Shred415 Case Study

According to the financial information of Shred415 given in the EY case file, the average revenue per class from all seven of your locations are about $405 with an average fee paid per class of $20.25 which means there’s about 20 people going to class on average. While, on average, 20 people being in class is great, there is still room for more customers to fit in these classes. So to attract more locals of the Chicago land area to join Shred415, we are offering a Refer-A-Friend discount for one free class to the member who referred the friend as long as that friend purchases at least the 3 class introductory pack. If Shred415 offers one free class for members who recommend their friends to go to Shred415 for at least the 3 class introductory

pack, you wouldn’t be losing money from the free class given at all, in fact you would be gaining much more by giving them out. By offering this Refer-A-Friend discount, you are having your loyal customers, who are already hooked with your extraordinary workout program, advertise your business through word of mouth. This is not only drawing in a bigger local crowd, but it is also one of the best ways for your company to promote itself without giving up any of your marketing budget which is already tight enough. These members who are in the love with your company, who already want to tell their friends to join your club because they want to work out with their friends, will be given an extra incentive to tell people about Shred415 because you are now offering them free class for bringing their friends. Fitness Formula Club (FFC), a fitness club also in Chicago that I belong to, offers a $100 gift card to the snack bar for members who recommend other people to join. This was extremely effective for FFC because many of the members, including me and many of friends, had a big incentive to get people to join because we wanted that $100 dollar gift card. Even though a $100 gift card isn’t much at all and most of the products that FFC sold cost about 10 dollars each, members still went out of their way to recommend as many people as they could to get that gift card. One free class here and there for Shred415 isn’t much at all especially when you are bringing in hundreds of more members from it. So, just like FFC you could give your loyal customers incentive to recommend Shred415 to their friends for just a small price in your case.
The free classes won’t have a huge effect on your revenue per class because, like we said above, it is one free class for your loyal members who bring in more customers bumping that average number of people per class up. Having more customers show up to classes increases your revenue greatly because these new customers are paying full price for 3 introductory classes while the loyal customers who brought them are getting only one free class. The free class is a small price you have to pay for huge returns because the people they recommend will most likely love shred415 given your extremely high retention rate. Take this example, say 3 of your loyal customers Eric, Bob, and Sarah recommend 1 friend each to Shred415. Each of their friends decides to give it a shot and buys the 3 class introductory pack paying full price while Eric, Bob, and Sarah get one free class per person they recommend. This not only brings in more revenue due to the fact that 3 new customers are paying full price for the classes, it also promotes your business because it is introducing more and more locals of Chicago to Shred415 getting that name out there. Also, its highly likely, after the 3 introductory classes, the new customers will be hooked on your workout and will sign up for more classes. If this is the case, there is more potential for these new customers to refer-a-friend to get that one free class. With this small incentive for your loyal customers, a tremendous chain of events of more and more customers has been put into effect without spending a dime of your marketing budget. However, the challenge is getting these new customers hooked in order for this chain of events to happen which we are have great confidence you can because of your unbelievably high retention rate and the unbelievable results people have had at Shred415.

Spouse Key to More Active Health Management
According to a Mintel report, Marketing Health to Men, by Marissa Gilbert, a spouse maybe the key to more active health management.

According to her visual, 70% percent of married men exercise while only 58% of men exercise when they are unmarried (Marketing Health to Men). Maybe having a spouse offers additional benefit because of their daily support.

So our idea is that Shred415 offers partner discounts for customers who bring in their partners to workout with them. Shred415 customers are currently 80% women ages 25 to 50 which leaves many opportunities for you to use the success you’ve had with women to reach into that male demographic. Having mostly women as your customers could be used to your advantage in this situation because giving out partner discounts to these women in order to get them to bring their spouses or partners will bring in a great deal of revenue for Shred415. Shred415 has a lot of customers and for it to be 80% women ages 25 to 50 means many of those women have husbands. Husbands are more likely to workout then men without wives, so why not workout with your wife. This gives them the perfect opportunity to stay active and healthy and still spend quality time together, which the couples will love. Shred415 will love this because once the wife brings the husband once that opens up the opportunity that they will make it a regular thing or a once a week

thing.
Take this for an example, Jessica, who is married to John, has been working out at Shred415 for a few weeks now and she is hooked. She hears of this discount for bringing your spouse with you and she decides she wants to take her husband to one class. John, who is decently healthy but could always use more exercise, ends up loving the class and loves getting shredded with his wife. John and Jessica talk to their friends, Frank and Susie, saying how Shred415 is the best workout they’ve ever had, as many of the customers of Shred415 say. They end up getting Frank and Susie to try a few classes and then they get hooked. These discounts, just like the Refer-A-Friend, have the potential to start an amazing chain of events for Shred415 that will get you an enormous amount of attention. Of course this is all hypothetical, but your program has been highly praised in the Shred415 testimonials and your company has such high retention rate so this hypothetical doesn’t seem too crazy.

Conclusion
Our 4-step plan is a simple yet extremely effective way to not only attract more of the male demographic but also attract more locals from the Chicago land area. With over 80% of your customers being women ages 25 to 50, you have an opportunity to cater to the desires of the male demographic and, in return, develop a more evenly distributed population of customers. Through intense challenges the males won’t be able to shy away from to the bring your partner discounts, men will be intrigued by Shred415 because men crave more and more challenges and they can’t turn down spending quality time working out with their loved one. You, also, have the opportunity to attract more locals of the Chicago land area by promoting in Chicago’s major events, such as the Chicago Marathon, where promotions for Shred415 will be seen by almost all of the runners and by having refer-a-friend opportunities your members won’t be able to resist. The implementation of intense challenges, such as P90X succeeded in, bring your partner discounts, promotion in the Chicago Marathon, and the refer-a friend offer, the opportunity to attract more males and locals will become a reality. Shred415 “Reach Your Max” and develop a more evenly distributed and larger customer population and get them shredded.