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Gradually, then suddenly

Posted: October 27, 2013 2:00 a.m.
Updated: October 27, 2013 2:00 a.m.

I wasn’t too happy to read about the closing of the Spectrum Health Club in The Signal but I was not surprised. For many months my wife and I had been discussing the likelihood of it happening.

There is a quote attributed to Ernest Hemmingway on bankruptcy. When asked, “How did you go bankrupt?” He replied, “Two ways, gradually and then suddenly.”

The CEO of Spectrum said in an email to members that the increase of the local competition was a main reason for the closing. Spectrum CEO Bud Rockhill, in an interview with The Signal, when asked about the location of the Valencia facility, said, “it was not an optimal location as far as visibility.”

I think the closing is partially due to competition but the club location is an asset. For years Spectrum had no issue attracting and retaining members and suddenly, the location is at fault?

The location is an asset: surrounded by thousands of potential clients living within walking distance; half a block away from a globally branded hotel; two free, covered parking lots within 150 steps to the front door of the club and is it is the middle of town!
The real issues behind Spectrum closing are internal, not external.

I have been a member for years and have witnessed first-hand the treatment of the facility, staff and clients and the dereliction of management responsibilities. It all starts at the top. Despite the desire of many who lead organizations, any person who wants to run a first class organization cannot neglect the details.

I visited LEGOLAND for the first (and likely last) time this summer, and watched the leadership team walk around with clipboards and pens, ignoring what was right in front of them: dirty, cracked concrete, litter, shabby food and retail facilities with a disengaged staff. On leaving I thought about writing a letter but determined I would not waste my time when it was clear that those in charge cared less than I did.

At Spectrum, particularly on weekends, I dealt with workout machines that were out of order; empty clean wipe dispensers; disengaged front desk staff giving half-hearted welcomes to members. Emails were not responded to.

There was a lack of enforcement of posted rules in workout areas.

Most of this stemmed from an ill-suited club manager. During my one brief encounter with him I quickly understood he did not like people nor did he want to have to deal with the issue I brought to him about getting a guest pass for our son.

Around this time, several new, competing clubs opened at lower initial prices, a standard tactic to gain volume in a market. The first thing that happened was that many of the Spectrum staff left, in a rush.

This indicated to me that the manager lacked the respect and engagement of his team.

The second thing that took place was that Spectrum made a decision to hold and in some cases, increase prices.

When there is advertised value for this kind of strategy and it is understood by paying clients, it usually well received and accepted. There may be some price sensitivity but the increased revenue offsets the loss of membership volume.

But there was no plan to add more value to the membership. There was no plan to add new members to the club.

There was no plan to retain current members from defecting to the new competing clubs.

There are lots of lessons to be learned for every business with this closing. The one I would like to pass along is this: one bad manager can start your company down a path that you may not be able to recover from. Do you have a manager like this on your payroll?

Ken Keller is CEO of STAR Business Consulting Inc., a company that works with small and midsize business owners to grow top line revenue. He can be reached at Keller’s column reflects his own views and not necessarily those of The Signal.



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