Les Mills International

Putting fun into working out is proving to be a profitable business for Les Mills International (LMI), with around 5 million people in 11,000 fitness clubs in more than 70 countries jamming, punching, stepping and pumping to its LES MILLS™ exercise-to-music programmes weekly.

LMI’s goal is to become one of the world’s top five health and fitness brands, as recognisable as Nike or Adidas. It’s a goal the Auckland firm is on track to achieve by 2015 says CEO Jill Tattersall, as it expands its global reach and adds to its product range.

LMI distributes its exercise programmes and supporting management, marketing and instructor training systems as an integrated group fitness solution for health and fitness clubs. The clubs pay a monthly licence fee to a local LES MILLS™ distribution agent, a portion of which is returned to LMI.

In ten years Ms Tattersall says LMI has achieved unrivalled penetration of its target market of full-service fitness clubs, raising penetration from a zero base to more than 30 percent in key European markets and 80 percent in Australia.

“The phenomenal thing is the way gym members all over the world respond in a similar way to the exercise experience we provide. Our programmes are now found in North and South America, across Europe and Asia, even pockets of Africa.

“The programmes are not only fun but effective, with people often amazed at the results they achieve.”

LMI has developed eight branded programmes, which go by names like BODYCOMBAT™, BODYSTEP™, BODYPUMP™ and BODYJAM™. They are delivered by motivating instructors, with the choreography and music renewed quarterly, a big factor in the growth of LMI’s customer base, says Ms Tattersall.

Clubs can sign up for as many programmes as they wish, with the current average of 3.4 programmes per club a further indicator of LMI’s success.

Ms Tattersall says while fitness clubs sometimes struggle initially with the notion of paying a licence fee for something they think they can provide at no cost, they quickly change their minds when they see the positive response of their members to the LES MILLS™ programmes – and the impact of the LES MILLS™ system on their bottom line profits.
 
LMI’s network of international agents is critical to its performance. As well as marketing and distributing the programmes, they provide ongoing customer support, instructor training and education along lines prescribed by LMI. Agents are usually already running successful businesses in the fitness education and services sector and have good distribution networks into fitness clubs.

Typically, LMI appoints one agent in each market, a model that has worked well for it in almost all its major markets, with the notable exception of the United States – easily the biggest fitness club market in the world.
 
“We entered the United States in 1997, and as we did in other major markets appointed a single agent,” explains Ms Tattersall. “In hindsight, given the size of the market, that wasn’t the way to go and by 2004 the results we were getting were only a fraction of those we were seeing in our other markets.”

LMI decided to start over in this critical market. It has appointed six regional agents and after a bedding down period, Ms Tattersall says the United States is now back on track. “Most importantly, we have laid the foundations for the kind of growth we have experienced in other markets and we are starting to see that happen.”

Recognising the huge potential market of California, LMI has taken ownership of the distribution agency in a joint venture with its Dutch distribution agent. It has also taken over direct distribution in the Nordic countries and is achieving significant extra benefits there in terms of revenue and market share.

LMI is also capturing additional value from its business in other ways, such as establishing subsidiary companies to supply Les Mills-branded clothing and the licensed music used in its programmes.

The company relies heavily on research to guide its business strategy, both in terms of market expansion and product development. The culture in the Auckland office, where it has 52 staff, is big on innovation, with the tone set by the entrepreneurial company founder Phillip Mills.

“In the past year, almost 10 percent of our programme sales have been in products that have been in the market for less than five years,” says Ms Tattersall.

The latest success to come out of LMI’s innovation pipeline is BODYVIVE™ - a low-impact programme for babyboomers, which responds to ballooning rates of gym membership among people over 40.

Contact: Jill Tattersall, CEO, Les Mills International, phone 366 9900, email jill@lesmills.com, or Vaughan Schwass, Marketing Director, email Vaughan@lesmills.com, www.lesmills.com