How to Differentiate Your Gym in a Crowded Fitness Market

When Sam became more involved in the direction of Stepz, the Australian fitness market was changing quickly. Large 24/7 gym brands were expanding aggressively and had scale, capital and increasingly impressive facilities behind them.

Sam recognised that trying to beat those operators by simply becoming another version of them was unlikely to work.

A conventional 24/7 gym has a relatively limited number of obvious competitive levers. You can change the price, improve the facility, add more equipment or perhaps improve convenience. The problem is that large established operators can often compete very effectively on those same dimensions.

Meanwhile, boutique fitness was creating something different. Businesses such as F45 were demonstrating that consumers would pay for coached group training, community, energy and an experience that extended beyond simply having access to equipment.

Sam saw an opportunity between the two.

Stepz could retain the convenience and accessibility of a 24/7 gym while combining it with a genuine group fitness product. The objective wasn’t to put a small group area in the corner and tick another box on the facility tour. He wanted both parts of the model to stand on their own.

That eventually became the hybrid model Stepz operates today.

There’s a broader strategic lesson here. If the competitors around you are significantly larger, copying them usually isn’t much of a strategy. You need to understand what they do well, where the market is moving and where there may still be a customer problem that isn’t being solved particularly well.

That’s where differentiation starts.

One of my favourite comments from Sam came when we were discussing how he developed the current Stepz model.

He said he thought more about the member than the business model.

That’s a subtle distinction, but I think it’s an incredibly important one.

Entrepreneurs naturally become fascinated by business models. We ask what has the best margins, what can scale, how many members we can fit into a facility and what services we can add to increase revenue.

Those are all legitimate questions, but they’re supposed to come after a more fundamental one.

What does this customer actually need?

For Sam, that meant thinking about the everyday Australian who wanted to improve their health but didn’t necessarily want fitness to become their identity. It could be a busy mum with 45 minutes between dropping the kids off and the next responsibility, a retiree wanting to become stronger or somebody who’s overweight and has never felt comfortable walking into a traditional gym.

These people aren’t necessarily looking for the most advanced facility, heaviest dumbbells or latest competitive fitness program.

They want somewhere they feel comfortable, afford and training that fits around the rest of their life.

Most importantly, they want to feel better.

Once you understand those needs, decisions around the business model become much easier because you’re designing backwards from the customer rather than forwards from what you happen to want to sell.

Fitness business owners spend a lot of time trying to understand their ideal customer, but there’s another side of positioning that receives less attention.

Who aren’t you for?

Sam is unusually comfortable answering that question.

Stepz deliberately caps the heavier end of its dumbbell range. If somebody wants to train with extremely heavy dumbbells and that style of strength training is central to what they’re looking for, Sam is perfectly happy for them to choose another gym.

That clarity then affects everything else. You don’t need to buy equipment that your core market doesn’t value. You don’t need to create marketing designed to impress serious lifters. You don’t need to change your product every time another part of the fitness market becomes popular.

A lot of gym owners become nervous at this point because saying who you’re not for feels like turning away revenue.

In reality, trying to appeal to everybody often makes you less appealing to the people who matter most.

A strong fitness business doesn’t need everybody in the suburb to want to join. It needs enough of the right people to feel that the business was built specifically for them.

This naturally leads into another important part of my conversation with Sam.

At the moment, it’s almost impossible to talk about the fitness industry without talking about HYROX and fitness racing. It’s a significant trend, and plenty of businesses are benefiting from it.

That doesn’t mean every gym needs a HYROX program.

Sam was quite clear that introducing one into Stepz simply because everybody else is doing it wouldn’t necessarily make sense. His members aren’t primarily looking for fitness to become the centre of their identity. Many of them want to come in for 30 or 45 minutes, train effectively, feel better and get on with their day.

That’s the product.

But understanding a trend and adopting it are two different decisions.

The right question isn’t, “Is this popular?”

It’s, “Does this make our product better for the people we’ve chosen to serve?”

If the answer is no, you don’t need it.

Sam made another comment during our conversation that I think challenges an old assumption in the gym industry.

He believes the industry has historically been very good at getting members and not necessarily as good at getting them results.

There have certainly been business models built around selling far more memberships than the facility could accommodate if everybody actually turned up. Commercially, that can work because a large percentage of members don’t attend regularly.

