Every crisis drives the need for creative solutions to solve newfound issues. COVID-19 has provided many examples where businesses have been forced to re-think their go-to-market strategy. The most agile businesses, who have done what they can to look after their employees and customers, are likely to come out ahead when this is all over. Some brands have created short term solutions to address immediate challenges such as the Shanghai Fashion Week which is livestreaming the entire event. Other brands have implemented structural change to help ensure longer-term sustainability.
At China Skinny, we’ve been closely following and strategizing initiatives that businesses can take to ‘make lemonade’ from the lemons that have been dealt from the virus. One of our favourite case studies is Les Mills International from New Zealand, led in China by Jane Jiang. We hope you find some applicable insights from how they have adapted to the COVID-19 environment.
Les Mills International works with 140,000 fitness instructors and 20,000 clubs worldwide to deliver “the world’s best workouts” and is New Zealand’s largest exporter of music. The company had been experiencing strong growth in China on the back of the fitness boom.
Yet in late January when China went into COVID-19 lockdown, the gym industry was one of the hardest hit. Even as measures have eased, gym-goers haven’t rushed back to their circuits and workouts. With a business model reliant on the sustainability of fitness clubs, Les Mills’ China office could have rightfully gone into meltdown. But it didn’t.
Les Mills’ customer-focus is evident, with its first focus during the outbreak to reach out to its clubs and instructor customers. They did what they could to understand their challenges and show they cared, sending messages and offering flexibility around licensing.
Beyond its core business, the outbreak provided an opportunity for Les Mills to accelerate the digital initiatives that it had been exploring since Jane took the helm. One initiative was an online training program which launched in February. Locked into their apartments and going a little stir-crazy, instructors were all over the new program to expand their repertoire. Prior to the outbreak, Les Mills’ upskilled about 1,000 instructors at their quarterly events. With their online training, they streamed to 2,800 folk in one session. Not only did this allow them to reach more instructors – including some beyond their five target cities, but lower costs to serve which led to profits being 2.5 times higher. Instructors found new benefits from the interactive online programs, such as allowing them to go back and watch them many times. 73% of those participating said they’d love to have both online and offline programs going forward.
Another part of Les Mills’ digital initiative involved launching a WeChat Mini Program to expand its reach. This provided free workouts and other content, allowing Chinese consumers cooped up in their apartments to stay fit and sane. Part of that sanity came from Les Mills’ kid’s programs – 15 minute workouts for 4-14 year olds. With parents already struggling to juggle working from home with kids there too, the program gave parents a small break. As we know, anything in China that shows a little love to the precious only child/children, is well received. Users were offered prizes to regularly check in and post photos which increased engagement further.
The move is Les Mills’ first foray into the direct to consumer (D2C) model in China. Last week they launched paid livestream classes which has seen around 1,500 people pay ¥90 ($13) to watch four interactive classes. This leaves the company well placed to take advantage of the steep uptick of both in-home exercising and livestreaming. The saleable packages also provide opportunities for multilevel marketing (MLM) to Les Mills’ existing community, allowing them to expand their own offering with complementary services that are on trend right now. Similarly, online promotions at Chinese New Year and Valentine’s Day saw online sales of equipment in February equal all of 2019’s sales.
In addition, Les Mills has also used the outbreak to accelerate its partnership discussions with Alibaba. This includes providing content on 5-6 of Alibaba’s channels such as Youku (China’s Youtube) and Alibaba’s productivity app Dingtalk. Although Dingtalk is predominantly work-focused, Alibaba realises the benefits of people take a break from their day job to exert some energy. Les Mills workouts were viewed and practiced over half of million times within one week through the partnership with Alibaba.
Keeping teams engaged over periods of outbreaks and uncertainty has been challenging for most businesses, and this was further exasperated by the enforced remote working in China. Yet Jane’s leadership and clear direction during the crisis, with increased health and safety precautions in place, paid taxis to and from work, and assurance that there would be no layoffs in the foreseeable future has seen the team “never be so united and engaged.”
Gyms are now starting to open again in China, although it will be some time before they are back to the crowded hives of activity that they were before the outbreak. Nevertheless, Les Mills is likely to emerge stronger than it was before, with complementary digital channels, more profitable systems and new avenues to grow their revenue and customer-base.
The one thing Jane wishes she’d done differently is “build the D2C online platforms a year ago,” which would have enabled Les Mills to expand their penetration as soon as the outbreak happened. “Crisis in Chinese means danger and opportunity. Resilience and confidence are the best friends accompanying us to seek opportunities when crisis is inevitable,” says Jane.
Les Mills illustrates that even businesses in the most impacted industries can come out ahead during these challenging times. The lessons aren’t just about succeeding in times of crisis, but also finding time to explore other marketing, sales and training channels during normal periods.
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