Client Acquisition vs Retention including KPIs

Hey everyone, today I want to go over an argument I heard on Stu Brower's What the WTF Gym Talk about client acquisition or client retention, which is more important. Um, this is one of his segments where he says, I may be wrong, but I doubt it, or something like that. And he had someone on and they kind of had a great conversation about it. Wanted to give you my thoughts on which Retention versus acquisition, because I do believe both of these affect the profitability of your gym. So in my book, Profit First for Microgyms, I explain my belief that true growth comes more from retention than it does acquisition. And there's others in the industry, like the Mad Lab Group, for example. I've— one of their messages in their marketing pieces that I've seen is that They reference that the gyms that use them have a higher retention rate than the industry average, and then that that's better for the business. I also think, look, if you're not looking to grow, retention actually becomes almost exclusively the most important thing because if you can retain your members, you don't have to add anymore. And then you're able to maintain. So from one standpoint, I don't think you can argue the financial logic that retention is— better retention helps growth, better retention helps you maintain, therefore better retention is better for your gym. At the same time, I don't think this argument needs to be placed in a combative— it's acquisition versus retention. In Stu's podcast, Stu Brower, he mentions that his argument is that A-level professional coaches are naturally doing the things, implementing things, they have the know-how of retaining members. And because of that, acquisition is more important. Because selling and that whole gamut of acquiring new clients is more unnatural. Um, and so like I said, I, I don't think anyone can argue the financial logic behind if I retain more people, my, my growth happens faster, that it's better for my gym if I have a higher retention rate than what I have now. I don't think you can argue that. But at the same time, I also know from firsthand experience that client acquisition is unnatural and should be a focus of your gym, especially if you're trying to grow. Again, I don't think it's an either/or proposition. I, and I'll say this too, based on my experience as a gym owner. and working with the hundreds of gyms that our firm does, I don't— I, I think a micro gym owner should have the capacity to be able to focus on both improving client acquisition and retaining members. We're not talking about organizations that have hundreds of employees where, you know, there's 6 or 7 departments of 10 to 15 people. Usually the departments in, in a micro gym consists of one person where really the owner is kind of the supervisor over each department. And then maybe they have help to do the things. And, you know, if they take some of like the 2Brain models, they've been able to empower a coach to be in uh, intrapreneur, and they've taken ownership over a department. But I, I think from a general industry-to-industry comparison, Microgym's— the structure of Microgym is a lot simpler than a lot of other organizations where they have a completely dedicated department of multiple people who focus on marketing, and then they have another department that's completely focused on sales and closing the marketing stuff. And then they have a completely different department who's focused on client delivery and another department who's focused on client experience. Um, so I think you need to focus on both. Retention is super important, but obviously if you don't have people coming to the pool, uh, to swim, you can't get them to come to your specific pool of your gym if they're not even jumping in the water. So both are super important. Um, and with that being said, I, I— one of Stu's arguments about, you know, A-level professional coaches know how to retain, I agree with that completely. I just don't think all micro gym owners have coaches who are all A-level Coaches yet, and therefore it's really important that as the owner you are having some sort of training structure so that your coaches continue to get feedback from you and reiterating your vision of what you want the gym experience to be. If there's one thing I've learned over the last year and a half is the importance of continually sharing your vision as the owner with your team. They will forget about it. They need constant reminders. Um, I'm not suggesting doing it in a robotic way either, but they need constant reminders. And so having some sort of good coaches training system in place, I think, is super critical. Putting that in place will help improve your retention. But then on the other side too, wholeheartedly believe that whoever is meeting with prospects in your gym probably could use your attention and support as well. I, I don't think you should focus on one or the other. I think you should focus on both, and my belief is you can do both. So with that being said, I wanted to talk about 2 KPIs. Um, if I'm looking at retention, the KPI that I would focus on is weekly and monthly attendance. Like, so I would— I want a list every week of who of our paying members didn't come in that week. And then I want a report every month of all my members and what percentage of classes did they attend, right? So someone's on a 5 times a week package and I get the monthly report and it looks like they've— they attended 10% of the classes they could have. I'd probably want to reach out to that person. So with that being said, getting those 2 reports, the numbers are great, but it's the actions that we take based on the information we get back that makes it valuable. Like, it makes it valuable and worth tracking, right? So, okay, I got a list. Here are the people who didn't show up this week. That of itself does nothing for you. Obviously, you want to reach out to them. and