If you had $100 to spend on personal fitness every month, how would you spend it? Historically, the toughest decision would be which gym to pick after New Year’s Eve. Would you go upscale at Equinox, or easy access at 24 Hour Fitness? Would you pump some serious iron at Gold’s Gym, or maybe just stroll the treadmill at your friendly neighborhood YMCA?

Health clubs, of course, have been demonstrating the beauty of the subscription model for decades. The standard line that most gym memberships are wasted gym memberships just isn’t true. Overall, the industry has a retention rate of well over 70%, which is exceptionally good for any consumer service.

Today, the global health club market alone is worth approximately $87 billion, with over 200,000 clubs and 174 million members. Just the US market alone is worth over $30 billion. As the population ages and the healthcare industry continues to expand, a gym membership is a pretty standard part of retirement these days.

But recently there are signs that the fitness vertical is starting to crack wide open. Take Fitbit’s headline-generating announcement of a new subscription program, which, according to CNN, will include thousands of workouts and a health report you can give your doctor at your annual physical.

So now with that $100, would you choose to spend it at the gym, or on Fitbit’s program? Or maybe you’ll go sign up with ClassPass? Would you go to SoulCycle, or buy a Peloton bike? Weight Watchers or Barry’s Bootcamp?

All of a sudden, there are a lot more options: wearables, clothing, equipment, connected shoes, supplements, workouts delivered over streaming media, or even full-length interactive Mirrors. And if you level up “fitness” to “wellness” (nutrition, yoga, mindfulness, etc), you’re looking at a global market worth over $4.2 trillion.

So how do you handicap a market like this? How do you pick the winners and the losers?

Here’s a hint: usage.

Long gone are the days when you can sign someone up for a gym membership and hope they don’t come. Any subscription model built on zombie payments is ultimately doomed. With all these choices now out there, the services that win are the ones that keep their users engaged.

Just take a look at Peloton. It started as a Kickstarter in 2014. Today it has over 500,000 members, but what’s even more impressive is its retention rate. According to its S-1, it has kept 95% of its subscribers over the past twelve months. There’s been some controversy over how it calculates churn, but any gym or health service would kill for a retention rate of over 90%.

And where does that high retention rate come from? Consistent usage. Peloton says that they have seen the number of monthly workouts per subscriber steadily increase over time, from eight to twelve over the past three years. They are running a flywheel — creating a compelling service that drives more engagement, which in turn improves the service, and so on and so on.

This space is going to look dramatically different in five years. Gym are going to evolve from physical locations to fitness services that we can take with us anywhere. We’re all going to have doctors, dieticians, personal trainers, insurance adjusters and sleep specialists wrapped around our wrists! You’re also going to see much more bundling and cross-selling of services (gyms and wearables, wearables and hospitals, streaming media and clothing, etc).

But always focus on the usage. That’s where the real gold lies.

For more insights from Zuora CEO Tien Tzuo, sign up to receive the Subscribed Weekly here. The opinions expressed in the Subscribed Weekly are his own, not those of the company. The companies mentioned in this newsletter are not necessarily Zuora customers.

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