Why Tula Yoga Studio is passing on Classpass

For the past few weeks Maile's been thinking about whether or not she wanted to sign Tula Yoga Studio up as an available studio for Classpass. After thinking things through, running some numbers and reviewing the Classpass agreement she's decided that Classpass isn't right for her yoga studio.

I'm in strong agreement with her decision, and thought it would be nice to outline the reasons why she's decided not to include her yoga studio on the Classpass network for other studios that are considering it as well.

We've wondered aloud about Classpass before, and we even built a nice little integration for our customers that use them. We're definitely not "Anti-Classpass" the way we are with Groupon, however we do think the tradeoffs are very real, and that the decision to include one's studio on the Classpass network shouldn't be taken lightly. We also believe there are inherent commoditization risks to participating in something like Classpass, and that many studios don't weigh these risks properly.

With this background, here are the reasons why Tula Yoga Studio won't be found on the list of participating Classpass studios any time soon:

They don't pay enough per attendance

Classpass pays studios 50% of the price of a ten pack, which at Tula is $140. This means Classpass would pay Tula $7 for every attendance they send. At present Tula is able to command far more per attendance, and $7 doesn't acknowledge the value that having her studio on their network would give Classpass.

Tula Yoga Studio is valuable, and Classpass wouldn't be paying anything for that value

Below is an image of participating studios in Chicago, with Tula's location highlighted. As you can see, Classpass has no presence in Logan Square at all (which is one of Chicago's hottest neighborhoods) and sparce coverage in the Northwest part of the city in general. How much would Classpass pay for the value of being able to include her studio in their network? $0. 

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The externalities are not accounted for

Classpass operates under the illusion that you can get something for free, which of course you cannot. Their promise is that they simply help you sell your "available inventory" that goes unused. The problem with this is that if you're a regular and there are 15 people in class, you do in fact have a different experience than if there are 25 people in class and 10 of them have never done yoga before. So in reality that "inventory" is being used. It's being used by the full paying customer by way of a more comfortable experience in the studio, and more attention from the instructor. So what happens is your customers that pay full price end up paying yet another price by way of a degraded experience while in the studio. 

Customers that pay full price feel like they're getting a bad deal

People aren't stupid, and they know when studios decide to participate in something like Classpass, and then they wonder why they're paying full price. The regulars at Tula Yoga Studio are too important to have them start to question if they're being taken advantage of.

Tula Yoga Studio's brand would be negatively impacted

Branding is a real thing, and Maile has built a studio with a brand reputation that shuns discounted yoga. By taking this approach, where she has discounts less than once a year, doesn't participate in daily deal sites, and provides discounted yoga by way of her own memberships, she's proclaimed that Tula Yoga Studio is special, and that the way to get discounts with her studio is by joining as a member for $99 per month. By participating in Classpass, she would be undoing years of brand building. I look at the stretch of studios down Milwaukee ave. that participate with Classpass and wonder if the students differentiate the studios from one another.

Tula Yoga Studio doesn't need Classpass to sell $7 yoga

If Maile wanted her studio to start logging more attendances, offering $7 yoga for the occasional class is something she could easily do on her own without the Classpass network. Basic economic law dictates that as you lower the price for something, demand will increase. Should Maile decide that she needed to generate more demand, should could sell a couple hundred ten packs for $70 and call it a day. She doesn't need Classpass, at all, to sell yoga for $7 per attendance.

Negative Impact on Cashflow

Because Classpass collects the fees from their members, and then they pay the studio once per month for the attendances, studios are providing the service and likely paying instructors out on these classes, prior to the cash from Classpass coming in. Compare this with a $70 ten pack that Maile could do on her own, where she would collect all the money up front and the services would be provided in the future, and you see that not only is Classpass offering discounted yoga, but they're injecting themselves into the middle of the cashflow stream, further devaluing their offering.

