Life Time, which is a healthy way of life company comprising of three businesses which are Life Time Work, Life Time Living, and Life Time Fitness. We are focused on exploring new ideas that improve not only body and mind, but also overall wellness. We have joined DOE’s Better Climate Challenge and are committed to reducing our greenhouse gas emissions intensity by 50% within 10 years and sharing our strategies to help other organizations reduce carbon and save energy. Since 1992, we have designed and built our athletic country clubs to operate efficiently – from the selection of materials, mechanicals, fixtures and technology to the implementation of water and waste reduction/diversion initiatives. Our business model is a heavy usage-based model that requires actively engaged members utilizing our clubs and in centers regularly throughout each month.
The project I chose and wanted to present is to transition all of our locations into cashless locations within the next 12 months. I chose this project due to the obstacles that we face in the field when dealing with cash each day along with the time commitment and cost that we incur related to cash management. This has been a real day to day complaint that we receive from the field thus I can take this project and make a real impact at my company. This change I already presented to our leadership team who are onboard with the change as long as it makes sense from both a sustainability and a profitability standpoint. Due to us being a public company we do have shareholders to answer to for any and all changes that we make thus it must positively impact our company. This proposal matches who we are trying to be as a company as we continue to work towards lowering our emissions year over year.
The value of this change will not only help us be more sustainable but also allows us to add to the bottom line while removing inefficiencies in our operations. The value in this change also benefits our consumers through a faster checkout process with cash removed. Removes the need for our members to carry cash. Reduces the risk of theft and loss of cash for our members in our locations. Our members are able to track their spending and track all of their charges and they will be able to receive quicker refunds with credit card transactions vs the 30 days that it currently takes us to refund cash through a check which is our current process. The value proposition adds up to over $10 million in savings from going cashless along with removing additional steps in our operations that are no longer necessary. The change also greatly reduces the paper/plastic usage in our clubs while lowering our carbon footprint due to reduced transportation of cash which will be scope 1 emissions under UN SDG 13 This change also helps us gather better data on our consumers and better customize our offerings which in turn increases sales. By reducing plastic usage, we will be able to measure progress for 14.1.1 and reduce plastic debris density. In terms of the environmental benefits of using cashless payments over cash, the environmental impact of each cash transaction is 4.6 grams of CO2, compared to 3.8 grams of CO2 equivalent for a cashless transaction which we can track through 9.4.1.
Going cashless will impact our entire field and all of our customers in terms of scope. This means 35,000 employees and 800,000 million members. This change has the ability to increase revenue by 10% and reduce costs by $10 million each year. The main revenue increase will be due to and increase in consumer purchase data and our ability to influence and suggestive sell to our customers due to their habits. There are two costs associated with this change for our organization. We will increase our credit card transaction fees by 10% due to 10% of our cash using members converting to card transactions. We will also incur the potential cost and risk of losing what we estimate will 1/3 of our cash utilizing members who refuse to convert to cashless. The cost savings however is the main driver for the change in going cashless. We will reduce our paper/plastic costs and usage related to drawer counts, drawer closings, and garda pickup bags. We will also reduce our labor by almost 30 minutes a day of labor removed from operations due to no longer needing to do 3 cash counts a day and drawer closing each night. 30 minutes a day multiplied by $23/hour for our concierge team multiple by 180 locations and 360 days which will save us $745,200 each year. By going cashless we will no longer need our $5 Million contract with Garda each year that we pay for their secure pickup and handling services. We will also lower delinquent accounts by 70%. 70% of our delinquent accounts are cash users which costs us $4 Million each year in dues lost from delinquent cash accounts. We will also we lowering our footprint as cashless transactions have less of an environmental impact along with no longer transporting money will save in emission from high fuel usage vehicles.
The frame work that this project utilizes from class is first and foremost related to impacting the largest spheres of influence. We are first influencing an organizational change in terms of processes and procedures. We are then impacting the Cultural sphere by changing the norm and systems of how all of our consumers do business with us. We are also taking into account the sustainable development goals that we discussed in session 4. The SDG we are impacting is life below water, climate action, and responsible consumption and production. We will also be able to increase value through this sustainability initiative like we discussed in class with ads that companies like All Birds, Budweiser, Google, and Stella. Life Time will be able to adversities to our consumers this change and the environmental impact we are having through this change. This project greatly aligns our sustainability and financial goals as a company. Not only will be save $10 Million each year along with increasing sales but we will also be reducing our consumption of paper/plastics while reducing our emissions related to cash management and our carbon footprint per transaction. This change will also cost us very little money and the benefits far outweigh the risks. In order to activate this change this will require quite a few stakeholders. The first stakeholders will be our concierge teams who will be implementing this change in the field and the second most important stakeholder will be the consumer who will have to adapt and change the way that they do business with us. This will also require out IT department to ensure that all of our Point-of-Sale systems are up and running at our club locations. This will also require our data team to help us collect data on this change so that we can track the impact this change is having at our company. The downside and risk of this change is related only to losing consumers that no longer wish to change and no longer utilize cash while doing business with us. The other downside is losing the long-term relationship we have with Garda should we ever need to go back to accepting cash should this change not be successful. Due to this change not needing additions but subtractions in both equipment and processes we will be able to fully make this transition to cashless within the year across all of our locations. As we also open 12 new locations each year, we can open those locations as fully cashless already.
