Monday, May 24, 2010

Dojo vs Dojo part 1 - The Supercenter

Analysis of the first of the two main types of karate school

I've mentioned previously my family's history with the martial arts (such as it is) and our current experience training at a local school. There's been a bit of turbulence lately, and it's gotten me thinking.

Here's our situation - we're training at a "chain" school, one of 13 in the Lavallee's family of dojos. The school has a long history in the Syracuse area, but not necessarily an entirely positive one. We went there at first because it was close and it had an extremely inexpensive "intro" program for the elementary kids. We went back as a family because it's a really nice facility and the instructors are ver personable.We like the facility, we like the instructors, and it's very close by. We've been there as a family for almost four months, now.

The turbulence set in every time we reached what I'd call a "sales milestone." It was time for them to pull out what felt like a scripted component of their business model and sell us on something new. First it was the initial 6-month contract, which was expensive but made more affordable because it had both a family discount and another discount if you paid in full up front (which I did). But a couple months in, we discovered the clause in the contract that stated we HAD to buy our sparring gear through the dojo, and the cost ranged from $125 to $180 per person. Pow! - there's another $600-900 we hadn't budgeted for. (What's worse, the instructor who sold me the contract had made it pretty clear we could use existing equipment that my wife and I already owned as long as it was the correct brand. That would have saved us around $100.) They ended up letting us buy the gear piecemeal and gave us a discount, but it was an unanticipated expense that not only didn't I feel had been made clear, but in fact I felt I had been deliberately mislead about it up front.  And then it was time to talk about the next stage in the process - their "Black Belt Champions" program. It's a 3-year contract that would cost our family $500 per month - more than double what we paid for the initial "family plan." Plus an up-front "down payment" of $500-1000. Perhaps you're thinking I ought to just stick with the family plan and the 6-month contracts? Yeah, me too. Sorry, they don't do it that way - when your first 6 months are up, it's BBC or the highway.

To their credit, they're willing to work with us to an extent. If we want to spend one night a week (about 3 hours) cleaning and mopping the dojo, the price drops dramatically to $250 a month. It's affordable, but it's also the very definition of indentured servitude, where you enter into a contract to provide labor in exchange for services you cannot afford, and you're stuck offering that labor until either 1) the contract expires or 2) you somehow come up with the money to pay the difference [or, technically, 3) you die]. I've concluded that I don't want to sell myself into slavery in order to learn the martial arts.

All of this would have felt a lot less like a scripted sales pitch if there had been any way to really understand the details up front, but at every step it felt like a battle to understand what we were really getting into, and it definitely sounded like a clever, tried-and-true marketing scheme that they'd already used to produce some 600+ black belts at that school over the last 20 years.

Here's the thing: I could be angered, disgusted and offended by the whole LaVallee's approach, but I'm not. I can even understand it. It doesn't really work for me, and it took a LOT of thought on my part to be okay with it, but I think I understand where they're coming from. My conclusion: there are basically two types of karate dojo. They operate very differently and they don't always get along, but they can each work for some people.

The "Supercenter" Dojo

I believe LaVallee's operates a bit like a retail supercenter (with one key difference that I'll address below). LaVallee's has productized the Martial Arts. It's not a traditional system of forms to them, it's a product. It could be used cars or vacuum cleaners or electronics, but it so happens that their product is Martial Arts training. They've packaged it, developed a proven and effective sales process, and they deliver it to their market in volume. Let's look at the product and the sales process separately.

The product is not a traditional, definable Asian Martial Art. It started as Kenpo Karate, but it's changed so much over the years that that's barely recognizable anymore. They've added a lot of Muay Thai kickboxing, plus a smattering of Brazilian Jiu Jitsu, and whatever else struck their fancy, to the point that it's a unique style totally removed from any pure Asian Martial Art. Ironically, they adopted the term Mixed Martial Arts until that became associated with the brutal and controversial "Ultimate Fighting Championship" matches, with which they didn't really want to be associated. So now I think they're calling it "Blended Martial Arts." It'd be a lot easier to just call it Kenpo, but that would be misleading so, to their credit, they don't.

The product is also an often intense workout with fairly well-trained, professional instructors. The product includes a VERY nice facility that's large, clean, and close by to large population centers. It has features like a huge training area with foam mats on the floor, a smaller warm-up area, and even large bleachers for parents and visitors to watch from. In my experience, they're some of the nicest schools you're likely to find. The product's well-trained, professional instructors are on-site six days a week, and there are a lot of them (I think I count about 7 of them at my school). Result - the class schedule is about as flexible as you'll ever find, ensuring that it fits your lifestyle and your training needs.

