Digitising the largest health club in the world: an interview with Virgin Active CIO Andy Caddy
Using a range of data sources and digital technologies, Virgin Active is aiming to completely change the way it interacts with its members
Since joining the largest international health club in the world, Virgin Active CIO Andy Caddy has been focused on digitising the customer service it provides to its members.
"We've got some great clubs with some fantastic customer service and brilliant expertise in the health fitness sector but what we are lacking, and many of our peers are lacking, is a really connected customer experience," Caddy tells Computing.
And it's this connected experience that he believes will enable the company, which makes $1bn a year in revenue, to retain more of its members.
But digitisation, he emphasises, is not just about improving the way the firm communicates with its customers, but also bringing up-to-date the company's internal systems and processes.
"There's a set of initiatives we're pursuing at the moment in order to add capability in our organisation, ranging from specific CRM and business intelligence solutions to more general moves to get the organisation as a whole collaborating more," he says.
"I've driven quite a lot of it, and I was at EasyJet before I was here, so I went from a company that was reliant on [being digital] to one that hasn't really formulated its strategy. We have matured since I got here and we've built up our marketing department and I work closely with our marketing director, but for me, the CDO is an over-debated item," he says.
"I think the CDO thing is a response to how the CIO role is changing so quickly - particularly within the last five years. Many CIOs feel that if they don't change they risk becoming redundant and irrelevant, and the CDO job is a response to that... and I think in different organisations, the digital responsibilities can fall to a marketing director or an IT director, or a hybrid role, which we have come to know as the CDO," he adds.
Caddy believes that a modern CIO needs to be customer-focused and able to maintain relationships in many areas of the business, not just IT.
"We're seeing a lot more of that; a good CIO is someone who can co-ordinate relationships," he says.
But whether it's a CIO or CDO at the helm, Caddy believes it doesn't make sense to put a timeline on going digital.
"Digital is just the way we do things. I don't think there is a ‘you've done it' moment. I think companies that think that way probably haven't thought through that - everyone will have a different pace about how they do it and how they are adjusting things," he suggests.
Virgin Active is opening two new London clubs this year, one in Paddington and one in Cannon Street, which the firm says are its first "fully connected health clubs in the UK, with digital technology built into every stage of a member's journey".
Caddy believes this new generation of club will help the company to better retain its members. Currently, one in two members leave after the first year because, he believes, the club isn't fully engaged with what they are trying to achieve and how much progress they're making.
"It seems pretty obvious that by putting the right tools in place, we could increase retention and engagement and really benefit our members' experience," says Caddy.
These tools include the likes of wearable technology such as Fitbits and smartwatches, cardiovascular machines that are connected to the internet, connected scales and body analysers, and nutrition-based apps like MyFitnessPal. The aim is for Virgin Active to use the data generated by these devices and applications so that it can give better advice to its members and check how they are doing against their goals.
"[It will be about] understanding behaviours of our members and how we can interact with them and interpret their behaviour and do something with [that insight]," he explains.
The company is also looking into using this data as a basis for offering fitness advice to both members and non-members.
"What I would like to do is offer members premium advice and also provide 'freemium' knowledge to non-members - that would be an interesting thing for us to try next year," he says.
And perhaps that knowledge will be available on a new app that Virgin Active is in the middle of developing.
"It's very early days but we will be launching an app that will be a very straightforward initially, but by next year will offer a lot more," Caddy says.
There are hundreds of fitness apps vying for consumer attention, so Caddy wants Virgin Active's app to be able to offer its members something that will "bring their membership to life".
While fitness bands feature it Caddy's digitisation plans, he says he'd be surprised if the devices are still around in two years' time, despite only being on the market for a relatively short time.
"I've seen the fitness band market evolve over the last few years but I don't think it's going to last much longer in terms of the $100 bands," he says.
After speaking to some of the fitness band manufacturers, he believes there will be a shift to products that can perform multiple functions, or into fashion and clothing.
He says the wearables market interests him, and is something that Virgin Active is keeping its eye on, but he also believes that it's very immature, and wants to see the bigger technology vendors to agree set of standards for their products.
"What I'd like to see is some of the big guys like Samsung, Apple and Google really come up with some standards because there aren't really many standards in this [space] - a heart rate monitor on one device is different to that on another so I think it's quite difficult for a consumer to use these devices in a really productive way," he says.
Moving to the cloud
As well the digitisation project, Caddy and his team are busy upgrading many of Virgin Active's internal systems. Sales and ERP systems are being updated and the company is also designing and building a new data warehouse using technology from Microsoft.
Much of this work involves shifting to cloud services, something that Caddy is keen to take further.
"We're moving quickly into the cloud. When I started, nothing was in the cloud, but now our ERP system and our data warehouse system and digital platform are all cloud-based. We see great value in moving to the cloud for flexibility, scalability and lower costs, and we're sacrificing a small about of guaranteed SLAs," he says.
He adds that a firm the size of Virgin Active is ideally placed to make maximum use of cloud services, and it will continue to shift systems to the cloud in the years to come.