Material impact causes negative impact, and immaterial impact is pointless

In order for it to be worthwhile, Classpass would need to have a material impact on the overall revenue at Tula Yoga Studio, which right now ranges from $20k to $25k per month -depending on the month. To increase revenue by 10% Maile would need to add about $2,000 to $2,500 worth of classpass attendances every month. At $7 each that's roughly 350 attendances. The problem is that at those numbers Classpass members would account for 20% of student attendances, while only providing 10% of the revenue, and that's IF there's no decrease in current revenue as a result of joining classpass. Add in the additional costs around instructor incentive pay and suddenly the net impact is $1,000 per month, maybe.

But you can absolutely count on the fact that if one out of every five attendances comes from the Classpass network, it would change the feel, energy and vibe of the studio. And for what? For an extra $1,000 in profit? That seems like a terrible deal for her most loyal students.

Summary

I could go on with a few more things ranging from the commitment terms, the exclusivity agreement and other details that we don't think are that great for studios. But what all this really highlights for Maile and I as it relates to her studio, is that joining Classpass makes her studio more like every other studio in Chicago. It makes it harder to differentiate herself and it doesn't help her achieve the ongoing objective of being the best studio in Logan Square.

Ironically, the simple act of not joining Classpass while other studios adopt the platform actually makes it easier to show how Tula is special.

What Classpass does show however, is that there is a very real demand for access to fitness studios of all kinds, and that with the right marketing targeting the right people, a fitness business can not just survive, but thrive. 

Continuing to do a good job marketing, providing quality instruction, staying focused on her core customer, and providing a wonderful experience for her loyal members: these are the things that she believes will continue to allow her to grow her business. 

Offering half off yoga to a group of people that fall outside of her target demographic? Not so much.

Share your experience

We don't necessarily believe Classpass is bad for all studios, and we're trying to learn more about the impact Classpass has had on yoga studios in particular. We'll be interviewing a few people for our podcast next week as well.

If you've used Classpass, or use them currently, let us know what your experience has been like, we'd love to know how it's gone for you!

Email Receipt Customizations

We just pushed out a small change to our email settings that a few of you have been asking for. On your receipt settings page, you can now customize the From Name, Reply-to email, Subject, and now you can also include a custom message on all your receipts. This can be good for people that need to include tax information on their receipts.

When you make updates to the "from" information, we'll also apply these changes to purchase and registration confirmation emails that your students see, as well as password reset emails for your studio.

Thanks to our customers who let us know you wanted these modifications!

The fine line between presence and oblivion

I was riding my scooter into the office the other day.

It was beautiful out with clear skies and leaves in full bloom, the sort of day you really appreciate when you live in Chicago. As I was riding slowly down an alley, looking up at the sky and a few leaves, I thought to myself how great it was that I could be so present to at once be able to have a scooter ride while also appreciating the beauty of the day at hand.

And then all of a sudden someone honked at me and told me to watch out. 

I hadn't been present at all, I had become oblivious. The problem with oblivion is that it can feel like presence, because you can also be hyper focused on something. This has me wondering lately, is there a difference between being highly present and oblivious? Does one require the other? Is it possible to be highly present in one place, without being oblivious in another?

I think the challenge must be balance as it is with most everything.

You simply can't be a present mother or father and a present CEO all at the same time. What you can do is segment things such that you're able to be present for the right things at the right time. This might look like different things to different people, but I think knowing where you're trying to be present is as important as the concept itself, and it's important to think about oblivion is a byproduct of it.

Maybe there are some people who have a total mastery of this. I imagine a Matrix neo-like character able to at once master running a business while feeding children while going on vacation and resting all while working for charity and being a great lover all at the same time.

With an instagram photo to go with it of course.

But for us mortals who have heretofore been unable to achieve this sort of enlightenment, I think it's good to ask:

Are we being present? Or are we being oblivious?

Registration matching now available in the iPhone and iPad applications

I'm super happy to announce yet another update to our iPhone and iPad applications - this time coming in the way of bringing our powerful matching feature into the event registration side of things.

If you follow Tula you know we go out of our way to make it so our customers can interact with their students, without us getting in the way. One of the ways we do this is by allowing people to make purchases and register for classes, without requiring their students to first have an account with us.

While we've had payment matching in the apps for a while, we hadn't yet brought the matching functionality into the registration side of things. Now we haven, and when a new person signs up for class from your website, you can easily add them right from within the apps:

When someone registers for class and there's no email on file, you'll be prompted to make a match...

