Why are some yoga studio owners recently turning away Class Pass clients and choosing to turn off the Class Pass API integration in their Mindbody system?

(To watch the video skip to the bottom)

Since its inception in 2013, Class Pass has been a controversial player in the wellness industry, especially in yoga studios.

But after MindBody Online's move with dynamic pricing, and the movement in Yoga, Pilates, and Barre studios towards severely limiting the classes that are available to class passers, Class Pass has been on it's heels trying to figure out how to pivot....

Last week they did just that, and in a big way.

The crazy part is that most business owners were not even notified of these huge changes and were left scrambling to figure out and deal with the repercussions.

And some studio owners are taking drastic measures.

So, how does the “new” Class Pass affect your studio?


The "new" Class Pass has essentially 5 major elements:

  • Switch to a credit system
  • Addition of Premium services
  • A la carte services
  • On demand video classes
  • Integrations with other fitness and wellness industry management programs


As a Yoga, fitness, or wellness business owner here's what you need to know…


Switch to a Credits System

Basically Class Pass now provides users with credits instead of classes, which they use to pay for visits to any Class Pass partner.

This is a big detail because it allows Class Pass to "charge" users for basically any service. Soon class passers will be able to book services beyond just fitness - salons, cooking classes, chiropractors, even restaurants are all in the realm of reality - because class pass can now place different values on specific services.

Previously, a visit to a Pilates studio or a boutique spinning class (with a drop in, in the $30 range), or a yoga class at a community gym (with a drop in usually below $20) would use the same 1 class in class pass.

But the new credits system allows for a different number of credits to be charged for a class.

This same charge difference could also be employed within one single business to charge differently based on more or less popular class times.

This allows them to not only charge more to their customers, potentially without them even knowing it, but expands their product offering capabilities.

The other almost completely un-talked about detail here is that this is a movement towards intangibility.

But what the heck does that mean?

Basically, studies have shown that the less tangible an expenditure is (for example using a credit card vs. physical money), the more buyer confusion comes with it and people tend to spend more.

With Class Pass’s credit system, users will experience a new level of "ease" spending their money.

Users will pay for Class Pass credits with a credit card, then use credits to purchase services, which will be priced dynamically based on value and demand.

And when users run out of credits they will be able to re-up their credits at any time (instead of waiting for the following month) or simply add an a la carte class on to supplement their practice.

These added levels of intangibility, and muddled understanding of what amount a class passer will pay for a service, will certainly calibrate in Class Pass’s favour - both in what their customers consume and in how they pay out your business.

There are multiple studies on the concept of intangibility, but recently some Ted Talks like this one break it down nicely.



Premium Services

Premium services is a huge shot at MindBody's dynamic pricing and an attempt to create a loop hole in the control that partner studios have over when class passers can book classes.

(Not to mention a pretty well disguised way for them to charge their customers more.)

With premium services, class pass users will be able to book into classes that are usually blocked out by studio partners (often prime time slots), or into classes when all the allotted class pass spots have already been filled, or when they've used up their limit of classes at that studio that month.

Users will have to pay a higher credit rate for those spots, but it will still be less than a drop in at that studio.

More importantly for business owners is the fact that with premium services, it will be possible for class passers to book up all available spaces in your busiest times slots.

The potential negative repercussions from this are massive.

This has the potential to severely impact actual members of that studio by limiting their access to the best classes.

And although the business will receive a higher payout rate on that class (usually around 25% more), it will certainly be less than they would earn from a drop in or an existing member.

But in my mind, the biggest impact here is that it will now be even more insanely difficult to convert class pass users to an in-house membership.

From the buyer’s perspective, the advantages of going on an autopay will be slim to none against everything offered by the new Class Pass system.


A la carte services

I would call this a stroke of business genius on the part of Class Pass.

The concept is simple in nature: allow people WITHOUT class pass memberships (or those who have used up their monthly credits) to purchase a drop in class at any Class Pass partner studio.

