The Great Race

It's a funny thing about personal trainers. They actually exist to remind and prod as much as to motivate and educate. If you want to skip a workout or have a legitimate excuse to miss a session, they are there to remind you. If you are ready to quit after four arm exercises, they let you know - in no uncertain terms - that a fifth set is required. After awhile, they might seem like a nagging mother or old coach - both of whom you thought you had long since outgrown. In the end, however, personal trainers are there to keep you on track. They aid you in setting goals and then do everything they can to help you reach them. The benefits are obvious.

Now, if there was only a way to put this exercise of remind and prod to use in the business world. For ICON Health & Fitness, Inc. (Logan, UT), the answer seemed obvious, if not technologically overwhelming. With about 5,000 employees and more than $900 million in revenue in 2000, ICON is the world's leading manufacturer and marketer of home fitness equipment. The ICON name might not jump off the page in familiarity, but the company's brand names (i.e. NordicTrack, ProForm, HealthRider) are very recognizable. Having pretty much cornered the home fitness market, the company has now set its sites on the commercial market that includes health clubs and hotel fitness centers. While ICON home fitness products have proven very reliable, none were constructed to withstand the all-day, all-night pounding that commercial equipment must take. A new line of commercial products would certainly get ICON a place in this market. But, ICON needed something special to separate itself from a crowded field of players - remind and prod, remind and prod.

Implementing business intelligence tools and supply chain management technology, ICON has developed truly innovative and powerful applications to leverage the Internet. Integrating these applications with a new line of commercial fitness equipment has resulted in products that monitor usage and actually schedule their own maintenance. While this is good news for commercial fitness centers, the same technology also offers plenty of benefits to the users of this equipment. For the commercial fitness centers, the technology acts as a personal technician. For the users, the technology is more of a personal trainer. In either case, the result is the same - remind and prod, remind and prod.

"We are right there on the cutting edge," comments Richard Crosbie, corporate director of IT at ICON Health & Fitness. "Great marketing ideas don't always translate into great technology ideas. But, we're always pushing. If a technology obstacle stands in the way of our vision, we'll try and find another technology that will allow us to accomplish the mission. This makes ICON a fun place to work, but it can get stressful."

Intelligent Software Improves Customer Service
Being one of the largest trade shows in the world, COMDEX is hardly a personal event. As ICON found out, however, it can be a great place to build a business relationship. It was at COMDEX where an ICON representative stumbled upon the Microsoft booth - tough to miss it being that it seems as large as a football field - where the Redmond, WA, software giant was displaying its vision of the home of the future. Every room in this future home was decked out with technological advancements. Every room, that is, except for the fitness room, which was noticeably absent from the design. "Our representative told an official at Microsoft what we were doing to leverage the Internet, and he was amazed," recalls Crosbie. "After discussing the technology in subsequent conversations with our company, Microsoft now has a fitness room in its home of the future."

What caused Microsoft to alter its futurama floor plan was the same technology ICON is counting on to help it break into the commercial fitness market. Its new line of treadmills, for example, integrates business intelligence agents from Computer Associates (Islandia, NY) called Neugents. These Neugents keep track of all usage of a particular treadmill - hours of activity, speed of treadmill, elevation of treadmill, and so on. Because the treadmills are designed to be connected to the Internet, all of this data is relayed back to ICON. At ICON, the information is used in a variety of ways. "The agents allow us to monitor the equipment at clubs. We can anticipate maintenance issues with equipment before the clubs even know there are problems," states Crosbie. "We can then dispatch a technician to repair or replace a part. The clubs just get an e-mail notifying them of the service call." A typical e-mail, for instance, might read, "The belt on treadmill 13A needs to be replaced at this time. To avoid significant disruption of service, we are dispatching a technician to service the treadmill between the hours of 3:00 p.m. and 5:00 p.m. Our data shows that this is the time interval when the treadmill is least active."

There is always frustration on the part of a club when a piece of its equipment cannot be used. But, to minimize this disruption with proactive service is a tangible benefit to ICON's commercial customers. Also, there is a big difference between unexpected equipment failure and scheduled maintenance. Adds Crosbie, "The Neugents (part of Computer Associates' subsidiary interBiz' BizWorks suite) are pretty complex software tools. The software remembers patterns and learns to anticipate." Then, it reminds and prods, reminds and prods.

Cutting-Edge Technology Increases Loyalty
The intelligent technology that ICON is taking to the commercial fitness market also benefits the users of this fitness equipment. Just as the Neugents allow ICON to track equipment usage, they also let ICON track the fitness routines of individual users. This ability has spawned a new ICON Web site for fitness buffs called iFIT.com. Through iFIT.com, users can manage almost all of their fitness activities from caloric intake to workout routines to competition with other users. Of course, all of the innovations of the site leverage the Internet and routines are based largely on the data users supply to ICON.

