What’s the SATS vision?
Ever since SATS was founded 25 years ago, its philosophy has been to make fitness available to everyone.
We talk about our clubs being welcoming places with a joyful atmosphere. That sense of joy is key. If we want everyone to enjoy the benefits of working out, we have to take on the role of inspirer. We have to create low barriers to entry and a product that’s fun.
Fitness isn’t about the very trained, very fit young people you still see in commercials across our sector. It’s about offering a product that really engages and activates the whole population, and that’s what we aim to do at SATS. We want to help everyone, of all ages, become healthier and happier.
This vision has implications for our product offering, of course, which has to be very diverse to ensure we’re a great choice for the super-fit 25-year-old guy or girl in the city centre of Stockholm, as well as for the 77-year-old who wants to stay active and in good physical shape as they age.
It’s also vital that our vision is strongly embedded in our culture, because in a people business like ours, the customer experience is reliant on the engagement and dedication of employees. We work hard to ensure our vision is lived in our clubs every day. If you go into any SATS club and ask even a part-time employee, he or she will really give strong examples of our vision in practice.
Where are your clubs located?
We operate in Norway, Sweden, Denmark and Finland (see The SATS estate). Within those markets, we’re very focused on creating strong footprints in the capitals and other large cities where we operate. This will continue to be our strategy moving forward: we will not be a single-club, single-city operator. We want multiple clubs in each city.
This cluster strategy is important, because our member value is based on our people using multiple clubs. A typical SATS member regularly works out in least at two or three different clubs. In our Stockholm city centre cluster, as an example, that number would be closer to four.
We want there to be a club close to where you live, a club close to where you work and a club close to where your friends live. We want the barrier to enjoying a great training experience to be low.
The other part of our cluster strategy is that across these clubs, you should be able to enjoy the whole product experience. Let’s take group training as an example, which is a central part of our offering; around 50 per cent of our member base are group class members, which is possible thanks to our flexible, modular membership.
In a typical week in Stockholm or Oslo, across the cluster you’ll have around 3,000 classes on the schedule. It’s a massive offering and – even though our clubs are typically around 2,500–3,000sq m with one or two group exercise studios, a separate yoga studio, an indoor running zone for running classes and a functional area for HIIT strength classes – we can’t offer everything in every club.
We can, however, make sure members have access to the whole product portfolio across the two, three or four different clubs they use. So, we look at our member data – at how members are using our clubs – and we distribute our product offering to ensure everyone has access to all products. This is a key part of our strategy and fundamental to the member experience.
Can you detail your flexible memberships?
The sector’s traditional model – one membership, one price, with a binding 12-month contract – just isn’t very member-friendly. We want to offer far more flexibility.
At SATS, you can therefore design your own membership and pay just for what you want. Do you want access to just one club, the full cluster, all clubs in the Nordics? Do you want a contract or not? Which of our products do you want access to? If you change your mind at any point, you can digitally upgrade and downgrade your membership – self-service – as you go along.
At some point, of course, you’ll be better off opting for our full-access membership. Because it isn’t like some other European markets where you pay €120 just to access one decent club. SATS full-access membership costs just €60–65 a month, and for that you get access to every one of our premium clubs, including all our classes. It’s a pretty low price point compared to the purchasing power of Nordic society and the pricing of other consumer goods.
Of course, it’s then up to us to ensure we have such a good offering – including such great classes and inspiring instructors – that people want to keep using it and paying for it. We know that 75 per cent of the members who leave SATS are inactive. If they’re active, they don’t leave. One of our KPIs is therefore number of visits per member per week, and we work hard to keep people coming. For me, that’s a much healthier approach than binding people into contracts.
Tell us more about your customer data use
This is crucial for the whole industry and a path all operators must go down if they haven’t already started. It’s about being customer-centric, basing decisions on what your members are actually doing – their preferences, needs and desires – not on what you think is best for them.
I already gave the example of our group fitness programming: which clubs get which classes and which concepts, at what point in time during the week. This isn’t dictated by the club manager or by instructor availability. It’s truly based on the data: historical data, member feedback, the ways in which members are using our clubs.
The same goes for new product development: we use data to understand what types of new product we should launch, we do a lot of piloting, we do a lot of AB testing of both our digital and physical member experiences.
We’re starting to become quite a data-driven company, with a strong technology and data insight team, which is great because it’s basically making our product offering better.
What are some of your latest product innovations?
We already had a decent digital offering going into COVID: we were already well aware of the need for a great digital experience as well as a great in-person one, and the need to invest in technology to deliver this.
But of course, we’ve stepped up during COVID, providing members with lots of live classes, digital PT solutions, home training programmes, nutrition advice, mental health classes and so on – all for free during memberships freezes. Because ultimately, if our vision is to make people healthier and happier… well, that vision doesn’t stop just because clubs are closed, does it? The more we can activate our members and help them train at home, the better.
