Hardware has the potential to disrupt the fitness industry. The must-have gift for the modern fitness enthusiast is a Fitbit, and everyone from the accountant to Zumba obsessives has a new piece of kit that tracks their activity. Wearable internet-connected technology is the cause of great hype and serious debate among forward-looking business technology leaders. Whether the Apple Watch, Google Glass, Fitbit or specialist enterprise devices, technology that customers and employees can wear is truly happening.
For the fitness industry this has created a boon if you are a web service. Strava is a Facebook-like community for runners and cyclists, and secured $18.5 million in funding in October 2014, following a similarly large round in 2011. It already has an Apple Watch app on the market. The flourishing of the smartphone market has created a plethora of apps for runners, swimmers and again cyclists to track their exercise and calorie count from the device that never leaves their side. Fitness device stalwarts such as Garmin, known for its GPS devices used by drivers and hikers alike, has also benefited. Many of us have adopted these devices and services because they are easy to use and make us better informed or feel better. So for a Health Club business, surely the rise of wearable devices and, in the UK at least, a renewed passion for sports such as running and cycling as a result of the UK’s success at the Olympics and the Tour de France is bad news?
Not so for Virgin Active, whose response to the changing behaviour of existing and customers was to hire a CIO, its first. Andy Caddy joined the business in April 2013 to enable the international fitness firm to be fit for the digital challenge ahead.
Climb the stairs of Barbican tube station in central London and you’ll be surrounded by advertisements for Virgin Active, cross the busy road at the station exit and you face one of the largest and busiest gyms in its network. The organisation’s office is just next door.
“The thing that Virgin Active is very good at is the facilities, and we are brilliant at customer service,” CIO Caddy says in the bright and relaxed Virgin Active headquarters. “It has got that Virgin-ness about it. That is a challenge and fun as you are working with an entrepreneur that people actually like,” he says of the business that shares a brand with airlines, banks, telcos and to my generation, record stores.
“He’s still very interested in it and it stands for a lot what he wants – good fun and good for you,” Caddy says of Richard Branson in an interview before the controlling share change took place.
“Gyms were born in the 1980s, and in those days you opened a club and had very little need for technology,” Caddy explains of the juxtaposition of the days of Day-Glo T-shirts and sweat bands that changed colour as you overheated, and today’s breathable clothing, gadgets and web services that are the constant companion to the sporting individual.
One of Caddy’s first moves as CIO of Virgin Active was to invite the digital disruptors inside the doors. Thus Runtastic, RunKeeper, Polar, as well as Microsoft and Google all visited.
“It’s like the mobile phone industry in 2004. No-one then could see the iPhone. It is totally the Wild West and the Internet of Things is a big talking point, but actually over half of our customers have some form of Internet of Things,” Caddy says of attitude to embracing the disruptive forces in his sector.
“My goal is to leverage the Virgin Active brand and to do something clever with the technology, so we are working with the likes of Microsoft, Apple and Samsung, as well as the app market where some of the fun stuff is happening,” he explains.
“Strava does the social and replay elements really well, so we work with them to ensure we remain relevant,” he says of integrating social tools into his organisation. “10% of our market is the elite group of cyclists and runners using Strava, and analysing their wattage output. The really interesting group is made up of those that join in January and leave in June,” he says. Virgin Active is focusing on customer journey information to see how it can keep these customers as loyal service users.
“We want people to be more engaged and more healthy. Giving people an end?to-end journey is the key thing,” Caddy is honest in that the gym industry tends to give a new member “some love for the first six weeks”, but that a lot of customers later leave as the membership didn’t “fulfil their goals”.
“We are a luxury purchase, so we have to demonstrate value. The reasons for leaving are all different, so how do we match the customer journey to ensure they reach their expectations? To not understand your customer is a cardinal sin.”
Technology is enabling Virgin Active to understand that customer journey. Newly refitted gyms in Paddington and Cannon Street, London use RFID bands for members who in return can use the band to enter the gym, open lockers and even purchase food.
“In the connected club, we can build on this journey to get people on to machines, into classes, but also we are able to offer people other forms of connectivity. With supplier Technogym you can Skype while on the machine, so there is great potential for tie-ins.