Sam doesn’t want that.

He wants Stepz members to use the gym.

Consumers have more choice and better information, and fitness businesses have far more ability to track member behaviour than they once did. If somebody joins but rarely attends, we shouldn’t consider the direct debit arriving every fortnight evidence of success.

Eventually, that member is likely to ask why they’re still paying.

The stronger model is one where the commercial interests of the business align with the outcome of the member.

Help them attend, train consistently and see progress.

This is where the conversation moved from philosophy into something much more practical.

Stepz is increasingly treating visitation as a metric.

Sam openly acknowledged that it wasn’t always one of the first numbers he focused on, but he now sees attendance as something franchisees need to understand because of the relationship between visits and long-term membership.

If someone is paying you but hasn’t attended for three weeks, the direct debit can create a false sense that everything is fine. Financially they’re still an active member. Behaviourally they may already be halfway out the door.

Attendance gives you an earlier signal.

One thing I particularly like about the Stepz story is that Sam’s decisions weren’t driven purely by purpose.

There was a commercial logic behind them as well.

The 24/7 model has attractive economics because it can operate with relatively lean staffing and allows members considerable flexibility. Boutique group training, meanwhile, creates coaching, accountability, community and potentially stronger member engagement.

Stepz combined elements of both.

The resulting value proposition is intended to give members access to 24/7 training alongside coached group fitness at a price below many standalone boutique offerings.

That’s important because differentiation isn’t valuable merely because it’s different.

A useful point of difference sits at the intersection of three things: the customer wants it, you can deliver it well and the economics work.

Miss the first one and you’re creating something nobody values.

Miss the second and the member experience falls apart.

Miss the third and you’ve created an interesting hobby rather than a sustainable business.

The best fitness business models solve all three.

There was another detail in Sam’s approach that I think deserves attention.

Once Stepz decided group fitness would become an important part of the product, it couldn’t simply clear a section of the floor, put some equipment there and announce that group training was now available.

The boutique fitness industry had already raised consumer expectations.

If Stepz wanted to compete in that part of the market, the product needed to be credible.

That meant thinking about programming, class structure, technology, consistency and the actual coaching experience. Stepz developed systems including class tracking and Stepz TV to help maintain standards across locations, while retaining instructor-led coaching rather than relying entirely on virtual delivery.

Sam also studied the franchisees producing the strongest group fitness participation.

What were they doing differently?

The answer wasn’t particularly complicated. The coaches were energetic, communicated loudly and clearly, and created an environment where people actually felt they’d trained.

As Sam moved from franchisee to master franchisor and ultimately into the broader franchisor role, his responsibilities changed.

He was no longer simply making decisions about his own gym. His decisions could affect other people’s businesses and capital.

That required a different level of conviction.

Sam’s solution has often been to test significant ideas himself.

At one point he opened locations in regional markets including Dubbo, Lismore and Muswellbrook when existing franchisees weren’t necessarily convinced those opportunities would work. He put his own capital and reputation behind the idea, proved the model and subsequently sold locations to operators within the network.

I think there’s an excellent leadership principle in that.

It’s easy to develop a theory in head office and tell everybody else to implement it. It’s very different to put your own money behind the idea and collect evidence first.

Before making a significant change, find the smallest credible way to test it.

If you’re considering a new membership, test the offer with a segment of your market.

If you’re thinking about a new program, run a pilot.

If you’re considering a new marketing channel, establish a budget and clear success metrics before committing heavily.

Evidence creates better decisions and makes change much easier to communicate.

Sam’s journey has involved several distinct identities.

He started as a member. Then he became a personal trainer, a franchisee, a master franchisor and ultimately the person responsible for the direction of a growing network.

Each stage required him to think differently.

One example came through reinvestment. As a franchisee, Sam could understand why an owner might want to delay replacing equipment or making a substantial investment in the facility. Cash is leaving your bank account, and the immediate benefit isn’t always obvious.

As a franchisor with access to a much larger dataset, his perspective changed.

He could see the relationship between reinvestment and business performance across locations, which meant he sometimes needed to hold a harder line than the younger franchisee version of himself might have preferred.

Stepz has an ambition to reach 100 Australian locations before Sam seriously pursues overseas growth. What I found interesting was how he thinks about where those locations should be.

He isn’t particularly interested in opening somewhere simply because the postcode sounds impressive.

