Fitness is big business in the United States, from fitness trackers to healthy eating to gym memberships and more. And this segment is one of particular interest to subscription businesses because an important facet of the market is to build a long-term relationship with clients as they pursue a healthy lifestyle. That ongoing relationship, as customers become loyal to fitness helpers that continue to serve their needs, is a perfect fit for a recurring value and recurring revenue business model.

The digital market, looking at wearables and apps, tops $3 billion in annual sales, and is on track to beat $4 billion by 2022, according to a Statista forecast. That includes a growing market for smartwatches, fitness trackers, and all kinds of apps, especially calorie counters and exercise loggers. Take a look at digital health and fitness revenue as projected by Statista:

(Source: Statista)

Note that’s just for wearables and fitness apps. Add in gym memberships and healthy food box services for even more. Actually, the fitness club market has been growing — and it dwarfs the digital trackers and apps market:

(Source: IHRSA; Baird, via Statista)

That’s $3 billion for apps and wearables, plus $27 billion for health clubs. I do not have an infographic for food boxes, but let’s agree with market research firm Packaged Facts and call the entire food box industry (not all of it particularly healthy) a $5 billion business. Let’s say half of the wearable revenue could potentially be served by a subscription model … and let’s say that the 2016 data above continues recent growth rates … and that adds up to a back of the envelope total of $35 billion in annual subscription revenue.

For more on the future of the food box industry, see my Feb. 8, 2018 column on the topic.

The trend goes beyond food and exercise, though. The Chicago Tribune has reviewed wellness apps designed to help consumers with mental health, yoga, and meditation. There are subscription boxes just for fitness clothes. Disorder-specific apps remind patients to take medication and monitor health status; IEEE reports that ongoing research is evaluating the effectiveness of these apps, not to mention the trend in telemedicine. On the lighter side, Bustle reports on 6 Apps That Can Help You Drink More Water. It’s probably worth noting that there are even “digital wellness” apps designed to wean you off your app addiction.

Fitness-focused Americans are continuing to seek ways to enhance their health, but what are they looking for, and why?

(Source: Research Now; Website (Mobiquity); eMarketer, via Statista)

The big three reasons to use health-related apps are for tracking, for awareness, and for motivation. It makes sense, therefore, that younger people are more likely to use them, and older people are more likely to be able to imagine themselves using them:

(Source: Statista 2017 study)

Bureau of Labor Statistics data show that about 20% of US adults (15 and up) engage in daily exercise. But of course, the market — an aspirational market — is much bigger. How are subscription services marketing to and tapping that large audience?

Pay attention to retention. Blue Apron focused on new customers and scaling, but after the company’s IPO, poor retention caused big problems, as GymInsight reports:

• A recent Harvard Business Review article investigated and found that the company had been running on a high-speed treadmill of signing serving and losing customers; retention was very low, cutting back on marketing hit revenue hard and fast. The philosophy of Blue Apron executives had been to drive growth, grab the new members and figure out the rest later. Later came and it wasn’t pretty. The drop in value for Blue Apron is a near-perfect example of how sensitive subscription-based businesses are to changes in retention. Blue Apron is still struggling to turn around, and it looks like they learned a lesson at a high price; neglecting retention is the most significant hazard to avoid when you depend on subscriptions.

In a crowded market, find a way to stand out. There are so many apps and websites and fitness opportunities out there, it makes a difference if a service can offer something unusual or even unique. For example:

• TechCrunch reports on an app that uses AI to plan your fitness regimen.
• The Harvard Business Review explains how cycling app Strava built itself into a social network and engaged users emotionally — even allowing them to “race” against each other.
• CNBC reports how Aaptiv connects users with human coaches.
• Similarly, here’s a diet food box option that offers subscribers personal consultations with dieticians, per Us Magazine.
• Gamification is a great way to increase engagement, per Yu-Kai Chou’s Gamification blog.
• The increasingly popular Sweatcoin app lets users redeem points earned walking for actual goods, as covered in The New York Times.

Despite intense pressure to bring products to market, treat user data carefully. Engadget reports that the Polar fitness tracker could be abused to reveal the locations of the homes of soldiers and intelligence workers. The negative press from a thing like that is bad enough, but when your product actually hurts national security and puts soldiers at risk, well, that’s … much worse. The same thing happened with Strava, so this is not an isolated incident — and that goes for women who feel unsafe when strangers see and “like” their work-out route, too.

Start with a devoted super-fan base. Per that Harvard Business Review article, a user base of engaged clients who love the product is invaluable.

• You need a group of users who love your product. We call this the “100 lovers strategy.” The concept: As a starting point, get 100 people to love your product. … It’s better to have 100 people that love you than a million people that just sort of like you. … Your 100 lovers must feel that they are contributing to the creation of a community. The lovers should be able to actively shape the community through feedback loops, which generate key insights.

Position your product to serve a specific niche. For example, fitness wearable Whoop managed to establish itself as a pro-level, luxury product “targeting elite athletes and Fortune 500 CEOs (both are part of its marketing) with its sensor-filled, nylon activity tracker and analytics platform. Whoop’s been charging professional and collegiate sports teams anywhere from $1,000 to $2,000 per player for access to the company’s in-depth stats tracking,” according to Wired. But three years after establishing itself in the niche, it is now offering a subscription service for $30 per month, with a six-month commitment required. According to Wired, it makes sense:

• A subscription-only model for a wearable and its software platform is also a way of pushing people to actually wear the wearable for an extended period of time. Data has shown that a significant number of people ditch activity-trackers within six months, and there’s plenty of anecdotal “junk drawer” evidence too. But [founder and CEO Will] Ahmed insists Whoop has high levels of sustained engagement, with over 50 percent of users remaining daily active users after a whopping 18 months of wearing the band.

There is a reason that fitness clubs have done well with a recurring payment model for many years, explains the National Council for Certified Personal Trainers:

• The subscription model remains the most popular fitness business plan. … For the client, the subscription business model provides access to the offerings of a studio for one fixed price (e.g., weekly dues, bi-monthly dues, monthly dues, annual payment). Clients feel a degree of security with this model knowing they will not have to dip into their wallet every time they want to participate. For the client, signing a contract forces them to make a greater commitment to leverage their investment. If they don’t use it, they lose it. As a result, the client is more likely to engage in the activities offered by the studio.

The gym membership business is huge and established, but not that sexy in a digital age. The high-tech options — from wearables and apps to subscription boxes and fitness content providers — are smaller but hold the potential for huge growth. Pymnts.com sees a special synergy there:

• Like traditional gyms, digital fitness services have the advantage of offering products through a model for which many consumers have demonstrated they’re willing to pay a monthly fee. … Consumers are already primed to associate the subscription business with a health and fitness experience.

Insider Take

Building on the old-fashioned gym membership experience, digital subscription services can offer more, from content (like workout videos) to coaching to game-like goals and social interaction. The business is lively, competitive, and full of innovators and disruptors. As Americans continue to focus on fitness and wellness, there’s no reason to expect that growth trend to slow down.