The commercial equipment includes an integrated monitor and Internet connection, which allows for the transfer of data. But, this is not the transmittance of standard height, weight, and sex data. Instead, users join iFIT.com free of charge and are assigned a user name and password. Members can then design personal workout schedules and set personal goals, such as losing 10 pounds or running 30 miles per week. "The site has really become a personal trainer for its members. It helps members create an eight-week program and then instructs them as to diet and daily workouts. It tracks each workout," says Crosbie. "If you skip a day, the site recalculates the original workout program and adjusts your routine to help you still meet your initial goal."

The intelligent agents combine with streaming video to put the fitness experience in the fast lane. If a particular workout calls for the angle of the treadmill to be raised and lowered, for example, the agents handle that need automatically. That seems like a walk in the park, however, to what can be accomplished by adding streaming video to the equation. The addition of video allows members to run through a scenic canyon, for instance, with images appearing before them on the integrated monitor. During these scenic runs, the speed and angle of the treadmill are adjusted accordingly. And, if users prefer, music or personal trainer commands can be added to heighten the experience. Another option allows users to coordinate competition between other iFIT.com members. In these competitions, users all run the same course and times can be compared online at the conclusion. If a personal trainer is required, it is not a problem. IFIT.com has trainers and technology that allow for trainers and users to both talk to and see each other during a workout.

"The clubs and hotels like the iFIT.com application a lot. People can use the site when they are at home, but they also have access to it when they are at a club or at a hotel," comments Crosbie. As long as users and clubs are using iFIT.com equipment, then there is no reason to miss a workout. The technology eliminates excuses - it reminds and prods, reminds and prods.

Forecasts Drive Manufacturing Process
Neugents, streaming video, and iFIT.com applications will all help bolster ICON's play in the commercial fitness space. Right now, however, the company owns the home fitness market, and according to its own Web site, "sells its products through virtually every distribution channel available." In addition to company-owned Web sites, 800 numbers, catalogs, and retail locations, the company also sells through department stores, mass merchandisers, catalog showrooms, and specialty fitness retailers.

Customers place orders with ICON for an upcoming year based on projected sales forecasts. While these forecasts are not set in stone, they are the basis for planning manufacturing at ICON's 10 facilities. "Our busiest time starts in September when we start building products for the Christmas season. In terms of sales, you might think December is the busiest time of the year for us. Actually, our highest sales numbers come in January and February (New Year's resolutions anyone?)," says Crosbie.

When it comes to tweaking sales forecasts, ICON listens to its retail customers. Sears, for instance, is the largest retailer of home exercise equipment in the world and it almost exclusively handles brands from ICON. When Sears speaks, ICON is wise to listen. But, the relationship is not one-sided in favor of Sears moving ICON's products. The retailer also profits significantly from the ICON relationship. "Sears recognizes its top 30 vendors every year, and we are almost always on that list," comments Crosbie. "In 2000, we were recognized as Sears' top vendor for January and February. Sears made more money from our treadmills and bikes than anything else it sold at its stores during those months. We are one of Sears' biggest and best vendors, and we value that relationship."

Online Sales Without Creating Conflict
While all of ICON's retail channels have proven successful, the company is expecting its biggest growth in sales to come through Internet purchases. In 2000, ICON realized about $12 million in sales via the Internet. In 2001, the company is projecting that number will reach between $30 million and $40 million. Being both a manufacturing and a direct sales company has not come without some explaining to its retail customers. After all, ICON may be ecstatic to see its Internet sales rise dramatically, but Sears and other retailers are likely to have somewhat less enthusiastic reactions. However, managing this potentially damaging channel conflict has been handled deftly be ICON.

"Retailers don't necessarily like manufacturers selling against them," states Crosbie. "But, we never undercut our customers' prices. The products we offer online are equal to or higher than what consumers would find in retail stores. Our retailers know that we would never undercut their prices and try to draw business away from them."

According to Crosbie, ICON's Internet sales have positive effects on retailers' business. ICON has found that its online customers simply prefer to buy their equipment online and would probably not venture to retail locations. This is a small group of consumers who are willing to pay higher prices to avoid the brick-and-mortar experience that includes fighting crowds and hauling equipment home in the trunk of a car. "There is also a group of consumers that will use our sites to research products and then come into retail locations with pages of information they printed from the Web. These tend to be more informed consumers who have specific questions to ask retail salespeople. These consumers are ready to buy, and retailers are closing sales much quicker," adds Crosbie.

Technology integration has helped ICON break into the commercial fitness equipment market and make users of its products more loyal. It has also led the company to expand e-commerce transactions while still managing its relationships with key retailers. Ultimately, ICON's cutting-edge technology is the manifestation of company marketers who have the vision, if not the technological savvy, to move the company forward. It is these visions that keep the IT department busy. They remind and prod, remind and prod.