business.
In an interview with CRM, Bally Total Fitness Senior Vice President and Chief Information Officer Guy Thier discloses Bally's efforts over the years to revamp its customer experience and service strategy. It's an evolving process—one that this quarter includes a rollout of new features, amenities, and mobile capabilities at its clubs across the country. But Thier was clear about one thing—the evolution will be all about experimentation. And for Bally, which continued to face class-action lawsuits even after the LA Fitness deal, starting from scratch to rebuild its image will be the first true challenge. Here are excerpts from our exclusive interview:
CRM: When did Bally decide, "We need to do things differently" or very possibly go out of business?
Guy Thier: The strategy began about 18 months ago, which was just before the first phase of selling off some of our clubs to LA Fitness. Bally used to sell three-year contracts to become a member, which was essentially taking out a loan to join us, and we became a banker as opposed to a provider of fitness services. So we definitely wanted to change that entire mindset. We no longer sell contracts of any length. The memberships are all month to month. The extent of our customer service back then was to be customer service agents. The only time you heard from us was if you were delinquent, and it was only by telephone. We've rebuilt our contact center to be member service–oriented with true support of members, whether they want to freeze their membership, cancel, inquire about amenities, or whatever the case may be. Plus, we changed from just supporting telephony to supporting email [and] chat, and we are monitoring social media now. We are responding to entries on social media now through Twitter, Yelp, and other outlets. We actually have our field personnel respond to members in a public forum [and say], "Thank you for your comments. Here's exactly what we're going to do to solve your issue," so that it's apparent to everybody. We're making a commitment as a company to resolve the problem.
CRM: What has been the biggest shift from the Bally of yesteryear to today?
Thier: First, we're moving from a sales culture to a service culture. Second, we're enabling…our club staff to truly solve a member's problem when they're in the club. Up until we implemented Sword Ciboodle [a contact center customer service company acquired by KANA Software last July], if you had any kind of issue when you walked into the club, our club told you to call the call center and let them resolve it. It was really altering that conversation to be more like,"How can I help you? I can help you right here for the vast majority of issues." Again, it's a culture change plus a technology shift. Third, we're trying to extend the relationship between Bally and its customers when you're out of the club instead of only when you're in the club. Then, when you do come to the club, it's the culture shift of having a conversation with you, being warm and welcoming, as opposed to [having the attitude of] "Oh, you're not here to buy from me, so I'm not going to [service] you." All of that relates to a new culture and a new set of channels to relate to the customer…beyond the few hours a week they're in the club.