Just over a year after leaving Merlin Entertainments to become CEO of David Lloyd Leisure, Glenn Earlam talks to us about how he is transforming the company’s customer experience and the results they can already see…
Q: In the leisure and tourism market, the experience is the product. What do you think brands in other sectors could learn from the leisure industry when developing their customer experience?
My answer is to be obsessed with the product.
Prior to my roles at both Merlin Entertainments and here at David Lloyd, I was an FMCG marketer. When I marketed Tango - as great as the product was and as much as I enjoyed the marketing - it was pretty similar to Fanta and own label Orangeade.
Leisure is different. It has an advantage because the products tend to be much more clearly differentiated and I am very clear about where we are trying to stand out.
Q: What is the most important aspect of transforming and improving customer experience?
The biggest impact is made through embedding the right values. At David Lloyd, everyone was involved in the creation of those values.
But they have to be right - rooted in improving the overall experience for the customer. Providing you properly embed these - which means involving everyone in their creation - there is a good chance you will genuinely make a difference.
Q: Is the process itself as important as the values?
Arguably more so.
It is about whether every single employee feels a genuine sense of ownership. If every employee knows what they contributed to that process, they will embed those values and their behaviour will change.
If you just involve a couple of hundred people at the top of the organisation and say to the rest of the company, ‘here are the new values’, well, good luck to you…
Q: What do you think are the biggest challenges for company CEO's in terms of delivering business growth and improvement through the customer experience?
The biggest challenge is time.
To deliver real improvements in customer experience you have to truly involve and engage the front line team members. That is a pretty all-consuming process.
When we were rolling out the many iterations of David Lloyd’s ‘visions, values and strategies’, we had to continually adapt and change it, informing everyone where we were in the process.
It is very inclusive and involving, and you have to be 100% focused on it.
The process is crucial - if you get it wrong you will wander into David Lloyd clubs on a dark Tuesday afternoon in winter and say to people ‘what do you think of the values?’ And they will look at you blankly and say, ‘what values?’
It has to be done in the right way.
Q: When you joined David Lloyd as CEO what did you see as the biggest opportunities for the company?
The two biggest opportunities were to improve both the customer experience and the knowledge and awareness of the brand among our target audience.
When I started at David Lloyd, lots of people within that audience had a club just round the corner but didn’t know it was there. And prompted brand awareness within the core target audience was 59%, which was way too low.
So there was quite a big push to tell more people about the brand, which culminated in a TV ad that aired in August of this year. There was also a whole series of local marketing initiatives to try and tell people we were there.
Following this activity, prompted awareness has risen to 77%.
Q: And the biggest challenges that faced you?
The organisation was very centralised.
They would eschew edicts about how things were to be at the club, yet this is a big organisation with 94 different clubs in lots of locations with lots of different types of members.
I’m not sure that a solution devised centrally in Chelsea is going to necessarily work as well in Knowsley in Liverpool, for example.
Members in different regions are quite different types of people each requiring different things from their health and fitness club. Yet we were trying to deploy one size fits all.
What we needed to do was localise the organisation. Culturally that was quite a big change.
More broadly, there was a lack of direction about where we were going. That was quite a big challenge and one which culminated in our new ‘vision, values and strategies.’
It was quite a different way of doing things than before.
Q: What were the key things you addressed straight away?
The only quick hit was getting the right senior team in place.
We made a few changes immediately and then went straight into the process of setting out our new vision, values and strategies.
Working closely with Brand Vista, it took about seven months from beginning to end.
Q: Can you outline what changes you have made at David Lloyd in terms of business improvement and customer experience, and what insights informed these changes?
It comes down to lots of little things.
As a consequence of being so centralised, the organisation was not particularly good at listening to what customers might want. It was also poor at sharing insights and feedback among the many different clubs.
A simple example of a change that every club made came as a result of the 'freedom to succeed' value we implemented. This was designed to give clubs some autonomy - within a broader framework - to respond directly to what their members wanted and put new initiatives in place.
Our staff started to understand that they now had the ability to listen to members and act on it.
One day I visited the Kingston club. And following a conversation with several members, one of our young guys had the idea of putting a large jug of fresh water just outside the gym every day, flavoured with lots of fresh fruit.
It was a lovely idea and it wasvery member centric. He then wrote a note to the transformation group and, without us issuing an edict, every club had implemented it within about two months.
That is what we want: things that come out of conversations with members, and the sharing of individual club initiative with other clubs.
Q: Is it a challenge to encourage such freedom among so many clubs yet ensure that the David Lloyd brand remains consistent?
Yes it is. That is why we have a framework to reference, which gives guidance.
Some of that framework is quite broad. For example, we want to improve our employee engagement scores or our customer service scores. But some of it is quite specific, such as ‘this is the brand logo, do not deviate from it.’
I have said all along that when you give 94 separate clubs freedom, the central people will turn up at those clubs sometimes and go ‘really? why did you do that’. You have to educate people and explain why something might not work well, while supporting them. If you kick them you risk destroying something you have worked very hard to create.
It is a tricky balance and we talk about it endlessly.
Q: Do you think most CEO's understand the importance and value of investing in the customer experience, and know how to deliver such change?
My experience of talking to CEOs in the leisure industry is that they seem pretty tuned in. If they aren’t tuned in you have to question whether they will survive in the long run.
Do they understand what it takes to actually deliver that change is another question.
My intuition is that fewer CEOs actually understand that...
If you want to go in a new direction it will take several months, it will involve every single person in that company, and it will demand the collaborative creation of a new set of very robust values.
I think there is less awareness on that front.
Q: Why was it necessary to bring in external help to improve the David Lloyd customer experience?
I have known Gary (Moss) at Brand Vista for a long time. He is a genuine expert in considering what, for us, we articulated as ‘vision, values and strategies’. He has a lot of experience in that area and he has also worked across numerous different industries.
I knew that if we were going to try and develop our core values and ensure that they truly differentiated us and were owned by the team, we needed to work with an expert.
I worked very closely with Gary throughout the whole process.
Q: How did you ensure you got buy in and commitment from the rest of the board and the senior management team to both the need for change and the changes needed?
The first meeting involved about 30 of the management team over a two day period. We set out a vision and the management had two days to pick it apart and feed back to me, so that we could adapt it accordingly and present it back to them at the end of the two days.
Gary sat next to me during that time. He is a great wordsmith and is very skilled at crafting people’s thoughts and ideas into a formal structure. He helped me with the micro detail, as well as applying his macro experience about what would be truly differentiating for David Lloyd as a brand.
This was followed by another two day event with about 160 of the management team. Then 94 separate management meetings for each club were held, where General Managers engaged with their teams about what we had created.
Q: Were there any divisive ideas and if so, how did you manage these?
The feedback wasn’t all consistent.
Sometimes half of the group are saying ‘go left’ and the other half are saying ‘go right’.
In addition, we have introduced a value called ‘Edge’, which is about facing up to tough decisions and not doing the easy thing. I felt David Lloyd really needed it - the company wasn’t facing up to tough calls. Instead, everyone wanted to get on with each other and therefore they sometimes took the easy route rather than the right route.
The boat needed rocking.
Yet I don’t think the majority of people wanted this value, so in that particular instance I said, ‘just trust me on this’.
As long as you are doing that on the minority of things and you explain the rationale, people are supportive. So with the majority of issues, most of what people wanted and the essence of what they were suggesting was articulated into words and developed by Gary and myself.
Q: How have you engaged the rest of the business and got everyone behind your vision and change programme? What are the challenges in doing this?
At the very beginning, I visited as many clubs as I could and sat down with the General Manager of each one. I asked them what their members wanted, what their staff wanted, and how else they felt the organisation could be improved.
By the time I had got round 30 or 40 clubs I was getting pretty consistent feedback.
I then began crafting that feedback into a direction, identifying the things that seemed to be important. When I first presented it to the management team, the background presentation consisted of about 100 quotes from the General Managers. Those quotes were the starting point for the direction of the company, and that direction got crafted into ‘visions, values and strategies’.
The last, and arguably the most important, part involved each of the General Managers delivering it to their teams and asking for their feedback.
Q: What business benefits have you seen since implementing your visions, values and strategies?
It’s going really well. The key things we look at are:
Employee engagement, which has improved a fair bit
Customer service scores, which have improved markedly
Attrition scores, which have already dropped from 36% to 32% in the space of a year. Our target was 30% by 2018, so we’re pleased.
Profits have also improved - we have seen an uplift in the region of 20%.
Q: What is the most important lesson you have learnt about getting customer experience right in the leisure sector?
In leisure, the experience has to be delivered through people.
So, above all else, you have to win the hearts and minds of your own team. If you don’t, you will fail.
As an FMCG marketer I would have been obsessed with David Lloyd gyms having the right look and feel. But while that stuff is important, it will never deliver a great experience unless you have the engagement of your people. I wouldn’t have thought that 20 years ago, but it is what experience has taught me.
Q: Looking forward, what's next - what are the most important developments you are working on in the near future?
It’s working well for us against all of our key strategic criteria, so the logical next step is to open more clubs and accelerate that pipeline of openings. That is what we are turning our attention to now.
Q: Looking further afield, what do you think will be some of the key challenges for the leisure sector in the coming years?
One word: competition.
There is an awful lot of competition from an awful lot of places in the leisure market. Competition for David Lloyd could be anything from shopping or the cinema, to a walk in the hills or the latest video game. There is an ever growing amount of competition and it is growing in quality all the time.
The answer is to keep innovating, keep improving, keep listening and never be complacent.