Managing 2.85 million customers in an increasing competitively environment whilst adapting to a backdrop of decreasing local authority budgets and funding is some juggling act that would leave a lot of organisations in deep water. Not KAL though– they are on the offensive and are pursuing both customer excellence and innovation to deal with the coming challenges.
KAL manage 12 major sports centres and swimming pools on behalf of Kirklees Council in the region. They are organised as a charitable trust and so all profits are reinvested into facilities, their ongoing development and growth initiatives to bridge their funding gaps following their approach of ‘invest to save, invest to grow’. As an organisation they are managed by a Board of Trustees who come from a range of backgrounds to help develop and drive the strategic direction of the Trust.
In March 2013 they exceeded 2.85 million customers, tracking way ahead of their 2014 business strategy target of 3 million customers. All this despite a challenging financial landscape. Turnover for the last financial year was £12.8,m up from £8.5 in 2007/8, despite a cut in funding from local authority of 32% over the last 3 years. Currently for each person that visits a centre, the council pays roughly 59 pence per head. 5 years ago it was £1.
As if these challenges weren’t enough to content with, the competitive landscape for Health and Fitness is about to change significantly in Huddersfield alone.
The competitive landscape for health and fitness
Budget gyms are now the ‘new kid on the block’ with two new planned openings in Huddersfield town centre alone by DW and Exercise for Less in the next 12 months. KAL have already hit back by developing their own ‘Smart Fitness’ package for £14.95 per month which has already attracted over 12,000 members. In addition KAL have their own brand new site development at a cost of £35 million due to open mid-2015. However the competition doesn’t end there though. The University of Huddersfield has approval to build a £22.5 million brand new leisure facility and will open the doors up the general public in addition to the student community in spring 2014.
This is all in addition to a number of smaller gyms and facilities in the Kirklees area. One such facility was the Fitness First gym at Lockwood Park, where Huddersfield’s Rugby Union team are based. After getting into financial difficulty last year which also threatened the sustainability of the rugby club, KAL agreed to take on the facility with its member base and majority of staff. After an initial refurbishment it was rebranded and officially opened in January 2013. Kirklees has certainly has its fair share of leisure facilities!
Customer experience is key
So with expanding competition and customer membership, and with products broadly similar in nature and in price, customer service is increasingly going to be a key differentiator in helping KAL stay ahead.
This was first recognised back in 2011. The Commercial Board had been informed of the 32% cut in budget over the next 3 years and so had a funding gap to fill. The outcome was the ‘Big 8’ ideas to boost revenue, innovation, diversification and customer experience.
Mystery shopping to diversify
Once such idea was to introduce mystery shopping but with parallel aims. The first, as you would expect from deploying a mystery shopping programme was to improve customer retention, raise service standards across all 12 facilities and to be able to audit processes for consistency such as the fitness suite visit experience and the membership sales process. The second aim, was to retail the system on to other businesses to use, and so generate additional income.
KAL’s approach was to go to the market initially and purchase an ‘off the shelf’ mystery shopping programme. However they quickly realised that the cost would be prohibitive. Undeterred, they decided to commission their own web based system and so iiD Solutions was born. A subsidiary consultancy business offering insight, intelligence and delivery to other businesses across industry using the mystery shopping software platform for data collection and analysis, tried and tested on the KAL organisation. This approach saved KAL a significant amount of money. In fact the life time cost of the system is actually less than a year’s subscription to an existing commercial package.
Mystery shopping visits are conducted monthly across all sites using a team of shoppers. Site managers have access to the system via their own log on, and can check their own scores and results, their progress over time and how their site compares to the others in the group to inject some healthy competition into pushing standards higher. The managers can also look at specific areas within their facility such a reception area, pool area, or café to help further drill into identifying areas for improvement or praising staff for exceeding standards.
Monthly results are also reviewed by the Commercial Board in their strategy meetings and there’s an expectation as to a minimum target of achievement by the sites. The numbers tell a positive story. Average mystery shopping scores on product knowledge of staff are up 3% over the last 12 months and fitness suite visit experience is up to 84% demonstrating that the KAL teams are actively engaging and using the feedback from the shopping data.
Annual customer satisfaction focus
This is an additional source of data around understanding for improving the customer experience. The back bone of any customer experience programme is a customer satisfaction survey which KAL conduct annually. 2013 saw over 1600 responses across a robust representation of members across all 12 sites. Again, the numbers tell a positive story amidst the back drop of increasing competition and rising customer expectation, not to mention the increase in membership. Year on year scores are up with the biggest increases in ‘overall satisfaction of staff’ to 87.4 and ‘overall satisfaction of information provided’ to 81.1.
KAL also measure Net Promoter score and 2013 saw a 3% increases to 32%. Interestingly, the health and fitness industry average is around 22%.
Staff are key to the customer experience
Despite the increases in satisfaction around staff from this year’s satisfaction survey, KAL aren’t standing still on staff development recognising the importance of all staff in delivering a great customer experience. In April this year, KAL joined the Institute of Customer Service (ICS) which is 2 year programme they’ve committed to, underlying their seriousness at developing the total customer experience. KAL now have 5 of their own staff as approved ICS trainers and the plan is to rollout training to 80 people between September and December this year. Of those 80, 50 are front of house staff, sales and membership, who will each undergo the 3 day ‘First Impressions’ course, in addition 30 Front line and Operations Managers will undergo the 4 day Service Management course. From 2014, all remaining staff will undergo ICS training to ensure a consistent level of service across all facilities which should see them ahead of the competition in service delivery.
And to the future
2014 also sees the start of the next 5 year strategic planning cycle. KAL have now established a ‘setting the pace group’ to gather further ideas and promote employee engagement. To date they have also;
- Established a set of KAL values
- Conducted KAL roadshows across the 12 facilities
- Created an “Active Thinkers” group to consider and improve key issues
- Promoted an inclusive culture encouraged by Managers. Staff views are actively sought via staff councils, staff surveys and site visits.
All this will add to the solid foundation already established, and further promote their cultural change within the organisation to further deliver on their philosophy of ‘best of public, best of private’ approach to business with a clear link to improving the customer experience as a differentiator.
KAL’s summer marketing campaign focussed at getting more people into activity used the strapline around ‘imagine, believe, achieve’ Three values that I think KAL themselves use to drive the business into the future.
Thanks to Joe Baker, Business Improvement Manager at KAL for his input into the case study.
Article first written for the July 2013 edition of Customer Experience Magazine.