Thomas Plummer

The business of fitness

Too busy being busy to make any money

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Do we have enough leads?

How many trials did you get from those leads?

How many new clients did you convert from those leads?

What is the average return per new client sold (average client payment)?

This should be in huge letters on the wall of every single person who owns any type of fitness business. This is your business plan and is where you have to start every single day as an owner if you want to be successful in the gym business.

In this business, you get so busy being busy you forget there is a huge difference between being busy and being effective. Busy is where you fill your day scrambling from one project to the next putting out fires and burning up your time. You stumble home late, check and see if the kids remember you, open a beer and flop on the couch mumbling to yourself, “What the hell did I get done today? I was really busy but didn’t make any money at all.” You can be busy all day, but still not make any money.

Effective is a completely different game. Effective means you work about the same hours, but what you get done in those hours changes the outcome of your business. The difference between hopelessly busy and effective is the difference between failing or staying in business and ending up with a financially successful gym.

So what do these four statements really mean in your business, and most importantly, how do we go from busy to effective?

Do we have enough leads?

There are no profits unless you have accumulated enough clients. You will never get enough clients unless you have a lot of perspective clients. All perspective clients start as a lead, defined as someone who made a serious inquiry about your business, or more common today, tried one of your trial programs, such as a 15-day quick start.

Your business will never grow unless you have dedicated person who does nothing but bring in leads for the business. In today’s world, this is usually a dedicated social media person who spends 10-15 hours a week doing nothing but concentrating on generating enough leads. This person cannot be an outside person. He or she has to be inside and one who can pick up the voice of your gym, how it runs, how it feels, who the clients are as a community and what makes you unique.

Everyday, you ask yourself, “Do we have enough leads to make this business profitable?” If the answer is no, then that is your main focus for the day, because you can overcome almost any problem in business if you have enough new potential clients to keep what you own growing.

The order for lead generation in today’s training gym is:

  • Social media marketing including your website
  • Referrals and internal events and promotions
  • Long-term working of your acquired list of former clients and missed potential clients
  • Traditional old school retro marketing, such as ads in newspapers

How many leads turned into trial memberships?

There are people who will take a look at your gym and then go no further. The question to ask yourself is, “What could we have done better to get more people to at least try our gym?” Start with these:

  • Does the potential client perceive this as too hard to even try?
  • What does the lead see that stops him or her from even trying us?
  • Is our trial too expensive to even try?
  • Did we target our marketing toward the right potential client?
  • Are we just plain bad salespeople who can’t follow up properly or ask for the business?
  • Is it too hard, or too many steps, to get from inquiring to trying?
  • Can a potential client sign up and pay for a trial of their choice online without even having to come to the gym first (your answer here better be yes)?

How good do you have to be converting leads into trials? You have to convert at least 80 percent of all leads into trial memberships of some type. If you are not hitting that number every month, think of the money wasted on marketing to buy nothing but misses. If you can’t convert at least 80 percent, you have an issue and there is nothing more important to fix today than how to be more effective at getting more leads to trials.

How many new clients did you convert from those leads?

Leads are important, but only relative in relationship to how many new clients were derived from that number. Leads without sales are just very expensive misses.

We will define leads as a client who has engaged with the gym in any way. A phone call, for example, is an inquiry, but not a lead, since the potential client is merely asking about information and has not engaged in moving to the next step.

The old school players who read this will cringe at that notion that a phone inquiry is not a lead, but in today’s electronically driven market phone calls are fewer and trials and social media leads are far more common. Leads have to be classified as a butt in the door trying something in the gym.

You can of course track calls and the conversion rate from calls to firm appointments, but with trial memberships as our primary tool, it is just more efficient to get people from the phone or social media directly into some type of trial membership.

Each trial has a different expected conversion rate, because the various trials attract different potential clients who respond differently depending on the tool.

Short terms trials

These trials are sold as solutions to specific problems. If you sign-up for a 15-day quick start program, you are most likely looking for a short and intense chance to lose weight. The same psychology applies to anyone taking the 21-day shred type of trial as well. These potential clients aren’t necessarily in the gym to join a gym, but to use the gym as a tool to accomplish a personal goal.

Based upon all of this, the closing rates are lower for this class of trial membership. The expected rate for these trials should be in the 40-45 percent range; meaning you will convert about 40 percent of those who sign-up for a 15-day trial into regular memberships in your gym.

If you fall below 40 percent conversion rate, you might have a sales problem, or in other words, you can bring them into the gym, but you aren’t strong enough to convert enough to new business to make a difference.

Longer trial offers

The longer trials bring in a different client altogether. The 30-day trial and the six-week version bring in an often more serious membership potential client with different expectations. He or she is looking for a more long-term solution, is willing to explore options in the gym and statistically is usually a more qualified buyer.

Perhaps the biggest difference in clients is the difference in price charged for the trial. Shorter trials are sold for less money; therefore, these trials attract a younger and more price conscious client. The longer the trial, the more is usually charged, which attracts a client more likely to commit for a longer period of time.

In the case of the 30-day trial, some gyms position this as a higher priced option while others price it lower to attract more volume. The price for this trial should be in line with your shorter term versions and should be sold at a higher price than your 21-day.

Closing rates on longer trials are significantly different over time. You should expect to convert at least 60-70 percent of all longer trials into memberships. The client is just more serious and more prepared to become a member than those who pop in on the shorter term trials.

What is the average return per new client sold?  (average payment per client)

This is probably the most important number no one is tracking in their business.

Each client has a value. Your goal as an owner of a gym over time to is to drive up that average per client. In other words, you need to understand how to make more money from fewer clients as your business matures.

The volume era of the fitness business, defined as the time when selling memberships, letting a client fail and then replacing that client with the next warm body, is gone replaced by a new generation of owner seeking better clients who are willing to stay longer and pay longer if they get the results the paid for each month.

For example:

Club Volume

3500 members paying $27 per month average = $94,500 per month before losses

 

Gym Next Gen

300 clients paying $319 per month = $95,700 per month before losses

It should be noted that the losses on the volume club are significant.

$94,500 x 12 months = $1,134,00

$1,134,000 x .64 = $725,760

(Figured on losses of 3% per month compounded to 36% annual losses)

The losses on the gym are far less. Clients have more money, are more sophisticated, better educated and are there for results and are getting the help and results they paid for so most are happier.

$95,700 x 12 months = $1,148,400

$1,148,400 x .88 = $1,010,592

(Figured on losses of about 1% per month)

In this example, the volume club needs to add hundreds of new clients each month just to replace the losses from members who leave for a variety of reasons ranging from losing a job, moving, just plain quitting and other issues associated with a client paying a small amount of money each month to access equipment without help.

The gym only needs a small number of new clients each month to maintain that number since the population in that class of client is more stable over time. In this example, assuming 300 clients at maturity for that gym, which would be around 18 months into it, this gym would need about 15-18 new clients per month to maintain the 300 number assuming normal losses.

The gym only needs a small number of new clients each month to maintain that number since the population in that class of client is more stable over time. In this example, assuming 300 clients at maturity for that gym, which would be around 18 months into it, this gym would need about 15-18 new clients per month to maintain the 300 number assuming normal losses.

Summary

We often get so busy we make the gym business harder than it has to be, but your business plan can be reduced to just four questions:

Do I have enough leads?

Did I convert enough leads to trials?

Did I convert enough trials to new clients?

What is my average per client sold and is it rising slowly over time?

If your gym isn’t performing the way you hoped, start here. This is your business plan for any gym. Focus on what makes you money each month and be sure and do it in the order listed here.

Don’t be so busy you go out of business focusing on everything but the right things.

 

 

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