Episode 87: Maintaining Customer Engagement with Eric Schmitz, President at California Athletic Clubs

On the latest episode of Subscriptions: Scaled, we speak with Eric Schmitz, president of California Athletic Clubs (CAC), which owns and manages health clubs throughout California.

On the show, we discuss everything from Eric’s career background to how California Athletic Clubs operates and how the company managed during the pandemic. 

Keep reading to learn more about the episode.

Eric Schmitz

Eric has been in the subscription industry for around 35 years. He has plenty of experience working with the subscription model and understands what works and what doesn’t. 

Eric attended the University of Wisconsin-Madison. Initially, he didn’t know what he wanted to do with his life. In the spring of 1985, Eric saw a flier for a triathlon that caught his attention. He decided to train for the local triathlon which involved running and biking around Lake Madison and discovered that really enjoyed it.

Eric's campus had a program for exercise physiology and so he decided to get a degree. He continued to compete in triathlons and his interest in fitness continued to grow. 

After school, Eric moved to California and lived in Santa Barbara where he continued to compete in triathlons. He then took on a position in a local athletic club. Over the years, Eric made his way up the company ladder. He started on the fitness floor and now works as president of CAC. He is in charge of seven athletic clubs. 

Eric loves that working in the fitness industry allows him to have such a positive effect on people’s lives. 

California Athletic Clubs

Unlike many other current subscription companies, California Athletic Clubs isn’t online. 

At CAC, the team stays focused on its values and makes operational decisions based on them. If the business were solely online, this would be harder to achieve. The team is constantly interacting with people and this provides them with opportunities to show value.

As he has worked in the industry for so long, Eric has witnessed many players enter the sector and he has seen how trends and innovations have shaped the industry. 

Over the years, CAC have tried hard to remain authentic and to take care of their employees. For them, it’s all about relationships.

CAC looks at retention as one of the main KPIs and monitor it monthly. This is because customer acquisition costs more than client maintenance. 

Memberships range in price based on their clients’ needs, and CAC wants people to fully utilize their subscription plans, because the higher the engagement, the more likely you’ll retain customers. CAC is at a higher price point, but the services they offer have higher retention rates.

The Pandemic

There’s been a lot of growth in health and fitness in recent years. However, because of the pandemic, around 25% of fitness clubs closed by the end of 2021. Digital fitness subscriptions and services became more and more popular with the lockdown. 

With many studios closing during and after the pandemic, CAC was lucky in that it had plenty of outdoor space for tennis, swimming, and fitness. It was because of this that the pandemic didn’t affect them as much as it did other fitness companies. 

Gathering feedback

California Athletic Clubs sends out a digital online survey every 90 days to people actively using a membership. They need to check in at the front desk before a workout to count as an active member.

This questionnaire allows customers to rate all aspects of the business, including cleanliness and friendliness. CAC then look at the data and compares it to other periods to see what they can do to improve the business and their services.

This way, CAC shows customers that they’re listening and this helps build relationships and grow engagement. For Eric and the team at CAC, communication and professionalism are vital. They want their customers to feel heard.

Contacting disengaged customers

California Athletic Clubs also sends monthly communications to customers, including disengaged clients, informing them of the things that are going on in the business. 

For example, one effective communication method is from the manager, or head of the department, to offer a simple exercise and nutrition program starting on a certain date. Loyal members receive a discount to encourage them to engage. 

This is a gentle approach to welcoming back disengaged customers. It’s not pointing the finger and asking what’s wrong or why they’re not engaging, instead, it’s inviting them to be part of the community and making them feel welcome by personalizing the invitation.

Referral incentives

California Athletic Clubs has had success partnering with local restaurants and purchases a certain amount of gift certificates for establishments at a discount. They choose restaurants that would work well with the demographics of their clubs. 

Customers that refer friends can receive a gift certificate for use in a local restaurant.

CAC has tried various referral incentives and this seems to be the most popular. 

Canceling a Subscription

Notoriously subscription services make it extremely difficult to cancel. 

Many people have bad experiences with subscription services, particularly those with low price points that make it hard to cancel and don’t offer great customer service. CAC is different. 

CAC offers a monthly subscription and customers only need to give 30 days' notice to cancel. They try to make the cancellation process as frictionless as possible.

At the same time, CAC likes to interact with customers before they cancel. This helps them understand where they went wrong, how they can improve and how they can help customers to get back into a fitness routine.CAC uses the customer experience feedback company Medallia to help them with customer experience management. The software allows them to determine what they need to change based on customers' wants and general recommendations for subscription companies.

Learn more about California Athletic Clubs by visiting the website, or reach out to Eric directly with any questions by emailing him at eschmitz@caclubs.com.

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