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ClassPass parent Mindbody aims to leverage AI to help the fitness industry grow

Nov 17, 2023
Photo illustration of Fritz Lanman surrounded by abstract shapes.

Photo illustration: Gabriella Turrisi/Axios. Photo: Photo courtesy of Mindbody & ClassPass

Fitness software company Mindbody believes it can leverage its large dataset of wellness enthusiasts to help businesses grow and make more money.

Why it matters: Health and wellness is attracting investor interest as consumers increasingly spend on their fitness and wellbeing.

The big picture: About 80% of members of the Global Health & Fitness Association, otherwise known as IHRSA, say they expect membership and revenue to increase by more than 5% this year.

  • The pandemic sent studio membership numbers declining by 20.5% from 2020 to 2021, and 36.8% from 2019 to 2021.

Zoom in: ClassPass parent Mindbody has about 2.4 million active customers — something it wants to turn into an opportunity.

  • "The name of the game of AI is, who has the most data to train AI," CEO Fritz Lanman says.
  • "We've seen more fitness consumers go through a churn pattern, so we can teach an AI [algorithm] how to predict for businesses, who's going to churn better than anybody," Lanman says.
  • "You kind of want to bet on the players who have the most datasets to teach the AI how to be effective," he says.

What's happening: Mindbody is training its AI models to help with recommendations, helping businesses grow because its app can better match consumers with businesses.

  • The company added a tool called price drop dynamic pricing, allowing businesses to maximize their revenues based on demand.
  • Mindbody's AI booking chatbot, meanwhile, supplements front desk functions, such as fielding phone calls, answering questions and facilitating bookings and payment.

What we're watching: It also has two AI features in beta. Mindbody has a churn prediction tool it calls "clients at risk," which examines consumer patterns and trains the AI to predict when a customer is likely to leave.

  • The company is also trying out a tool that augments services for big spenders.
  • This helps businesses "make sure you do whatever you need to do to get those people to convert down the road," Lanman says.

What's next: The company sees more growth in geographies and adjacent verticals.

  • ClassPass, which the company acquired in 2021, is in 28 countries.
  • The company has already expanded into spas, salons and medical spas that offer injections and skin treatments.
  • "I think we can transfer some of our advantages from fitness into that category," Lanman says.

The intrigue: "We're super interested in M&A, but the bar is super high," Lanman says.

  • Mindbody is looking for strong technical teams that have built something differentiated and hard to replicate.
  • They also need to have some scale dynamics, he says, "and some secret sauce, in terms of their tech capability. And that's pretty rare."

Between the lines: He expects to see many interesting startups that aren't able to get funding in the next 12 to 24 months.

  • "That will keep our eyes peeled for sure," he says.
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