You can also see that the senior students are regularly competing in things like full-contact matches (of highly dubious quality), and they're winning. Even if watching them train and demonstrate their skills wasn't enough to ensure that the training at the school is effective, seeing their successes in competition is a strong indicator (though not a guarantee) that it's not just snake oil they're peddling. Another indicator that they're not just a "black belt factory," which is the term for a karate school that sells people their black belts over a 3-5 year period whether or not they actually learn anything useful, is the fact that they actually care whether you show up for class. A fitness center might take your money whether you bother to work out or not, but LaVallee's wants you to show up and train with them.

That all adds up to a very respectable, fairly high-quality product. But it's a product that is slickly sold through a carefully-crafted marketing plan that offers a variety of ways to attract new students and separate customers from their money. For starters, they focus on kids. There are a LOT of kids around the suburbs and most of them think karate sounds pretty cool. So they mine the neighborhoods for young students to join. They send home "introductory offers" through the school. These offers are so inexpensive that it's almost crazy NOT to do it. You get a couple of months of training and a free uniform for around $40. The uniform alone would probably cost around half that, so it seems like a steal. Once they've got students in the door, they use a number of tactics to expand on that initial point of attack. They have "buddy week," where students get a gold star on their uniforms by bringing a friend to train, for free, during the week. They have birthday parties where, in addition to taking in money from the child's parents, they get a chance to solicit the kids attending the party to see if they might like an introductory offer of their own. They also throw free events during the year, including a really nice Halloween party and an Easter Egg hunt. Marketing, advertising, brand-building - it's no different than Pepsi sponsoring a stock car, and it all serves to build opportunities to attract new students.

Moreover, they have various tactics to extract as much cash as possible from existing students. For example, they offer a wide array of "bonus" services throughout the year. Virtually every month, they have some sort of Saturday-afternoon party where, for a fee, parents can drop off their kids for a few hours of fun, games, and exercise. It's glorified babysitting, but it brings in some extra cash and keeps the kids' enthusiasm-level for the school high. It builds a strong bond where spending time at the school (often compensated) is a routine part of the child's life. And, of course, the "introductory offer" has to be converted to a membership. They start with that initial 6-month membership, that's quite a bit more expensive than the "introductory offer," but not nearly as expensive as the 3-year Black Belt Champions program. And there's the gear, which comes in a nice package that includes a $16 bag (upgradable to a $25+ bag if you're feeling the weight of unspent money dragging you down). You may think that $16 doesn't sound so bad, until you consider that for a family of five, like mine, that's $80 in addition to the rest of the equipment. To be fair, they let us skip the bag and use our own, but I still thought the gear was overpriced compared to what I found for the same stuff online. As you go up in belts, there's additional sparring gear, plus a variety of weapons, new uniforms as the kids get bigger, etc. None of the fees are unreasonable (except the actual monthly tuition for the 3-year contract, which I thought was pretty high), but they all add up.

This is the heart of American entrepreneurship, so you can't really view it too harshly even if it may seem a bit seedy at times. They developed a quality product, created a marketing program, and then applied it rigorously to make a profit. If they hadn't done all of those things, then the product wouldn't be as good, because the nice facility and the numerous, capable instructors cost serious money to operate. The marketing glitz may not be strictly necessary, but if you're going to productize something you're obligated to use all means at your disposal to generate sales, and that means word of mouth, advertising, brand management, community outreach, special offers, discounts, and whatever else it takes to get customers into your storefront. You might take issue with the fact that, in addition to his schools, Kyoshi Steve LaVallee also has a side-business wherein he sells his packaged product to OTHER martial arts instructors who wish to become millionaires through their own schools, but if you agree that it's a quality product and it's not sold to anyone who is obligated to buy it, then it's simply the free market working as designed.

With that said, there's one aspect where I think LaVallee's differs from the "Supercenter" model, like Wal-Mart. One of the hallmarks of Wal-Mart, Target and similar stores is that they drive down costs. I don't think it's accurate to conclude that LaVallee's does so - if anything, I suspect that they drive UP the costs of Martial Arts training in the area, and I know at least one local LaVallee's competitor who agrees.

Still, free market is free market. If they didn't offer a quality product at prices people thought was fair, they'd be out of business. And, I should be clear, if we could afford the cost and if they didn't mandate a 3-year contract, we'd be staying. I think the contract is crazy-long for any service and the price is just too high, but we do like the program. It's a great workout 2-3 days a week, our family genuinely likes the managers and instructors at the facility, it's super-close and wickedly convenient. It's purely their business model that's driving us away.

However, it's not the only model. In part 2 of Dojo vs. Dojo, I'll examine the traditional model, its advantages and its disadvantages, especially compared to the Supercenters.

No comments:

Post a Comment