In 2020, there was a 400 per cent uplift in the volume of digital content we produced, with thousands of classes on offer and 700,000 members working out with us online. I think it’s probably one of the main reasons why our member numbers held up pretty well throughout lockdowns compared to many other operators.
Now we’ve taken the next step in our digital product offering, with the recent launch of a completely new home training solution: Mentra by SATS.
What is Mentra by SATS and who’s it aimed at?
Mentra by SATS is the name of the whole ecosystem, with the first physical product an interactive fitness mirror. The mirror costs around €1,300, with a digital fitness subscription charged on top of this. This subscription is discounted if you’re a SATS member; if you have an All Inclusive SATS membership, Mentra by SATS content is included for free.
We absolutely believe the market is there. In fact, further down the line, our ambition is to also launch a bike and treadmill for connected home training. Across the whole of Europe, as well as in markets like the US, people are now showing they’re willing to invest more and more in living a healthy lifestyle.
How will your clubs and home workouts co-exist?
Obviously there’s a lot of discussion around how the industry will change, how consumer behaviour will change, as a result of COVID.
At SATS, we believe people will work out more at home and outdoors than they used to, but that they’ll also work out more in-club. We truly believe overall activity levels will increase across society and that we have an important role to play in contributing to this.
Once again, it comes back to flexibility and making sure the barriers to activity are low: some days, members will want to come to the club for the joyful experience of working out with others; other days, when they can’t make it to the club but still want to do their class, we’ll make it possible for them to do that from home.
We’re therefore optimistic both for our physical clubs – where we’ve seeing visit levels recovering post-lockdowns – and in terms of the rise in digital and home training.
Of course, digital is also a way to extend our product offering into geographies where we aren’t present with physical clubs, as well as to reach those in our existing geographies who don’t want to attend a physical club. Both of these are very interesting opportunities.
How is SATS performing?
Club closures are very challenging from a financial perspective, in spite of our strong measures to control cash burn rate. If you look at the share prices, we IPO’d in October 2019 at NOK 23.50, which over the next six months rose to NOK 30. Then came COVID and brought the price down to NOK 12, so it was a massive hit.
In spite of Omicron, we’re back to trading between NOK 19 and NOK 24, so we’re at or close to IPO level.
We also took a decision early in the COVID crisis to use this special situation to come out as a strengthened company. We’ve, therefore, doubled down on expansion, not only of our digital presence, but of our physical club network too. During 2020 and 2021, we’ll have opened 30 clubs. Compare that to just a handful of openings in 2015 and 2016, for example.
Our focus will remain on the Nordics for now; new countries may come in the future, but that isn’t something we’re focusing at the moment.
We’re continuing to invest in our product, too, including new class concepts and selective expansion of our offering: a branded clothing line, nutrition, and physical therapy treatments in some of our markets which is picking up pretty well. I think there are several interesting opportunities for further brand expansion, either on our own or in partnership, to offer a more holistic health experience for our members.
And of course, short term the focus is on getting our membership back to pre-COVID levels. We went into COVID with around 700,000 members and currently have around 600,000, so although numbers are recovering, we still have a way to go.
Are you concerned by digital competition?
Being market leader in the Nordics, people often ask if we fear competition from new concepts, boutique operators, new digital offerings and so on. To be honest, we don’t. It’s not that we’re naïve – we’re aware there are a lot of great new offerings out there that could compete very well with us. It’s simply that we see ourselves as part of a growing market.
Penetration is a bit higher in the Nordics, but look across Europe.
We’re talking maybe 10–15 per cent population penetration. Our job isn’t to compete with each other, fighting over the same members, but to expand the market together, bringing more people into physical activity. And there are so many opportunities to do this, which is why I see the innovation happening in the industry as a good thing. It’s what will bring more people in. And I think we, as a sector, have a responsibility to do this.
It’s why SATS has focused on UN SDG #3, which is all about health and wellbeing. We believe our sector has a vital role to play in improving physical and mental health across society, by increasing activity levels. As an example, SATS had around 40 million member visits a year before COVID, and rising. Those 40 million visits… that’s a whole lot of public health.
But there’s still a lot of work to do to ensure governments, other decision-makers and society in general really understand the value of what we do. We can’t sit and complain about this, though. If ours was one of the first industries to be locked down in many countries, it’s because we haven’t yet told our story well enough. We have to take responsibility.
Over the past 18 months, we’ve seen more collaboration across the sector and we need to keep this going, working together to get the message out there about the contribution we can make to society.
What do you love about working in fitness?
In other industries, you might stand on stage one day and talk about vision to your employees, but the next day it’s back to talking about financials. In our industry, the two are inextricably linked. Of course, as a listed company we have to deliver our financial results, but our vision of making people healthier and happier... If we deliver on that – if we focus on the member experience, on bringing people into activity and on keeping them active – the financial results will come.