ClassPass Mythbusters: 5 Things You Wish You Knew About This Wellness Experience Aggregator
Thousands of businesses use ClassPass to fill empty spots and grow revenue. For many business owners, ClassPass presents a new concept, and it can be difficult to understand how it works or what differentiates it from aggregator models in other industries. In this blog, we’ll clear up some myths and misconceptions we’ve heard to shed some light on what ClassPass is—and what it isn’t.
First, the basics: how does ClassPass work?
We’re glad you asked.
Consumers on ClassPass select a membership plan and receive a monthly bank of credits that they can use to book fitness, beauty, and wellness experiences at participating businesses. The number of credits needed to book a class or service varies and is listed next to every class or service listing.
Business owners on ClassPass maximize their revenue by filling their empty spots using SmartTools to dynamically price their services based on live availability and demand. The cherry on top? Businesses can get started on ClassPass for free.
Myth #1: ClassPass will cannibalize my business and take away my loyal members
No beating around the bush here; we’re starting with the biggest, most widely spread misconception about ClassPass: the idea that it steals direct members. If this were true, ClassPass simply wouldn’t work. We need your studio, salon, or spa to have a strong direct membership so that your doors stay open and we can monetize the excess space—it’s the only way our business model works. Not only that, but our data shows the opposite of cannibalization. While some of your members may find a ClassPass subscription appealing because they're seeking variety in their wellness routine, we’ve proven that ClassPass will drive incremental revenue to your business that you wouldn’t have seen otherwise. We can help you attract customers you wouldn’t have attracted yourself, into spots you wouldn’t have filled yourself, with no support costs—all while completely protecting your business from cannibalization and price erosion.
ClassPass will increase your revenue. We’re so confident, we guarantee it. For Mindbody customers, we’ll measure the revenue from the visits ClassPass sends to your business and compare it to the revenue lost from any customers you lose to ClassPass. If you lose more than you gain, we’ll pay you 2x the difference.
Myth #2: ClassPass underprices services
We get it—it’s scary letting a machine price your classes. That’s why we use the smartest technology out there to determine pricing by looking at historical trends and real-time data to predict how full a class will be and what rates will maximize your revenue on that class. SmartRate looks at demand by class—charging more for your most in-demand classes and less for your not-so-popular classes—and adjusts the price for the class throughout the booking window. ClassPass uses machine learning to determine the optimal price for each spot in a class and maximize your revenue based on the time remaining before a class starts, the probability of selling out, and a host of other demand signals.
Historically, 99% of partners who weren’t using SmartRate left money on the table, and now that we’ve proven that by running tests with legacy partners, over 90% of integrated partners are now on SmartRate. If you want to challenge SmartRate to test higher pricing floors, we’ll try raising and lowering floors and ask that, whichever produces more revenue (net of cannibalization), will be the new floor.
Myth #3: SmartSpot prioritizes ClassPass users over my direct members
Not a chance! SmartSpot is designed to protect your direct fill. Its objective is to never book a spot you could fill on your own, while never letting a spot go to waste without trying to fill it on ClassPass. It predicts fill based on historical data (including walk-ins) and adjusts to real-time fill (monitoring how many spots are open on CP).
In fact, SmartSpot will even disable classes if it predicts those classes will sell out on their own—and it’ll do so in advance of the actual reservations being made. Of classes and services booked ahead of time, 90% of spots are filled within 72 hours and 98% within 48 hours, so merchants have ample opportunities to fill their own spots. SmartSpot even leaves a buffer spot open just to put your mind at ease.
All we ask is for a fair shot at filling unsold spots that would otherwise go unfilled. The more chances we have to give our clients access to your business, the stronger the case for ClassPass becomes (and the bigger your wallet grows!). We give you access to customers who, while they’re interested in your products and services, would not pay your direct rates, and they’re willing to make tradeoffs like potentially not getting the appointment time or the instructor they want in order to receive a discount on that class or service.
Myth #4: ClassPass users will always expect aggressive discounts
Don’t worry—we keep the numbers between us. ClassPass pricing is opaque, meaning discounts are marketed behind a paywall (the ClassPass subscription) and classes and appointments are displayed in “credits” rather than dollars. This system makes it tough for a customer to compare rates or figure out how much they’re actually paying for each class spot, so your pricing can fluctuate freely without creating tension with the end user.
Myth #5: ClassPass users won't become part of the community
We know how important it is to facilitate camaraderie and community at your business, and it’s not unusual for ClassPass skeptics to wonder if ClassPass users can become regulars. We’ve found that after an initial shopping period, ClassPass users habituate, meaning they find 4-5 businesses they love and continue going to those overtime via ClassPass. After their third month on the app, 90% of their bookings are at their top favorite studios. So, you will see them repeatedly as ClassPass users also enjoy being a part of a community and having instructor relationships. Therefore, the top 3 “favorited” studios for CP users who visit a studio after month three generate $521 in lifetime revenue from that user.
We encourage you to welcome ClassPass users into your community and treat them like direct customers. Invite them to fill out a user profile in your booking system, introduce them to others in the class, and check out these ideas on welcoming first-time ClassPass users.
So, what does it all mean?
The point is this: ClassPass connects you to clients you’re not reaching today. Over 40,000 studios, gyms, salons, and spas fill empty spots and convert new members with ClassPass. We want your business to thrive, and we want your bottom line to grow. And because we know this dynamic, innovative tool will bring more money to your business, we’re guaranteeing an increase in revenue. Mindbody customers can add ClassPass for three months (it never costs money to be on ClassPass), and if you don’t see an increase in revenue in 90 days, we’ll make up the difference x2. What are you waiting for?