“The connected club allows us to understand what a customer does; what are their touch points? We can then cater for them and reflect their needs with a library of content.”
But Caddy’s vision of a connected gym isn’t just about the tortuous-looking machines on offer; it includes one of the most important resources Virgin Active has – its people.
“We are beginning to capture some of the knowledge of our personal trainers and can include a nutrition plan, or let a customer know a trainer can offer additional yoga classes? We have over 950 personal trainers in the UK and 800 in Europe. The opportunity is massive and they will all have a story behind their skills. That is something we can use for the customer journey. One trainer I have met is a cancer survivor. He is in his 50s and a personal trainer, and talks about being in the best form of his life,” Caddy says of the personalisation, community and relationship opportunities on offer.
“When I look at other sectors, hotels are getting good at this, as too are the retailers and mobile phone operators because they have a lot of experience of customers jumping to other providers,” the CIO adds.
Like all his peers, Caddy could only embark on the digital journey with robust foundation technology. As this title lands on your desk, he’ll have completed the year-long task of replacing the legacy membership and billing platform, which will simplify many of the business processes at Virgin Active.
“This project delivered a simplified set of business processes across our 95 UK clubs by using the implementation of a single, enterprise-class membership system as a chance to examine all of our operational club and member processes. We have removed paper processes and improved the member experience, and vastly reduced the back-end reconciliation processing that was in place to work with the three legacy systems.
“This means that we can speed up all aspects of our member interfaces from sign up, through to billing and problem resolution. It’s also a simpler, more intuitive system for our staff, and due to the use of eLearning and webinars for rollout, we have managed to capture, share and retain best practice across the organisation,” he told our CIO 100 survey.
“When you’ve sorted out your back office, you can then move on to digital, but the business doesn’t stop,” he says of how he’s tackled both the foundational improvements and the disruptive forces at the same time.
“In a way it was greenfield when I joined, but with a board that now gets technology and they want to do everything at once,” he says of the enjoyable challenge he has.
Caddy has worked with Microsoft as a major partner to Virgin Active. “Microsoft is a sensible choice for our size of organisation. I have worked Microsoft hard and got a good relationship as a result, and that means we should be well-placed to make the most of opportunities. The digital platform is on Azure, the membership platform is SaaS, and that all shows Microsoft is getting its act together. If you buy three of its products, then you get some benefits of scale and that starts to make a good story, and here we have the chance to do that,” Caddy argues.
His other major supplier relationship is with Samsung. Virgin Active, as you can imagine is a large consumer of plasma screens. “We buy so many, I just thought let’s build a strategic relationship and Samsung were an obvious choice as they also have a large mobile product line.
“Mobile is the channel of choice for our members – they are on the move and active, and they don’t want a drawn out traditional website interaction with us. We have not served this channel well in the past, but the “digital journey” project will deliver a great experience for them in 2015,” he says of the increasing focus of mobile within his team.
His department consists of just 70, dotted around the world. Recruitment for the London headquarters, despite being right on the edge of the City, is not an issue he says. “We leverage our brand and people understand that, and we are getting a name as an interesting company to work for, but you’ve got to have a story to sell to them. When I joined I knew I was coming to something less sophisticated,” he says of his move from being CTO and head of enterprise architecture at easyJet.
“EasyJet is like a CIO academy. When I joined, Simon Pritchard (now at Arcadia) was there, as well as Colin Rees (Domino’s Pizza CIO) and Mike Sturrock (DX Group CIO). It is the right size of organisation that gives you exposure in e-commerce operations. It was so commercially focused, it totally changed my outlook,” Caddy says.
He joined Virgin Active in 2013 and is enjoying the similarities it has in terms of attitude to easyJet, but with that Virgin relaxed appeal. Caddy reports to CEO Paul Woolf, who the CIO describes as being an advocate of digital business and the fittest CEO he has ever met. “Paul encourages me to try out classes frequently as it’s the way you get to understand your product and I have certainly got fitter,” he says. Though with three young sons, the music lover probably doesn’t lack for ways to burn off energy.