Sam spoke about the temptation to open in a market such as Bondi as an ego decision. If the competition is enormous and the economics aren’t particularly attractive, being able to say you have a location there doesn’t necessarily make it a good business decision.

Meanwhile, Stepz has experienced strong results in regional markets.

That’s where ego and strategy can easily become confused.

Fitness business owners often want the biggest facility, most prestigious location or second site because it feels like evidence of success. But your landlord doesn’t care how impressive the suburb sounds when the rent is due.

Expansion should be driven by evidence.

What does the local market need?

How much competition exists?

What will occupancy cost?

Does your ideal customer actually live there?

Can the location support your model?

Sam and the Stepz team have invested in mapping the potential Australian market and believe there are significantly more viable territories available than they ultimately intend to occupy. The goal isn’t to open everywhere. It’s to select enough of the right opportunities to build a strong network while protecting the economics of existing franchisees.

That’s a much healthier growth philosophy than expansion for expansion’s sake.

You don’t need to operate a franchise or own a 24/7 gym to apply the lessons from Sam’s story.

The starting point is clarity.

Take a serious look at your market and ask who your business was actually designed to serve. Not who could technically buy a membership, but who receives disproportionate value from the way you’ve built the product.

Then look at your decisions through that person’s eyes.

Does the equipment you’ve added matter to them?

Does the new service solve one of their problems?

Does your marketing speak their language?

Is your pricing aligned with what they value?

Are you tracking whether they’re actually using the service?

This is where positioning becomes practical rather than something that lives inside a marketing document.

For Stepz, positioning affects the size of the dumbbells, the combination of 24/7 access and group fitness, the pricing, the facility footprint, the markets it enters and the trends it chooses not to follow.

That’s what real differentiation looks like.

It’s not one clever sentence underneath your logo.

It’s a series of consistent decisions.

Start by identifying a specific customer whose needs you understand particularly well. Build your service, experience, pricing and marketing around solving their problems rather than trying to match every feature offered by competitors. Strong differentiation usually requires being comfortable with the fact that your gym won’t suit everyone.

Look at the members who receive the most value from your current service, stay longest and naturally fit the experience you’ve created. Consider their goals, lifestyle, previous fitness experience, barriers and reasons for choosing you. Your target market should be specific enough to guide business decisions without being artificially narrow.

Only when the trend is relevant to your target market and improves the product you’re trying to deliver. A trend can be commercially successful across the broader fitness industry while still being wrong for your particular gym.

Attendance is an early indicator of engagement. Members who establish consistent training habits are more likely to experience the value of their membership, while a sudden decline in attendance can signal that somebody is disengaging before they formally cancel.

Make attendance easy, enjoyable and relevant to the member’s goals. Strong onboarding, coaching, accountability, communication and proactive follow-up can all help. Track changes in individual attendance patterns so your team can contact members whose engagement begins to decline.

It can be, but simply allocating floor space to classes isn’t enough. The service needs appropriate programming, coaching, scheduling and systems to create an experience members genuinely value. You should also ensure the additional service fits your target market and business economics.

Avoid trying to beat a large operator purely through scale, equipment or price unless you have a genuine structural advantage. Smaller fitness businesses can compete through clearer positioning, stronger relationships, specialised services, better coaching and a member experience designed around a specific market.

Expansion makes more sense when the first business has strong economics, repeatable systems and sufficient leadership capacity. Evaluate the new local market based on demand, competition, occupancy costs and customer fit rather than choosing a location primarily for prestige.

The fitness industry will continue to become more competitive, and there will always be another trend, training concept or piece of technology competing for your attention. Trying to respond to all of it is rarely a good strategy.

What I took from my conversation with Sam is the value of clarity. Stepz understands the customer it wants to serve and uses that understanding to guide decisions around its product, pricing, facilities and future growth. Just as importantly, that clarity makes it easier to decide what doesn’t belong.

That’s a useful question for any fitness business owner to consider. Are you making decisions because they’re right for your members and your business, or because you’ve seen somebody else doing them?

Differentiation doesn’t require you to continually add more. It requires you to understand who you’re for, what those people genuinely need and how you can deliver that better and more consistently.

Know who you’re for, understand what they need and become exceptionally good at delivering it.

In a crowded fitness market, that clarity can be one of your strongest competitive advantages.