One of the most important decisions you have when deciding which software platforms to purchase as a fitness business owner is whether you want to use a closed or an open software platform. If you are already using software to run your business you may have already made this decision and just aren’t aware of it. Don’t be alarmed, no matter what stage you are at or what software you’re already using there’s nothing to fear. The goal here is to help provide a clearer understanding of how software companies are structured, the strategy and benefits behind closed vs open platforms, and what to look for so you can make the optimal purchases for your specific needs.
First, let’s define what I mean by a closed vs open software platform:
Closed platform: A company that limits access to their platform to selected software partners to build integrations into their platform. The selected software partners could be underneath the same ownership company or completely separate business entities.
Open platform: A company that allows anyone to build an integration with their platform, pull the data they need and market the integration. Typically, software platforms will establish rules for software partners to meet to ensure a certain level of quality. An open platform can still select specific partner integrations to promote while supporting an open platform policy.
For software companies that have grown to the point where they can open their platform for integrations and partnerships, there are valid arguments to be made for both open and closed platforms.
The Benefits of Closed Platform
Discussing the closed platform strategy first, there are clear benefits for the platform company itself. If a platform is closed, it builds the value of the data created on the platform over time and could make it easier for the company to retain their customers. The general theory is that the more data a customer has on the platform the harder it will be for them to churn. Another benefit worth considering is that the closed platform can work to ensure that the software partners they choose build really strong integrations. Instead of offering all the integrations in the world they can limit their partners to only the best to their customers. To add to that, closed platforms can work towards bundling their software partners into all-in-one licensing packages that are easy for customers to purchase all at once instead of purchasing one software tool at a time. Think of this as purchasing the Microsoft suite, 5-6 tightly integrated tools all at once, vs purchasing Slack, G suite and several others one at a time. As a software purchaser, the ease of purchase and integrated tools can be very appealing.
Open Platforms Should Also Be Considered
As a fitness business owner, open software platforms are also very much worth considering for your fitness business. Software companies will choose an open platform strategy to allow the free market to build as many integrations as possible to fill gaps in their own platform. In an with Rick Stollmeyer, the co-founder of Mindbody, last year, he said, “Our feeling was that when we create a fertile field that allows other seeds to germinate it will ultimately make our platform more valuable.” Looking back, Rick believes that their open platform was one of the key differentiators that led to fitness business owners choosing them and their incredible company growth in the fitness software industry. Breaking that down a bit further, because of the openness you, as a software purchaser, will have a lot more software options to choose from meaning you have the freedom to choose the best fit for your specific needs. Having said that, because there could be so many options available it does require some extra time and experimentation to figure out which platform and partners fit your needs. In the long-term, there is an argument to be made that if you are using an open software platform it will be easier to continue to update your software partner integrations if something newer/better is released in the market.
The easiest way to define and determine whether you are purchasing or already using a closed or open software platform is to review the software that you use as your source of truth for user accounts. For fitness businesses this is usually the fitness billing and scheduling software (example: Mindbody, Jonas Fitness) or your CRM (example: Salesforce, Hubspot). When advising fitness business owners who are making this decision, my advice is always the same. Discuss as a team what type of company you are now and where you see your business going in 5-10 years. This is a great starting point to help clearly define what your software needs will be in the short-term and the long-term. Once these needs are established, you’ll find that it will become much easier for your team to reach a consensus on the right software platform for you. Best of luck!