CBI: Today, management contracts represent the lion's share of PlusOne's activities. Can you give us a sense of that side of the business?
Mike Motta: We only own one facility right now—the original PlusOne in the SoHo section of New York City. We had another facility in the World Financial Center in Lower Manhattan, but, as you know, it was destroyed on 9/11. Our managed facilities break down in the following way: we have 21 corporate sites, six hotel fitness centers, three physical therapy clinics, two commercial operations, two government installations, and one hospital-based club. Of the corporate sites, 16 are located in financial services firms, two in media/publishing companies, and one, each, in legal, retail, and biotech environments.
CBI: That original PlusOne site specialized in personal training and physical therapy. How, and why, did the company move to the management side?
Mike Motta: To be honest, it was a matter of survival—period. We opened our second personal training and physical therapy facility on Wall Street in 1988, and, unfortunately, soon discovered that financial services and, by extension, Wall Street, were preoccupied with a serious down market. At the time, however, we heard that a new health club was being installed at the Waldorf Astoria Hotel and Towers, and they were looking for a management company to run it. They were in the midst of a worldwide search, so we called them up, and were given a chance to meet with their management. Their attitude, and rightly so, was 'We're the Waldorf. So who are you?' But after meeting us, they allowed us to respond to their request for proposal (RFP). We made a presentation and, fortunately, got the job.
CBI: Creating and implementing a management agreement is obviously a demanding process. What’s the toughest thing about it?
Mike Motta: Scope. When you're a small company and dealing with a much larger organization, it's like wrestling with that proverbial 800-pound gorilla. One of the real challenges, in the case of a larger company, is the fact that you have to plan for its future growth, while attending to its present needs. For example, we have a national agreement with a financial services firm, and now manage five locations for them in three states. To accomplish that, we had to think 3-4 years down the road, and create financial models for facilities that didn't yet exist.
Another difficult part of the relationships is working with corporate procurement departments. After you've won the contract, by selling one of the top people in the company, you’re handed off to a 100-person department. From that point on, you’re constantly negotiating conditions and terms for everything from membership pricing, to operating expenses, to staffing budgets. It’s an exhaustive, and can also be an exhausting, process. They demand precision with respect to every detail, and you have to make the most of the 20 minutes that you might get for face-to-face negotiating.
CBI: How do you sell a client? What's the process like? What sort of cycle is involved?
Mike Motta: Most of our sales start with someone at the top. Typically, we've already established a relationship with a corporate executive, or we obtain access by going through another contact. For example, I had a personal training client who subsequently became the president of a major financial services firm; 30 days after his promotion, we were hired to run the firm's fitness center. In other cases, it’s simply a matter of guerilla sales and marketing—sending out letters and making phone calls.
In any case, we always begin at the top and look for a champion who believes in the importance and value of a healthy workforce. Once the sales cycle gets under way, we usually find that there's a formula. You meet the prospective client, and they gauge your skills. If you pass scrutiny, you embark on the RFP process; these proposals are customer-specific and very detail-oriented. Following submission of the RFP, you may be invited back for a follow-up presentation. After that, you're asked to submit a request for best and final price. Then, if you get the job, you negotiate the details of the contract.
The cycle is painfully slow and increasingly competitive, but it’s also challenging and fun. Now, sometimes, we find ourselves going up against major players, such as Johnson and Johnson, and we love that sort of competition.
CBI: Another of the heavy responsibilities that PlusOne bears is that of creating a good working relationship with its client companies. What does it take to achieve that?
Mike Motta: Responsiveness and support are key. You also have to be customer-service oriented, because, in fact, everyone in the organization is your customer. For us, the relationship originates with our general manager and his or her supervisor, the vice president of accounts. We put the right GM in place and give them all of the support they need in the person of that direct supervisor. The GM represents PlusOne on site, and is our critical link to the client and the client's customers, employees, and members. The physical plant and fitness center environment are basically determined by the client, so what we provide, essentially, is talented and committed people, and the GM is the beating heart of that team.
CBI: Holding onto a corporate client isn't easy, either, particularly during uncertain economic times. What does it take to transform a new relationship into an enduring one?
Mike Motta: We've discussed responsiveness and customer service, but longevity is also dependent on our ability to achieve service excellence consistently, and to constantly confirm the contribution we make despite the frequent changes that are caused by the corporate staffing cycle. Once you've been in a client's space for a year or so, and have been performing well, you begin, as it were, to fly below the radar, but you never know when you might find yourself reporting to someone new. In the corporate setting, where people are always moving up or moving on, you may wind up with a new boss every 18 months. So you always have to be ready to reeducate the person you’re dealing with and demonstrate, prove, your value.
CBI: Management is obviously your forte, by PlusOne is also a design and development firm and sometimes builds a facility from the ground up. Why? And how do you work with clients to get the job done?
Mike Motta: Actually, our goal in doing design and development is simply to land the management contract. We work with the client’s architects and construction people, make recommendations about layouts, and will even review their existing CAD drawings and make suggestions about equipment needs. We offer advice and direction on everything from the size of the facility to benchmarks for utilization rates, hours of operation, fees, etc. Getting involved in the process early on allows us to provide the client with a clearer, more persuasive, understanding of our level of expertise.
CBI: How do you go about staffing the sites that you manage? Do the GMs come from other PlusOne facilities? Do you use a different model for each client?