They'll pay a premium rate (vs. using regular class pass credits) that will be dynamically priced based on the popularity and availability of that specific class.

But it will almost certainly be less than the drop in fee charged by the studio.

This does a few things:

First, it places Class Pass between the customer and the business. They get a piece of the pie, whereas previously they probably wouldn't have.

Although this seems like a real dick move, you can’t deny the brilliance.

These days in business, we are trading in the currency of attention. People’s time - or their perception of it - has never been more valuable. Attached to this concept is the idea of status:

If a group of people you've appraised as having an important or cool status are all doing something, then you are significantly more likely to participate as well.

If all of your friends are using Class Pass for their fitness and tell you about how great it is, when you go to purchase fitness, where are you gonna look?

If you’re not interested in signing up for a monthly fee for whatever reason, previously Class Pass wouldn't have been an option for you.

With a la carte offerings, now it is.

Unless there is a massive, swift, and consistent backlash from Class Pass partners, it's feasible that Class Pass could become the standard in how anyone books fitness and wellness services in certain markets.

Don't think it's possible? Have you heard of AirBnB?

Interestingly though this a la carte Class Pass offering kinda proves MindBody's dynamic pricing model.

The current consumer psychology tells us that people default to the lowest or no-commitment option most often, but they still want a fair price (basically anything under the highest price).

It will be interesting to see how this battle to offer discounted, no commitment drop ins plays out. Mindbody's consumer app is way less user friendly, sexy, or status-raising, that's for sure.

And keep reading because when you consider the new integrations Class Pass has, the potential future integrations, and the fact that Mindbody will never be able to integrate their consumer app with non-Mindbody companies, there's little reason to think Mindbody's dynamic pricing will be nearly as successful as Class Pass’s a la carte option.



On demand Video Classes

To say that video fitness is up trending (and has been for awhile) would be a massive understatement.

And this trend isn’t going to stop anytime soon.

For a few years now I’ve been predicting a blending of online and offline in fitness offerings becoming the new norm. It may not be here yet, but it’s most certainly on the way.

Some predictions for 2018 have online / streaming / video / on demand fitness growing 100 – 400%.

Online may soon over take offline fitness.

I’ll have to write another post to go in depth on this topic, but for now check out Peleton, Flywheel, or CodyApp as examples.

On trend with this, and in an obvious effort to get a piece of the online pie, as well as an intelligent way to increase brand value, Class Pass has launched on demand video fitness classes.

Now Class Passers can literally stay at home to get their fitness in :0

For me, this is fascinating but also disconcerting.

Why would anyone join a yoga studio’s membership program if they can get cheaper high quality yoga on their 110-inch, environmentally sound LED, flat screen T.V. and hear it through their crystal clear Bose surround sound system?

Well...

They might still want the individual attention of an instructor and the shared energy of an actual class.

Yep.

And that’s where Class Pass credits will come in super handy.

Eff.

It’s brilliant.

Now don’t panic. There will always be a desire and need for brick and mortar studios - I mean that’s what Class Pass’s product really is.

But you should be aware.

The big thing this highlights is that the market for on demand video yoga classes or live streaming classes is here, and is NOT different from the market for brick and mortar fitness classes.

The detail being missed by most brick and mortar studios is that the clients purchasing online classes are NOT DIFFERENT than the clients in our studios.

What most of us on the ground are experiencing is a drop in average attendance in classes due to a drop in average practice frequency in our studios by the clients.

But this does not indicate that people are practicing yoga / pilates / HIIT classes any less. They are just diversifying where they practice, and are therefore more reluctant to commit to a membership at any one business.

Without going down this rabbit hole, this diversification is the result of multiple things, but most notably the fitness trend of our time: diverse functional training.

But it’s also a result of our lack of (or perceived lack of) time to devote to fitness and health.

All of this has led to the uptrend in on demand fitness, and Class Pass easily establishing a following over the last five years.

As a brick and mortar fitness or yoga studio, if you really want to play the game right now, I’d be seriously looking at expanding your product offerings to include online classes.