have a communication. I also, uh, I can appreciate the desire to automate things and to save us time, but whenever possible, I believe for the microgym model, it is more important to have the human-to-human contact. And so phone calls and personal text messages that people can clearly see aren't automated text messages Because every single week they miss something, it's the exact same text message. I think the personal touch is going to go a lot further for you in the micro gym model. And then monthly attendance, same deal. If I have people, you know, personally, if they're probably under 70% attendance of what they're paying for, I want to call them and potentially some— If you're a gym mentor, uh, and you have a better percentage, please pop that into the, the comments here on this video. Um, I don't know, maybe you think 80% or 90%. If it's less than those numbers, you should reach out to them. But there needs to be a number. So I'm just suggesting maybe 70% off the top of my head, where if they're under 70%, probably want to reach out to them. Or if When they do come in next, just pull them aside during the warm-up or before the warm-up and just ask how things are going and get information from them. Because again, the KPI of itself has zero value if you don't take any action on the information it's giving you. The other metric that I wanted to share with you is related to the client, client acquisition side, and I'm going to share my screen here, I think. Uh, if it will let me. We— when I, um, wrote the book, I, uh, created this template. This is based on a template that we use personally in Insight Tax. Ours is slightly different, um, from a standpoint of some of the different verticals. That we use. But everything else is exactly the same. So the idea with this template is I'm listing here vertical, you could call it lead source. It doesn't matter. But, you know, by doing events, how many new members am I getting, etc.? Facebook ads, Google ads, Google search, you just type in whatever you want. We leave some extra things. You can name these however you want. And then what you're doing is on each tab for each month, you're gonna— so if I had an event in January and it cost me $600, I'm gonna type $600 in here. Uh, this is a template, so I can't actually type in it, but I would type in $600 here. Maybe I got 5 leads and one of them turned into an actual client. Then what it does is it calculates for me conversion rate, what percentage of leads are coming from it, what's my cost per lead, what's my cost per deal. So then I'm going to get an estimated revenue from it, going to tell me what my average deal value is, or in this case it could be average revenue per event. Anyways, this all gets calculated. And then as you fill out each month as they happen, your year summary tab automatically is pulling in that information from the different tabs. We use this information, and I believe if you're trying to grow your business doing client acquisition, you need something like this because you want to know that, oh, you know what, events, they seem fun. They're really good for my ego. People come in and they tell me how awesome it is, but then when I look at it, maybe I'm— I can finally see, oh, I'm spending $3,000 a year on events, I'm getting one lead from it and no new clients. Or maybe vice versa, uh, I'm spending $3,000 a year on it and I'm getting 100 leads and 50 new members. But you don't know if you don't track it. And then based on what the information is telling you, it gives you a good idea of which, uh, lead generation activities you should be doing because they seem to be the most effective. Um, this is a template. We created this as a free giveaway to people. So if you're interested in this, um, feel free to put your name in the comment and one of our teams will give you access to it. And as you can see here, once you get access to it, you're going to make a copy of it so that you have your own in your own Google Drive, but, um, it's really important that you track these things, because if you're not tracking it, you don't have the information you need to determine if it's an activity you should keep doing. There are lots of times we are doing activities that we think are really beneficial for us. But they're a lot of work. And then when we look at the return on that investment, it ends up not being worth it. So just because we've done something in the past doesn't mean it's something that we need to continue doing in the future. But again, you don't know that if you don't track it. And just tracking it of itself does nothing for you. It's what you— what action are you taking based on the information it's giving you? When we first started doing this, we had been told by a marketing consultant that we needed to focus so much on Facebook ads. You guys have got to get on Facebook. And so we were doing Facebook ads and we were doing all the right things and A/B testing and all this stuff. And after 6 months, I could see, holy crap, we spent $8,000 on Facebook and we've gotten zero leads from Facebook. Zero. It was an astronomical amount of money, um, all because the marketing consultant said we needed to do it. Uh, so once I saw that information, which again of itself doesn't do anything for me, but the action that it's telling me to do is stop doing Facebook ads. You're doing everything right and it's still resulting in zero leads. Find a different lead source, which we had other lead sources that were producing just fine. Um, I mean, better than zero. So, and certainly less expensive than $8,000. But that's the type of things you need to do with your KPIs. Hopefully this helps. Client acquisition, client retention, both are very important, and I believe you can focus on both. Hopefully these KPIs give you a way in which you can track it, and then you can take the information and make changes. Profit is a choice. Have the courage and wisdom to choose it.