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9 thoughts on “ClassPass: Bringing Boutique Fitness to the Average Yuppie

  1. Nicely done, Caitlin!

    I found this super interesting, as a big ClassPass user myself. My only question is that it seems like the value of ClassPass to fitness studios is filling extra holes due to underutilized capacity (say for example, Flywheel). The long-term value is then that users become regulars of Flywheel and do not go through ClassPass. This ties in to your above comment regarding the sustainability of the business model– I wonder if ClassPass will have to invest heavily consistently on acquiring new users since old users, if the system works properly, will slowly but surely defect.

    Loved the read– great job!

    Prak

    1. Thanks Prak! I definitely have those same questions about the long-term value of ClassPass and whether it can maintain its existing users or attract enough new users steadily. I actually was a former user of ClassPass who abandoned it for a membership at one favorite studio. I do think it’s a sustainable model for customers who are willing to give up some perks (access to the most prime hours/classes, inability to keep a strict routine, etc.) for a lower price point, but the value only exists for studios if there are enough new users who potentially switch to their packages. I think there will also be a challenge retaining the “best” studios, since those are more likely to entice new memberships outside of the ClassPass platform, increase brand awareness and fill capacity, and then no longer require ClassPass services. It seems like such a tricky balance to strike, but if it can strike it successfully I do think ClassPass will continue to fill a need in the market, especially since Millennials are so transient and new studios and new workout trends are popping up all over the place.

  2. Hi Caitlin – love this post, as an ex-user myself. The operating model is fascinating because of the points you mention – they segment the market for studios, and they increase engagement and accountability for users (which keeps you fit!). That said, I wonder how this model will scale, as demand becomes too big for non-primetime studio supply. As it stands currently, the premier classes (like those $40 pilates classes after work) get booked immediately. Will they find a way to increase the supply part of the equation? Or will they lose too many disillusioned users along the way?

  3. Great post, Caitlin! ClassPass is pretty genius– it capitalizes on the niche micro-gym trend while doing the legwork of aggregating long-tail supply. I do wonder though whether the model works outside of urban areas where there aren’t as many high-end fitness options. Secondly, at what point do the fitness studios get tired of ClassPass cannibalizing their existing business and mediating their relationship with customers? Does ClassPass eventually fall into the Gilt / Groupon trap where they dilute brand of the studios and/or start feeling too expensive to justify long-term?

  4. Great post Caitlin!

    I have a couple of friend who swear by Classpass (almost enough to get me to try it). I think the model is especially beneficial to smaller studies with new concepts that do not have the resources to advertise and really garner the required support to become profitable. Classpass basically brings in an audience of health focused individuals who might not be willing to try new routines unless they are offered at a discount (which is the case here).

    I also particularly like the fact that you can continually change your workouts (trying new things and really avoiding it getting monotonous).

    The question I had was regarding solvency – i think Classpass had issues with liquidity and was having to refocus operations. If not mistaken they were exiting Boston because of this. Could you maybe provide some insight into the issues they are facing? Thanks!

  5. Great post, Caitlin! ClassPass has really taken off given the growth in studio and group exercise classes. The company was able to ride this new fitness wave without significant upfront capital expenditures that new gyms have to incur. I wonder though how the company is dealing with the churn issue when existing ClassPass users find a studio or a workout that she or he really prefers. The other question I have is whether certain group exercise studios will start to partner with other types of studios and cut out ClassPass entirely. Further, what will happen if studios start to do online gym classes that people can join from home? Looking forward to seeing what the future holds for ClassPass!

  6. Caitlin, it’s great to learn more about such a popular and rapidly growing business! I’d like to learn more about the company’s gross margins – how much is ClassPass paying studios for their inventory? Is an individual user profitable for ClassPass? My guess is that the company’s gross margins are extremely high, given the high price tag studios charge customers for classes and that ClassPass raised their monthly fee by 20% recently. Additionally, as others have mentioned above, I’d be interested to see the data on customer retention. If customers are leaving to join a studio, the ClassPass needs to work on its churn/ customer retention. However, if customers aren’t leaving the platform, ClassPass’ value proposition to studios isn’t actually true.

  7. Loved your post, Caitlin. Very interesting in how the Company has successfully created value for both participating parties – individual customers and participating studios – and how they have captured some of that value in a subscription-based model. Wondering if there is an additional way to capture value in having ClassPass members actually join one of the participating studios – one of the big risks to the sustainability of the ClassPass models as users trade in their ClassPass and instead sign up for their favorite studio classes directly? Also wondering average customer churn; are customers really using this as on a trial basis and trading in for specific studio memberships or are they enjoying the access to a range of classes that ClassPass offers?

    Your thoughts – any specific opportunities you see to improve the model as you researched?

    Thanks for the introduction!

    Jackie

  8. While I agree to an extent with the point of cannibalization that a few have made, I actually think there is a huge market for ClassPass consisting of those people that don’t want to work out at the same place more than three times per month! Most of ClassPass’s participating fitness studios are focused on one type of fitness class, whether it’s spinning, boot camp, yoga, trampolining, etc, and the ideal exercise schedule combines cardio with strengthening and stretching. It’s not physically sustainable (or shouldn’t be!) for a ClassPass user to spin 5x per week and do nothing else. It seems like this business model really lends itself to providing users with a well-rounded workout routine. I’d be curious to know if ClassPass purposefully stays away from more generalist fitness-type studios for this reason, or if that’s just the current market.

    Loved the post!

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