This letter was sent by Dibs founder Alicia Thomas to all current partners on January 11, 2018.
Happy New Year!
Thank you for being an early partner of Dibs. You took a risk by trusting some of your pricing to a young company, and I want to honor that trust by being transparent and honest in every conversation with you.
2017 brought plenty of challenges, as well as victories. Suffice it to say, we learned a lot.
There are a few key takeaways that I'd like to share with you now.
Many studios will not survive the dramatic shift that's happening in the fitness industry.
Customer churn is high across most studios causing flat or negative growth. The most common version of the story casts ClassPass as the villain, stating that they turned formerly loyal customers into studio-hopping deal-seekers, with studios as the hapless victim.
The truth is, customers actually prefer to be regulars, but now, there are so many companies competing for their attention.
The old way of pricing does not set you up for success.
Price must communicate real value.
Pricing that's too high or too low is bad for you and bad for customers.
Reason 1: Customers are smarter
Customers have gotten smarter and they don't blindly trust pricing. They research. Pricing for appearances undermines your credibility. Price has to be tied to demand so that customers know that prices are real and can be trusted. Some classes should be more expensive. And yes, some classes should be cheaper.
Reason 2: Deals reward bad behavior
Studios are offering deals to win back lost customers, or they sell "excess" inventory at deep discounts. This not only undermines the value and trust of your customer base, but it also undermines the value of the entire industry.
You have to reward the behavior that you want more of. Reward more valuable customers to get more valuable customers.
Everything strategies do not work.
Studios need to be consistent with pricing. Too many studios implement conflicting pricing strategies, hoping to grow revenue. When everyone does this, the whole industry gets stuck in a race to the bottom.
Studios need to bring their pricing back in-house. You need to implement a whole and complete pricing strategy that supports the way customers buy NOW - not the way customers bought 10 years ago - before there were iPhones.
We've changed to help you meet your profit goals in a real and sustainable way.
Quick fixes are not lasting and they're not real.
We are the best at what we do. We have the ability to dramatically increase your profit by using price as a tool to retain your highest-value customers. This is the single activity that has the most dramatic effect on your profit. Dibs does this better than any other company. Hands down.
Going forward, we will partner with studios that aim to create real value for themselves and for their customers.
We will partner with owners and operators that are willing to do things differently in order to get different results. For us, that means fewer, deeper studio partnerships.
In the days to come, we'll be sharing exactly what this looks like.
We believe you deserve to have the type of customer you intended for your studio, and we're here to help you find them and keep them.