Gym-Pact, the Free Concept and New Business Model

A lot of people who join gyms or health clubs find it very easy to stop going. Two 2010 Harvard graduates, however, are determined to change that.

http://articles.boston.com/2011-01-24/business/29342190_1_membership-fees-planet-fitness-workouts

Gym-Pact (http://www.gym-pact.com/) is a fitness program where you pay less if you exercise more. As described by its creators Zhang and Oberhofer, “Users create a Pact of how many days a week they want to get to the gym, and how much in Stakes they will pay if they don’t work out. When users fulfill their Pacts by checking in at the gym with their smartphone, they earn cash, paid for by those who didn’t make their Pact.”

In a sample Gym-Pact program scenario, a member might commit to four gym visits per week, with a motivational fee of $10. If he keeps to this commitment, his gym membership is free. If he only goes to the gym twice that week, he’ll owe Gym-Pact $20. If he decides to stop the program altogether, he will have to pay $75.

Nowadays, this main idea behind Gym-Pact, a new company in Boston which is the co-founders are Zhang and Oberhofer that partners with local gyms to offer discounts to consumers in exchange for weekly workout commitments. As a member, if you successfully fulfill your commitment, you enjoy great discounts on a fitness membership that you actually use.  If you fall short of your commitment, a motivational fee is charged for each day missed that week to motivate you to get back on the fitness track.

Gym-Pact, as described Zhang and Oberhofer, “is a Foursquare-like mobile app with cash incentives to get you to the gym. Users create a Pact of how many days a week they want to get to the gym, and how much in Stakes they will pay if they don’t work out. When users fulfill their Pacts by checking in at the gym with their smartphone, they earn cash, paid for by those who didn’t make their Pact.” Currently, they have 50+ gyms registered as part of the application.

Real accountability was critical, but collecting attendance data from gyms proved problematic, and they keep tabs on members through a simple SMS system. E-tokens are kept at the gym’s front desk, with a digital password that changes every 60 seconds. Whenever you arrive at your fitness destination there will be a passcode for the day at the front desk. You SMS this code to the Gym-Pact designated number when you sign-in and when you sign-out.

http://thenextweb.com/lifehacks/2011/01/25/a-brilliant-idea-to-make-people-visit-the-gym-regularly/

Basically, Gym-pact operates by negotiating a group rate with Planet Fitness, then paying off the membership fees for participants. They will agree on a weekly schedule and if the members miss a session or opt out of the program for unexcused reasons, they will have to pay. That money will be used to pay for more gym memberships and to build a financial aid fund. The company will eventually make money from referral fees and revenue-sharing affiliate programs with gyms.”

So, the questions are:

  1. Have you ever heard Gym-Pact and would you like to participate into this program?
  2. How would you assess this free concept and new business model? Does it works?
  3. If yes, how can we extend this concept and model and apply to other business layers or industries?
Wenyuan Zhang
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5 thoughts on “Gym-Pact, the Free Concept and New Business Model

  1. Hi Wenyuan,

    This is Geoff from GymPact – thanks for writing about us! I have a few corrections to make about our program. One correction is that we do not charge a $75 fee for leaving the program – members are free to leave anytime except in the middle of their commitment. Another is that we now offer cash prizes to members who exercise instead of discounts to gyms. A final correction is the we have fully switched over from an SMS system to iPhone and Android applications. If there’s anything else you’d like to know about GymPact, don’t hesitate to contact us!

    – Geoff

  2. First of all I’m impressed that GymPact is keeping tabs of people posting about them and correcting the information out there. That says a lot about their social media strategy.
    Second, I used to work for a local gym and we prided ourselves in actually getting members to come and use the gym. We would have liked to have done this better and I think this idea could really work. Most gym models make the money from people who don’t come to the gym but I have always thought that the more people you get in a gym the more profitable it will be. Yeah there may be more expenses but the less you pay for advertising and promotions. You get people in and you keep thme there by encouraging them to come.
    I haven’t used GymPact before but it is something that I would try if I could afford to go to a gym here in the first place. Right now I go to the school’s gym. Can I check in there and still get the cash? Maybe they should link it up with FourSquare so people with Blackberries and other phones can check in.

  3. This is a very interesting concept. Would love to see the initial results from their test groups.

    It would be interesting if they were able to add a social layer on top of this – where groups of friends or couples could sign up and utilize this tool. An option could be that the “pool” of money that you can earn (or other incentives set up within the group of friends) comes soley from friends that didn’t keep up with their weekly pact (instead of the larger pool of all Gym-Pact members) – nothing like a little competition amongst friends to motivate you!

  4. First, I was surprised that GymPact kept an eye on the social media layer about what people said about it. I agree with bdpriest that there must be more expense to attract new customers than keep your old customers. GymPact provides an innovative way to keep old customers and might be great to attract new customers since old ones would recommend their friends to come if they found this method useful.
    I like jason’s idea. I wanna develop this idea. They could create a social media platform where those people who join GymPact have an account. It is like facebook’s application that once you check in at the front desk, people could see. You can also see if your friends (or people you follow/circle) meet their commitments or not.

  5. One thing not updated above is that they now offer a free $5 contribution to your pact if you sign up using a GymPact referral code. Get one from a friend or use mine: ‘DNALukeE’

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