On the matching page, choose to match the incoming registration with an existing student, or add them as a new person... 

Confirm your selection and the registration will be complete.

We're thrilled with this latest set of updates and you can get the most recent version of the iPhone app here, and the iPad app here.

Blocking the Chasm: How the yoga community slows the adoption of the practice it loves

One of the greatest insights I've learned about business comes thanks to Roger's Bell Curve and the Technology Adoption Lifecycle. This concept explains how new technology products are adopted, the path they go through - from early adopters into the mainstream - and importantly it also explains why some products fail.

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Image Courtesy of Wikipedia

For all products that eventually become mainstream, there is a chasm, and crossing this chasm is the key to becoming mainstream. There are loads of other lessons baked into understanding this adoption curve, and I highly recommend reading more about it if you haven't already.

One interesting thing I've noticed about the yoga community, is that unlike the technology industry where we obsess about this chasm, and we do everything we can to build bridges to help our potential customers cross this chasm, the yoga industry unknowingly puts up barriers to crossing this chasm.

I don't think it's done with intention, and I certainly don't think it's done with ill will, but I do believe that by paying attention to these blocking actions the yoga community can collectively introduce, and retain, a lot more people than it is at present.

While it's true that there are more people practicing yoga in America today than ever before, (in 2012 yoga journal commissioned a study that found there were 20.4 million active participants in America) the rate of adoption seems to have slowed the past few years with estimates seeming to hover around 22 million, although it's difficult to find a study more recent than the 2012 study.

In no particular order, here are the things I see the yoga community doing that slow the growth, and reduce the retention rates, of people practicing yoga.

Students (the customer) are Second Class Citizens

In almost every industry, it is the customer that the industry obsesses about. Tech companies obsess about users and their needs. Sports teams obsess about putting a team together that fans want to see. And the yoga industry obsesses about...teachers, and becoming a teacher.

If you are someone who is very into yoga, who wants to dive deeper into yoga and it's origins and truly strengthen your practice, almost every single option is a road that leads to being an instructor. If you are someone who wants to be a deep student of yoga, but you don't have an interest in teaching yoga, the options available to you fall through the floor.

Moreover, if you are someone who has found you enjoy a great asana class twice per week and no more, there are countless people who will happily talk to you about how you aren't a "real" yogi. The level of disrespect I see directed at people who work in the industry but have chosen not to become teachers is something I am regularly stunned by.

Men are not explicitly catered to and they are often outright banned.

Let me share a little insight with you about men: we too have insecurities and we need help dealing with these insecurities. Do you know that a 45 year old man with a beer belly probably feels as uncomfortable next to a skinny 24 year old woman as a new mom does? I never once thought of yoga as a practice that could be meant for me until my wife opened a yoga studio. Something is wildly broken when that's the bar that the industry has set for introducing someone such as myself to yoga.

81% of practitioners are women, and yet I almost never see an event explicitly designed to bring more men into the fold of yoga. Rarely do I see an intro to yoga for men event. Rarely do I see couples events designed to help women introduce their male partners to yoga. I have come across no fewer than 3 events in the past 6 months that I was intrigued by only to learn they were women only events.

Seeing as how men make up 49% of the population and only 19% of existing yoga practitioners, there is no greater opportunity for the growth of yoga than to introduce it to more men. And yet.

Instagram Pictures of Instructors instead of Students

Maile and I talk about things we notice in the industry all the time, and a main topic of late is how rarely we see pictures of yoga teachers teaching yoga. Seriously, when's the last time you saw a really great photo of an instructor helping someone hold a handstand? When is the last time you saw an instructor doing an adjustment on their student? Generally speaking, when it comes to yoga and instagram, it's all about the teacher and not at all about the student.

Applying these lessons to your own business

Like I mentioned early on - I don't think any of this is the result of malice. It's just that often times people forget that in order to grow an industry, you need to make it accessible to new adopters, and that those later adopters need help crossing the chasm.

A good question to ask is: for every existing practitioner you serve, how many non-practicioners are you working to introduce yourself to? Opportunity is abound.