This is part of a 3 part series, to check out this first part in which I highlighted some of the challenges facing allopathic practitioners click here.
The Integrative Lifestyle Practitioner
The beautiful thing about these practitioners is their generally shorter period of time to revenue generation. While there are some that do follow the numerous years in school and training, a large portion can take cheaper classes that aren’t the sole focus of the person (freeing up time to generate income elsewhere), and can get to working with clients sooner rather than later. Although their income potential may be less, they get started sooner and with proper investments and spending caps, they can utilize the law of compounding interest for them rather than against them.
The challenge on the flip side is that there is a trade-off for them between time and money. The uncertain amount of demand of clients, of existing clients’ needs, and the pyramid shaped pricing for practitioner sessions puts a continuous mouse-wheel on the industry. Any attempts to grow or scale something beyond this is merely a walk on the tight rope of cash flow stability.
Further, the mindset and skillset of a practitioner makes it ultimately challenging to navigate the terrain of switching from service clients’ needs to building a successful business. As the revenue is generated from the hours sold to the client (there are some other more clever pricing schemes that work), the only way to increase revenue is through increasing the per session price, offering semi-private or group classes (another challenge of demand) or providing additional entrepreneurial products such as meal plans, workout plans, or product sales. The benefit of course is that the practitioner does not have a mounting level of debt requiring repayment, does not delay the time period to generate revenue, and has flexibility on work-life balance. The challenge is the slow buildup of revenue potential, the uncertain demand and scheduling, the need to be entrepreneurial, and the never-ending trade-off between building a clientele list, delivering services and expanding the product offering.
Even when one might have a clientele list, the biggest challenge with clients in the lifestyle space is the client churn and turnover within the industry. There is not a set foundational view of utilizing a practitioner for life because of the isolated skillset inherent within one of these practitioners and the relative premium view of their services.
Because of the limited skillset with one person, there needs to be a shopping around of other practitioners to meet the needs of the client. This kind of referral network is strong and does appeal to creating a more stable supply of clients for the practitioner. An alternative and concurrent approach is that the practitioner can continue to seek continuing education in other modalities to appeal to the diverse needs of clients. However, there still is a limiting factor to the amount of hours an individual can work and the cap on a per session price.
There also exists the issue in total market size available for a practitioner as he/she moves up the pyramidal pricing structure. Because of the elasticity of the demand curve, there are many people who can afford a lower price per session and much fewer affording the higher price point. This can be gamed through spreading out the payments and/or packaging the in-person sessions with an overall multi-day plan in which the practitioner is not present and the client works in isolation. The challenge of this approach is the lack of accountability and removal of the in-person/personal nature of the practitioner which is the product differentiator.
The face-to-face interaction of another healthy, happy person is just as important an aspect to the experience as the actual delivery of the service. It is leading with the hug, kiss on the boo-boo, and popsicle.
Another aspect that should be considered is the community approach of the clientele. This in fact is THE most important aspect of what is being created here. The intense focus on self-improvement creates a happier, healthier person who is committed to personal development through the dedication of both time and money and will thusly be looking to create a life (with products, services, experiences, and people matching). Avoiding the discussion of a “high-vibrational being”, I will simple refer to these individuals as health conscious who look for white-glove, intensely personal products, services, and experiences that align with their “lifestyle”. Working in isolation as a practitioner makes community building activities another challenge as it requires uniquely different set of skills.
One final financial challenge of the individual-driven model is it is ripe with inefficiencies and the inability to leverage economies of scale. Fixed overhead in the spaces of marketing, scheduling, facility use, training, and essentially all aspects of SG&A make for a juicy opportunity for roll-up opportunities with instant cost savings.
Innovative Approaches
Fully digital applications for health and fitness have been pursued to mixed degrees of success. Often they are too archaic in infrastructure or too removed from the client’s need to be sticky enough to hold. Those identifying and crafting a value proposition on a particular aspect are found more cumbersome than useful for the individual practitioner as it results in needing to piece together many different solutions.
The hybrid model most notably Peloton in which a person can go into a classroom environment for a premium or be a part of the community and participate in the group session from home yields the most promising for many of the pain points. This self-selecting pricing mechanism is the ideal version for the lifestyle space as it allows people to opt-in at the price point they are comfortable with and experience the same outcome (cycling) in different environments.
The biggest bummer is wanting to go to the early morning class but waking up 5 minutes too late to make the train or drive there in time. This multiple ways to enjoy the experience also allows the person to calmly still participate in the class in the comfort of his/her own home. The one challenge to this of course is having the equipment and space available to participate from home and may not be feasible for practices outside of the highly equipment constrained. However, with the suburban home developments, the allocation of a room for a gym is feasible; as is in urban environments an apartment complex’s gym. These two investments from both the home owner and real estate developer can provide a vast increase in attributable customer value and therefore makes for a sensible investment.
The next challenge is when/if the practitioner requires physical contact with the individual. There are numerous innovations created to address a lot of the treatments that are typically associated with hands-on environments, yet there still remains a good deal number more treatments that require in-person interaction.
The biggest challenge to hands-on practice is the geographic proximity to clients. Some practitioners travel to their clients but this is both a huge inefficient use of the practitioner and puts them into insurance pools that are far too costly for what they actually are doing (categorizing them in the same category as “in-home care”).
If the client is to come to a location, centrality and access is key which typically comes with a real estate rent premium. Further, with a lot of the focus on a client’s “feelings” pre and post session, one of the most damaging yet uncontrollable aspects for a practitioner’s success is the client’s driving to and from the location experience (and parking!). Traffic, numerous adrenaline producing moments, poor posture in the car, and the frustration of finding parking can be some of the more counter-effective measures to the treatment which oftentimes requires an initial “grounding” period to calm the individual back to normalcy before beginning.
Because of the geographical challenge, a hub and spoke model of expansion could be perceived as beneficial or counter-productive to expansion depending on the relative price point of the services. In doing so, expansion could be optimized through having central “large” locations as the hub with the spokes being smaller in size and in product offering. This is a common strategy for gyms and is directly observed with some of the major chains. For a lower cost price point service, the word of mouth marketing that is dominant in this industry allows people who were otherwise “too far away” the ability to participate.
For premium services in which the price is prohibitive for many, the demand may be less than the supply in the expansion and would actually hurt the business’ expansion. In case of premium pricing, the strategy would then be to enter into high-income earning urban cities to add to the appeal to the premium brand as well as serve those clients who may not have the time to travel to one general area. The challenge with this is insuring a consistently high-level quality of care remotely as administrators would have less frequent ability to directly observe each location. Therefore, quality control methods and mechanisms for tracking are essential as is a deep-seated, well executed and maintained company culture.
So what is the alternative approach to this brick-and-mortar, command-and-control, fully integrated system that transcends the aforementioned “every practitioner fends for themselves” model which has been proven to be challenging, risky and operationally inefficient?
To find the solution I propose in the final part,
click here.