The scaling of this project from this phase of an idea will take some work. I met with Sarah Emola who is the Director of Sustainability for Life Time numerous times already to discuss this change and we have a meeting scheduled December 13th in order to create a timeline and figure out the logistics of this change so that we can present this properly to our leadership team. The Communications team will meet us as well in order to help layout the communication strategy to our members to help facilitate the change along with the marketing team to help us maximize the impact of this change through our magazine and our marketing partner to gain eyes on this change and impact. Providing the research will make getting approval for this change much quicker. The only resource needed is simply the corporate office labor in order to facilitate the change. The team required to help implement these changes are salaried team members but we will have to have a cashless education module created and the cost of team members to watch this module to help facilitate this change as well. The goal is to implement this change at 10% of our locations across the United States. There are extremely important data points we want to measure in order to ensure that this is a change that is profitable. The first data points that we need is the attrition rate increase in clubs moving from cash to cashless. Sales increase or decrease in our in center businesses and increase or decrease of tickets. Labor % decrease at the clubs that are cashless vs cash. The last data point we will collect is change in delinquent accounts at the cashless locations.
All in all, going cashless is not an original idea however it is a new idea within the health and fitness industry where there are still a lot of old school consumers that do business with us. This is a minor change that will have a major impact. This change is not only helping us reach out sustainability goals but also helping us save money and be more innovative within the health and fitness industry.
Mishkat Lightwala – EMBA candidate 2024
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Even though you say it is not a new idea it is still an excellent realization of an impactful initiative! I am interested to hear the internal and external feedback as the proposed project moves forward.
Awesome idea. I am glad to hear it is on the path to implementation. This is a real value add to the business while adding another step towards the company’s overall sustainability goals. I enjoyed seeing the granular cost savings breakdown. Small changes can have huge impacts.
The cashless business model seems risky due to consumer pushback, but also appropriate at this point in time. I remember a time when most people paid for their retail purchases with checks. It’s taken a long time for the check practice to die but it eventually did because a more covenant option, the debit card, came along. In your proposal here, you’re not offering the consumer anything in trade so it wouldn’t surprise me if your 1/3 subscription reduction is true. Maybe there is an opportunity to add some type of customer value that offsets their cash option. You might try appealing to their “green” side or offer some other small perk like a free smoothie.
Cashless transactions is a trend which picked up in recent times . Especially in countries like India where cash was predominantly used as for transactions is now changing . I never looked at this change from a sustainability perspective and your article had helped focus some light over that. Thank you !!.. great idea
Going cashless seems to make a lot of sense from a sustainability and profitability standpoint, but there is the risk you pointed out about losing customers. While this is a real possibility given your client base, particularly those “old school customers,” ultimately I think that with time they will come to realize that there is a convenience benefit to them with a frictionless transaction. I’ll be honest, I wouldn’t have thought that the fitness industry was still processing transactions with cash!
Mishkat: Interesting to see that there are clients that “refuse” to go cashless so much that you are considering them as customers that will prefer to do business with somebody else if they are “forced” to go cashless. At the same time it is interesting tthat 70% of the delinquent accounts are from cash customers… perhaps those are the ones that you will lose so it may balance out!. Anyway, it seems like a feasible project to get done in the timeframe proposed. Good luck!
The move towards a cashless society has its merits, streamlining transactions, reducing the risk of theft, and enhancing overall convenience for consumers. . However, it’s crucial to acknowledge the potential drawbacks, such as excluding individuals who lack access to digital financial tools and the concerns related to privacy and security. Striking a balance between the advantages and challenges is essential as we navigate the transition to a cashless economy, ensuring that the benefits are inclusive and the potential risks are effectively addressed.
Great Post
Mishkat – Very nice suggestion. I like the way you are trying to enable it. As you are first influencing an organizational change in terms of processes and procedures, you have higher chance of adoption to the project. Eventually society will go to cashless and you igniting the spark of this innovation will benefit Lifetime as well as reduce carbon footprint.
I really like the idea of a cashless economy. It takes away risk of fraud and increases clarity in transactions. Really nice blog post and interested to hear where this project goes!
Going cashless can seem like a no-brainer when considering sustainability and profitability. You’re right about the potential risk of losing some customers, especially those who prefer traditional payment methods. However, I believe that over time, even these “old school” customers will see the convenience of frictionless transactions. It’s often a matter of adapting to new technology and realizing the benefits it offers. Great post.