To be clear though, the objective is better retention of your in-house clientele, not necessarily to launch a new business vying for a major online presence.



New Integrations

Class Pass like so many other programs has had one big hindrance – MindBody Online.

Since its public offering, MBO had not only increased prices to studios but also to its API integrated partners. I am speculating here, but that probably includes Class Pass.

Class Pass has until recently been at the mercy of MBO. It’s certainly been a fruitful relationship for Class Pass but not a balanced one.

For all of the aforementioned programs and future potential growth metrics to really grab hold Class Pass needed to move out from under MBO and onto a more even playing field.

They needed to diversify their offerings.

And so we arrive at new integrations.

At the moment, Class Pass lists integrations with MindBody Online, Pike13, and Zingfit.

But it would blow my mind if they weren’t already talking to Wellness Living, Punch Pass, Zen Planner, Tula, Karmasoft and the like.

And this is only the fitness industry. In one interview Class Pass founder Payala Kadakia clearly states that she see Class Pass as a life wellness brand and that in the future that may include services beyond fitness.

Imagine being able to use credits to book any “class” like cooking or language classes for example.



Okay But What Now?

A couple of important notes are that some studios are experiencing bookings into classes via Class Pass and their premium services that they have not given permission for!

It seems that Class Pass may be trying to pull a fast one on some businesses.

This highlights the importance of being diligent as a business owner to always check in on your agreements with third party companies periodically and be sure they are abiding by your agreed upon terms (which you of course have in writing, right?).

In another case when we looked into payment details, Class Pass had shorted one studio’s payouts for months!

The most important detail here is that as a studio owner you still hold the majority of the control.

Class Pass’s primary product offering is you!

Check in on your situation and if necessary, renegotiate the situation.

Seriously ask yourself – do we need Class Pass? – because maybe you don’t.

If you do plan to use Class Pass, here are some strategies you should put in place immediately:


1. Studio owners need to understand that Class Pass is a marketing platform, not a way to sell your classes.

This means you need to have a special up-sell feature for people who come in on a Class Pass!

In this unique case, a supplementary pass of 3 to 10 classes with a long expiration such as 1 year often works best. Of course if you can get them onto a membership like your autopay, that is always the better.


2. Restrict which classes Class Passers can access, such as you most popular class times or favourite teachers.

BUT

Have one class in that time slot or with that teacher available for Class Passers on occasion (no more than weekly), so they get a taste. This will support your up-sell offer.


3. Have a pipeline / funnel / flow / plan for Class Pass people in an effort to retain them onto one of your pricing options. You may even have more than one so you can segment people who come in on Class Pass based on if its their first time at your studio or if they are a returning Class Passer.


4. Always collect all the information you can from Class Pass clients when they arrive at your studio so you have their info for future marketing and reporting.


In a worst case scenario or if you’d like (or need) to get Class Pass’s attention with haste, there are two aggressive actions some business owners are taking:

- Turn away Class Pass students and contact any with upcoming reservations (in classes that you’ve not agreed to make available) to say that they will not be able to attend the classes and that they should contact Class Pass directly as the problem is on their end.

- Turn off your Class Pass integration in MBO. This will shut Class Pass out of your system.

To do this go to:

Home > Manager Tools > API Integrations > Remove Integration.


It looks as though Class Pass will most certainly continue to be a force in the wellness industry so love ‘em or hate ‘em, you’ll need to figure out the best way to work with or around them.

In the end, you should educate yourself and make a decision about your relationship with Class Pass.

But it’s much better to focus internally on your business and make sure each facet is working optimally rather than focusing too much on external factors like Class Pass.

All of these changes amplify the necessity of wellness studio owners to increase their business know-how to stay relevant in the current market.

It’s one thing to have an incredible product, but in this day, a great product also needs to be coupled with great internal marketing, enthusiastic staff, and real authenticity to ensure that your wellness business wins.

So are you staying with Class Pass?


Be sure to share this post! #yogalove


Watch the video here: