“Start-up’s in India can list without IPO’s”: Angel Funds can invest only in start-up’s up to 3 years old|by: Sainul K Abudheen | VC Circle

Securities market regulator, SEBI (Securities and Exchange Board of India) has come with significant guidelines for the “Start-up Ecosystem in India”, boosting liquidity prospects for early-stage investors by allowing start-ups to list without IPOs but has proposed certain restrictions on angel funds which may affect their investments.

The proposals, some of which have been talked about for a while, were cleared in a board meeting of SEBI on Tuesday. However, SEBI did not give a timeline for the implementation of the new decisions.

 sebi

Start-up listing :

SEBI noted that lack of exit opportunities for the existing investors and restricted access to new investors is one of the problems faced by start-up’s and SMEs. To provide liquidity for angel investors, VC firms and others, it approved the proposal to amend regulations to permit listing of start-up’s and SMEs in a separate Institutional Trading platform (ITP) without having to file for IPOs.

This would be different from the existing SME exchange platforms of BSE and NSE which allow firms to list with relatively laxer regulations. SEBI said such firms shall be accessible for investment to the ‘informed investors’ only and it marked the minimum amount for trading or investment on the ITP as Rs 10 lakh. These companies shall also be exempted from the requirements to offer up to 25 per cent of their stake to public through an offer document in order to get listed. This would allow such firms to list without IPOs and do away with the expenses associated with it.

However, SEBI added that such companies will be able to only make private placements and not public issues. This would create an institutional trading market for shares and other convertibles of startups, which can potentially bring more investors beyond angel investors and VC firms who have access to investments in such firms.

Standardised norms of entry for companies, eligibility criteria, continuous disclosure requirements, simplified exit rules and corporate governance norms will be prescribed separately, SEBI said.

According to Sanjay Vijayakumar, an angel investor and co-founder of MobMe Wireless (which is in the process of listing in an SME exchange), the decisions will help bring in more financial discipline much early on for entrepreneurs.

“In my opinion, along with HNIs, the platform should be open to working professionals as well since there are many young professionals who understand the Internet/mobile medium but are not HNIs. The next generation of youth has a higher risk appetite and they would be willing to invest under Rs 5 lakh in a startup,” he said.

Vijayakumar said the current SME exchanges call for 25 per cent of equity dilution which was a dampener. “In most cases, the startups would want to dilute less, raise what is needed, increase the valuation and then raise more money,” he said.

Vijayakumar explained that a positive spin to listing is that it can assign a market cap for the company and the shares can then be used as collateral as well. “This will help in unlocking value of shares in early stage itself as government funds give out loans at soft interest rates with shares as collateral, he said.

One of the key features of an IPO-less listing would be cost saving from the process of going through an IPO. This additional platform may also put pressure on the associated costs of listing on an SME exchange.

Mahesh Murthy of Seedfund said, in theory the SEBI proposal to allow startups and SMEs to list on an ITP without an IPO is great as it allows firms to divest less than 25 per cent and discover a price for their stock so that raising the next round though private placement will have fewer debates on pricing and valuation.

“But in practice, I’d like to see this market of HNIs and others on the ITP. I am not sure it’s a big market of buyers right now. For an ecosystem to work it needs not just sellers but buyers too. There will be hundreds of sellers. But where are the buyers?,” he asked.

Angel funds : 

The market regulator also came up with guidelines for angel funds and angel pools, bringing them under the ambit of Alternative Investment Funds (AIF) regulations. Given the smaller size of such funds compared with other VC firms, it categorised them as separate from VC firms but put such early stage investment funds under category I of AIF regulations.

SEBI said individual angel investors shall be required to have early stage investment experience/experience as serial entrepreneurs/be senior management professionals with 10 year experience. They shall also be required to have net tangible assets of at least Rs 2 crore ($330,000) while the corporate angel investors shall be required to have Rs 10 crore net worth or be a registered AIF/VCF.

For angel funds, the regulator prescribed a minimum corpus of at least Rs 10 crore (against Rs 20 crore for other AIFs) and minimum investment by an investor into that fund to be Rs 25 lakh (may be accepted over a maximum period of three years) against Rs 1 crore for other AIFs (such as larger VC firms and private equity firms). It added that the continuing interest by sponsor/manager in the Angel Fund shall be not less than 2.5 per cent of the total corpus or Rs 50 lakh, whichever is lesser.

SEBI also put separate riders for angel investments: they shall invest in firms incorporated in India and are not more than three years old; have a turnover not exceeding Rs 25 crore ($4.2 million); are unlisted, not promoted, sponsored or related to an industrial group whose turnover is in excess of Rs 300 crore and have no family connection with the investors proposing to invest in the company.

Further, investment in an investee company by an angel fund shall be not less than Rs 50 lakh and not more than Rs 5 crore and shall be required to be held for a period of at least 3 years.

This makes the guidelines restrictive which may affect such investments. This is especially so with respect to the requirement that angel funds to limit their investments to firms which are up to three years old. Though much of such investments happen in the early life cycle of a firm, it would take out access to such angel funds by firms whose founders managed to bootstrap for the initial years.

Such Start-up’s would need to pitch to larger VC firms

A Harvard Economist’s surprisingly “Simple Productivity Secret” |by: Chip Cutter |LinkedIn

It’s one of the most common complaints in the professional world : ” Too little time”..

Workers who log 60-plus hour weeks gripe that they don’t have enough room in their schedule to even tame their in-boxes, much less think about big projects in some creative way.

“But time isn’t the problem”, says Harvard economistSendhil Mullainathan. The ultimate barrier to success is a shortage of mental ” bandwidth,” OR the ability to focus on a task in the moment.

Mullainathan’s research focuses on ” scarcity”, and how humans respond when they have a shortage of something — be it money, food or time. He presented his findings, Thursday at the “Annual Aspen Ideas Festival”, along with his research partner, Princeton psychologist, Eldar Shafir. 

What they’ve discovered is that shortages, lead people to make poor decisions. That’s because the brain can only process so much.

The problem extends across income levels. Busy professionals fail to schedule their time in efficient ways for the same reasons low-income people fall for predatory lending schemes. They’re distracted, Shafir says.

Take an example from your own life : If you’re thirsty, and desperately want water, it’s hard to think about anything else. If you’re low on money, budget concerns frequently pop into your thoughts.

The same is true in the professional world. A lack of time isn’t the issue; a lack of focus is. 

Mullainathan’s own productivity breakthrough came when he dropped his cellphone in a toilet.

That night, he went to dinner with friends, and found he had a surprisingly fun time. His friends didn’t get more interesting. The food wasn’t better than usual. What changed was that he didn’t have his phone.

That meant he couldn’t receive potentially bothersome emails or text messages before or during the meal. “My bandwidth for those two hours was focused on the thing I wanted to be focused on,” he says.

Since then, he’s made other changes. He no longer receives work email on his phone. Before a meeting, he tries not to get to check email, so he’s focused on the discussion ahead.  And he’s come to a realization.

“All those times that I thought I was using my time well — ‘Hey, I’ve got five minutes, let me check my email’ — I was actually using my bandwidth badly.”

Mullainathan, concluded by urging the audience to think back to Henry Ford. 

The automaker famously discovered in the early 1900s that, by increasing his employees’ schedules to 60 hours a week, he could squeeze more productivity out of them. But that burst of productivity lasted only about four weeks. Over time, the workers putting in 60 hours a week began producing less than their counterparts who worked 40 hours.

The people working overtime lacked “not just the ability to work hard, but the ability to actually think hard about the problem,” Mullainathan said.

The lesson for professionals :” Having precious little time doesn’t matter.. Spending quality-time with it, does”..

How to boost company’s short-term earnings, while maximizing long-term value? |by: Curt Cyliax | Chief Outsiders

After managing the purchase and sale of a number of companies, we’ve identified “FIVE primary-drivers of business value”.

If you’re a business owner who plans to sell or transfer your company in the future, you’ll want to know how you can maximize the value of your business, make it more attractive to potential buyers and get top dollar for your business.

What are buyers looking for in a business acquisition ? Ultimately, they want an investment that minimizes their risk and maximizes their return.

There are several key characteristics – value drivers – that can help increase the value of a business by reducing the risks of owning the business, while demonstrating an increased likelihood of future growth.

curty cyliax blog pic

By working to improve the following value drivers now, you’ll pave the way to a premium price for your business when you’re ready to sell : 

1. A strong, motivated management team– Motivating and retaining top talent is crucial for the sale value of your company. Does your management team have the leadership, skills and drive to fluidly grow the company when you leave? Are the appropriate incentives and employment agreements in place to help keep management after the sale? A strong and motivated management team demonstrates to buyers that the value of the business is not completely dependent on the company’s owner.

2. Recurring revenue and multiple streams of revenue – The larger the portion of a company’s revenue that is recurring, stable and likely to continue in the future, the more desirable that company is to prospective buyers. In addition, multiple revenue streams – the number of different ways a business earns money – can help reduce the risk that any single product or service might fail. In other words, buyers are more willing to pay a premium for businesses that demonstrate predictable earnings for the future.

3. Customer diversification – If your company’s largest customer left, what would be the impact on your business? If the answer is “significant,” then potential buyers would likely perceive your business as a high-risk investment. That’s why building a diversified customer base is critical. A good rule of thumb is that a business should have no single customer that accounts for 10% or more of revenue.

4. Realistic strategic growth plan and scalability – How  will your business get to the next level? Buyers are interested in the future, so having a realistic plan that demonstrates the potential for growth and profitability for your business is important. Are there new products or services in the pipeline ? Is the business scalable ? Can you take the business model and roll it into new markets successfully ? These are just a few examples of the growth opportunities business owners can use to estimate their company’s future growth potential for buyers.

5. Financial systems & controls that can withstand due-diligence – When purchasing a business, buyers will typically scrutinize the company’s performance during due diligence, reviewing the company’s past performance. So the quality of your financial information can have a huge impact on the sale of your business. Are your books and records accurate and detailed ? Are your company’s financial statements reviewed or audited by outside accountants ? Having reliable financial systems and controls in place to manage your business, protect your assets, and support your company’s financial claims are critical to a successful sale.

” Focus on these value drivers to increase your company’s profitability, improve market value and maximize the company value throughout running you company and when you’re ready to sell”… 

“Give Your Performance-Management-System a Review” |by: David Rock | H B R

Nearly every mid to large size company in the world now has some kind of performance management system, a process that in theory should help people set to achieve goals and ultimately drive performance.

Yet only 14% of organizations are actually happy with their performance management system as it stands, according to industry research firm CEB. Despite that, so far only 3% of companies are doing anything radical around how they manage performance. The rest are tinkering on the surface, altering the number of goals being set, shifting from a 3 to a 5-point rating scale, OR changing the rating criteria. 

While I respect that significant change in a large organization is tough, tinkering isn’t doing much. Research shows that there is no measurable impact on performance linked to the number of ratings people have, or from altering the wording for these ratings. It seems that we need a significant rethink of the whole concept of how we manage performance.

Driving this need are seismic changes in demographics as well as how work is structured today. Annual goals might have worked 20 years ago, but between new technologies and a rapidly changing economy it is hard for goals to be relevant for more than a quarter. Even quarterly feedback does little for younger generations craving to learn something useful every week from their boss. And consider the fact that most of the time performance is only discussed with one manager – even when that employee is involved in a half dozen emergent teams unrelated to his manager’s work. The nature of work has become more relational and creative than ever, with a greater need for collaboration — which some performance systems accidentally inhibit.

The first step in any difficult change program is to acknowledge that your company has a problem. To help recognize that problem, maybe it’s time you gave your performance management its own performance review. There are many ways to do this, including identifying the real business goals of having a performance system, and seeing if these goals are being achieved through employee surveys. You could also collect data about the actual behavioral impact that annual employee conversations have on teams.

I will share more on these kinds of approaches in future posts, for now I wanted to share an even simpler idea: A 5-point rating scale for performance management itself.

Here’s how I would craft the ratings — read through and think about where your company’s system falls : 

Tier one: “Needs to go” 

While your performance management system showed promise during recruitment, it’s turned out to be a dud. It hasn’t achieved any of company goals. Heck, it probably never knew it had goals. Worse still, no one wants to work with it anymore. It’s time to move this system on to new pastures and let it find a place more suited to its talents.

Tier two: “Needs improvement” 

Your system has personality issues. Despite achieving a few goals and having good technical skills, it often rubs people up the wrong way. People complain about its lack of authenticity, inflexibility, and glaring blind spots. In short, the system is under-performing and needs to have a breakthrough soon if it is going to stick around.

Tier three: “Good but inconsistent” 

Your performance management system is like the wind in summer. Things fly along, then there are long stretches of nothingness, people becalmed in a sea of unmotivated action, waiting for something better — feedback of any sort, a career discussion, any puff of positive wind in their sails. You wish your system raised performance more consistently throughout the year, yet you can’t quite bring yourself to let it go, because, sometimes, it works.

Tier four: “Strong performer” 

Your performance management system does a solid job most of the time. It gives employees the feedback they need to feel appreciated once in a while and helps them generally understand how they can develop. While not a stellar system, you’re happy with what you have and can’t see yourself firing this system any time soon. You’d love it to be a top performer, but hey, at least it’s consistent.

Tier five: “Top performer” 

Your performance management system consistently motivates top talent, stretches mid-level performers, and helps your low performers self-select out. When times are tough and bonuses are tight, your performance management system helps folks stay engaged for better times. Everyone who works with your performance management system loves it, and wishes they could be it when they grow up.

So, how does your performance management system rank ? If it is low, how long has it been at that level, with no consequences ? Should you let your system languish another few years on a low tier, hoping it will improve ? Oh, and if you decide to rank your own firm, be sure to keep things confidential. No one likes feedback going public. Even performance management systems have feelings.

“What Inspiring Leaders Do ?” |by: Jack Zenger & Joseph Folkman |HBR

What do top executives want from their leaders ? IBM recently asked this question of 1,700 CEOs in 64 countries.

The THREE Leadership traits that most mattered were: ” the ability to focus intensely on customer needs”, “the ability to collaborate with colleagues” — and “the ability to inspire”.

Our own extensive 360° feedback data, which we’ve gathered from just under 50,000 leaders who have been assessed by approximately a half-million colleagues, strongly confirms the importance of inspiring leadership.

Of the 16 leadership competencies we most frequently measure, it is clearly the one that stands out. In our data, the ability to inspire creates the highest levels of employee engagement and commitment.

It is what most powerfully separates the most effective leaders from the average and least-effective leaders. And it is the factor most subordinates identify when asked what they would most like to have in their leader.

Yet, when you talk with leaders who want to be more inspiring, you often get a deer-in-the-headlights reaction. They simply do not know what to do ??

What inspiring leaders do ? : 

To address this question we engaged in what some might refer to as a reverse-engineering exercise. We went into our database and looked for those leaders who received the highest scores on the competency of “inspires and motivates to high performance.” We found 1,000 such leaders and then analyzed what they did that separated them from their less-inspiring counterparts.

Some of what they did was specific and tangible. For example, they set stretch goals with their team. They spent time developing their subordinates. They engaged in highly collaborative behavior. They encouraged those about them to be more innovative.

Other things we identified were somewhat less specific and less tangible. These inspirational leaders were more adept at making emotional connections with their subordinates, for instance. They were better at establishing a clear vision. They were more effective in their communication and willing to spend more time communicating. They were ardent champions of change. They were perceived as effective role models within the organization.

Our data send a clear message : In this case, more is more. That is, the more of these behaviors a leader exhibited, the more inspirational that leader is perceived to be.

How they go about it ? : 

We next turned our attention from what these inspiring leaders did to the manner in which they did it. We’ve found that many leaders equate being inspirational with being enthusiastic and outgoing, and that can be so, but we also found that leaders could take any number of other approaches that didn’t necessarily require them to be extraverted.

That is, a leader could be inspirational in setting a stretch goal, say, in a number of different ways. She could, for instance, do it by creating a compelling vision (which we dubbed, unsurprisingly, as the “visionary” approach). Alternatively, she could meet with team members and have them, collectively, set the goal (taking what we call an “enhancing” approach.). Another inspiring leader might set stretch goals by tossing out a challenge to the group and setting a specific deadline by which to make it (taking a “driver” approach). Or maybe he encouraged the team to find an ethical goal that focused on the organization’s mission (in which case he took the “principled” route). Yet another of the inspiring leaders might have convened a meeting and delivered a classic half-time locker room speech to set the goal (which we think of as the classical “enthusiast” style) , or finally, he might take the “expert” route and interview team members to determine what skills each might best contribute to the effort.

Inspirational leaders might apply these different approaches to any of their leadership responsibilities, taking, for instance, a visionary approach to championing change by painting a compelling vision of a future in which the company was implementing a new strategy or taking an enhancing approach by encouraging team members to develop an innovative strategy together. Similarly, a leader could go about producing peak results by painting an exciting vision of the future or by marshaling the enthusiasm of the team to aspire to a higher goal.

Although merely 3% took the expert approach, perhaps more surprising is that only 12% went the enthusiast route. Each approach was equally effective, our data indicate, but leaders who were able to master multiple approaches did significantly increase their effectiveness.

Learning to be Inspirational : 

Finally, we turned our attention to the question of whether leaders could learn to become more inspiring. To find out we did another study of 882 executives from data collected over the last three years, who were measured on the 16 different competencies and encouraged to focus efforts on improving one of them. Focusing on the 310 who chose to improve their ability to inspire others we found that as a group they made impressive strides — moving from the 42nd percentile (that is, below average) to the 70th percentile. This is a statistically significant positive gain, and compelling evidence that when leaders use the right approach they can learn to become more inspiring.

In other words, with awareness, good feedback, and a plan of development, leaders are able to improve this most important of all leadership competencies.

How to Avoid the “7 Sins of Customer Experience” |by: Sharon Daniels | Chief Executive

Today’s business environment is one of heightened competition, and customer experiences are part of a complex matrix that determines customer loyalty. Customer experience can ultimately be an organization’s primary competitive advantage, if it is managed correctly.

Exceptional customer service produces loyal customers who buy more, refer friends, resist special offers from competitors and forgive the occasional mistake. Our newest research report on customer experience sheds new light on the “seven sins” of customer experience – key missteps that make organizations stumble when it comes to customer interaction.

The study surveyed 5,500 consumers and conducted in-depth interviews with outstanding customer service employees in 7 countries.

Among its significant findings: 

– Customers are sharing their rants and raves about their service experiences around the clock and around the globe. Almost 40% reported they posted complaints about a company or brand after a bad service experience.

– Negative experiences have a bottom-line impact. Half of those surveyed said they would defect to a competitor after only one bad service experience.

– Consumers give low ratings to customer service. Only 25% of survey respondents said that service employees “make me feel they are on my side.”

– Service employees’ interpersonal skills are what makes or breaks the customer experience. One third of survey respondents believe it’s more important to be “listened to and shown respect” than to have their issue resolved.

– Reinforcing the need for human contact, most survey respondents prefer communicating with service employees by telephone (43 percent) or personally (37 percent), compared with email (18 percent) or text (2 percent.) Though they’re quick to make complaints online, they want real-person interaction.

As the survey data indicates, the “customer experience counts mightily in organizational performance”. Recognizing this imperative, CEO, Kevin Peters of Office Depot, invites customers to a prototype store near company headquarters so they can help design a superior customer experience. Their input affects factors like the shelves on which products appear and even where employees stand as they stock the shelves.

These are the ” 7 sins” of customer experience :- 

1. Not Minding Your Metrics: 

Company leaders are failing to take full advantage of new tools that make it easier than ever to monitor customers’ experiences. The tools include a wide variety of CRM systems, voice-of-the-customer software, customer-interface technology and predictive analytics. Data on customer retention and the results of cross-selling by service reps can be especially valuable.

Obtain a comprehensive review of your customer’s opinions and actions through quantifiable metrics. Regularly survey them on key pints – whether they would recommend your company, what specifically is influencing their buying behavior, and what ideas they have for improving the customer experience.

Among the businesses that use highly sophisticated measurement frameworks is EMC, the IT storage cloud computing company. It identifies the aspects of the customer experience that have the biggest impact on loyalty. It then determines which ones require immediate changes, which to improve over time and which to promote as its strengths.

2. Underestimating the Power of Emotion: 

Even when the service provider can’t immediately fix the problem, customers can be satisfied if the employee connects with them on a human level. The service employee has to walk in the customers’ shoes.

Employees must listen actively so they can communicate sincere understanding, using a voice tone and/or body language that shows empathy with the customers’ emotions — even when the customer caused the problem. An angry customer may expect urgent concern, while a confused one may be satisfied simply with kindness. When it’s appropriate, an apology can work wonders and service employees shouldn’t hesitate to provide one.

3 Fumbling Defining Moments: 

Every customer interaction has defining moments that must be handled carefully. One of the first defining moments occurs when the customer is greeted, and it sets the tone for the entire interaction. A drive-through customer at a fast food outlet wants speedy service, as does the chain itself. KFC drive-through employees are required to greet the customer no more than five seconds after the customer reaches the intercom.

Another defining moment presents itself when the customer has a complaint. The Ritz-Carlton hotel chain, which prides itself on maintaining an excellent customer experience, allows every staff member, regardless of position, to spend as much as $2,000 to resolve a guest’s problem without seeking approval.

A customer who must return a product faces another defining moment. Customers often complain about return policies. Zappos, which has a 100% satisfaction guaranteed return policy, actually encourages customers to order several sizes of a clothing line and return what’s not wanted.

Another defining moment crops up when an employee answers a customer’s questions. The employee has to answer directly, without evasiveness or circumlocutions. Another is when asking questions. The employee has to clarify the customer’s concern without putting the customer on the defensive. Finally, the customer shouldn’t be put on hold for a prolonged period.

3. Employees on Autopilot: 

Service people must stay engaged. They should do it by asking a blend of open questions, which keep customers explaining, and closed questions, which help confirm facts and isolate the customer’s needs.

Employees should explain what happened in terms the customer understands. They should be clear about what they know and don’t know about the situation. They must avoid blaming anyone for the problem — the organization, another employee, and certainly not the customer.

Most importantly, they should provide the particular kind of service each customer needs. Geek Squad, which provides support for technology product users, trains its employees to understand that customers have radically different levels of knowledge about the products and to serve them accordingly.

4. Focusing on Features: 

Some well-meaning service providers, hoping to give their customers insights about the product, talk too much about its features rather than the customers’ problems. This can make the customers feel their concerns aren’t being addressed. This is no time to try to up-sell or cross- sell.

More than 40% of survey respondents worldwide said they get annoyed when an employee “talks to me about things other than the problem I am trying to resolve.” Customers dislike complex processes and generally want to be spared the details of internal activities and issues.

5. Getting Negative: 

It’s not what the employees say but how they say it that leaves a lasting impression on the customer. The interaction must be positive throughout its duration. Words like “can’t” or “won’t” can quickly send the conversation spiraling downward. It would be wise to give service employees lists of words to use and words to avoid as they communicate with customers. Verint Systems, a consulting and research firm, identifies some of the words and phrases that can antagonize customers. They include “you people,” “let me speak,” and “you promised.”

6. Escalating Anger: 

Angry customers sometimes express their feelings by verbally assaulting service providers. Employees must avoid responding with anger. Help them understand that customers aren’t attacking them personally. Teach them how to ease tension and clear a path to address the customer’s problems.

7. Customer-Loyalty is built one successful interaction at a time :

Customer-facing associates are likely the most critical link between the customer and your brand. Indifferent or unhappy buyers among your customer base can be converted into brand promoters by taking a holistic view of the customer’s experience and determining how employee skills and behaviors fit into it.

Why Does “every Gym / Health-Club, have a unique Equipment Requirement ? ” |by Rory McGown |GYMetrix

One of the early, surprising, discoveries that GYMetrix made, was that each gym we measured the equipment usage, the customers demand pattern was different, and therefore the equipment requirement was different.
We did not expect this, and it was particularly surprising with gyms that had identical demographics and were geographically very close to each other. We expected these gyms to have very similar demand patterns, but in fact each gym we measured was different.
This disproved 2 common industry assumptions:- 
WARNING: Demographics of neither existing members nor those of the surrounding population determine a gyms equipment requirement! 
WARNING: There is NOT a single “golden”, one size fits all equipment ratio model, each gym has an individual equipment requirement! 
Often we say the equipment usage information we provide operators is not the answer sheet but the question sheet. The answer is not ‘ This is what equipment usage is!’ rather the questions is ‘Why is equipment usage like this?’ and ‘What can we do about it? ‘ 
So when we were measuring different demand patterns at every gym we had to ask ourselves the question,“What causes each gym to have a unique demand pattern?” 
Viewing Each Gym Floor As an Ecosystem- 
We began by viewing a gym floor as an Ecosystem that has four components that interact with each other in a way that determines the overall demand pattern.
Gym Ecosystem
Then we looked at each individual element within the Ecosystem and asked what influences each element of the Ecosystem, starting with what has influenced Customers Equipment Choices.

Some of the Factors Determining Customers Equipment Choices:- 

Customer Equipment Choices

When we surveyed gym customers for one project we asked what had determined their equipment choices. 40% of customers responded that they were doing either what their original induction had taught them to do or what a past PT had taught them to do.

Induction programs and PTs play a hugely important role in determining the customers equipment choices, this role is far larger than what the demographics of the members is.  

Some of the Factors that have determined the Types, Quantities and locations of Gym equipment:-  

Influenced Types of Gym Equipment

Until GYMetrix started trading the sad truth for gym customers is that what their demand actually was for equipment was not a factor in determining what equipment, and in what quantities operators bought !! 
In the main operator were using the 7 deadly assumption when refurbing gyms – we now have hard data proving these to not work.
Some of the Factors that determine the influence Gym Instructors will have on Customer Demand Choices:- 
Instructors Influence
The influence that Instructors can have over gym customers equipment choices should never be underestimated: 

A single proactive, enthusiastic, persuasive instructor who is inducting customers thoroughly on equipment they think customers should be using, will have far more of an impact on the customers equipment choices than any demographic data of the surrounding population.

GYMetrix information on equipment usage is not just used to help operators match their equipment supply with existing customer demand, but in every project we look at where ‘Demand Side Management’ can benefit the gym and its customers through instructors changing the customers equipment choices through induction programs and education.

Examples would be: 

1) Where functional training equipment usage is low the answer is not to remove it to a level that matches customer demand, but rather the instructors educate customers more about how to use it, and its benefits, to increase customer demand.

2) Where (commonly) ab machines have high usage and therefore low ‘availability’ and this is creating customer dissatisfaction  don’t get another ab machine, but get instructors to teach customers alternative ab exercises with swiss balls etc or do ‘Ab Floor Classes’ in peak to reduce the demand on the ab machine.

This provides ” value add” staff interactions with customers educating them with better methods of working Abs. 

Conclusion: 

Once we look at all the different combinations and permutations of the influences on each element of the Ecosystem, and then realise that each element will be interacting with the other elements, we begin to understand why each gym has a unique demand pattern.

Indeed we can see how improbable two gyms having the same demand pattern are, and therefore the same equipment requirement ratio. The larger the gyms get the larger the variance there is.

From its inception GYMetrix has been getting asked what the ‘Golden equipment ratio’ is that is best for all gyms. What our research has proved is that there isn’t  a Golden ratio. One size fits all ratios will produce a sub optimal customer experience and a sub optimal return on operators equipment investment. 

To get the best customer experience and return on equipment investment the answer is to measure each gyms unique demand pattern and then accurately cater to it, otherwise there will be equipment shortages leading to customer frustration and equipment excess which is waste for the operator.

When buying gym equipment small mistakes cost a lot of money !! ” Lots of small mistakes cost huge sums of money !!! ”