Tips to Improve Your ROI as A Gym Owner

All right, Chris, thanks for joining me today. Um, man, you're one of my favorite people. You're one of the best minds in the business. And, uh, it is crazy. I think about 2 years ago, it seems like you and the Two Brain organization just 1,000% increased the amount of content that you guys create. I feel like I see 2 pieces of new content from you guys every day. Um, it's awesome. I love the support you provide. the industry, and obviously much needed. So today, we're actually— I wanted to focus on something that you guys posted, and it's 10 ways gym owners can improve their return on investment. For those of you who don't know, sometimes people call that ROI. It stands for return on investment, and what we're talking about is your investment in your gym. So, we're just going to go through this list and Chris is going to give us his tips and maybe he's going to help us understand some downfalls under each area where people make the mistake and things they need to do better. So, this is going to be great.

What an awesome intro, man.

Yeah.

My best ROI, to be honest, some of my best investment actually did happen exactly 2 years ago and it was CrossFit HQ was laying off their CrossFit Journal staff, and I scooped their number one guy, Mike Workington. This guy ran and produced the journal for over a decade, and he joined 2Brain. And you're right, we publish 2 to 3 times a day now, and it's way better than the stuff I used to do. Um, yeah, so, so, um, one of the best things that I think gym owners can do right now to improve the return on their investment of owning a business is producing media. I didn't put this in the list, but honestly, you are your own media company now. You have to be. That's a big part of your job. It's not just about posting on Facebook, but you have to create content that makes your audience know, like, and trust you. And that's what we try to do. And that's what we're here today to talk about, is one of our posts that we made this week. We publish in a sequence every week. So there's a series including 3 or 4 blog posts and at least one podcast. And this series is how to get a higher return on your investment in a gym. Part of that return is financial, part is time, and today we're going to focus on the financial side.

Yeah, really cool. So, just on that though, like, for a gym owner, when it comes to producing content, what are your— what are some easy tips or things they need to keep in mind or pitfalls that others are doing that they need to avoid?

Yeah, man. So, the thing that stops most people is they think, I don't know what to say, or I'm not good at it. But I've been producing content for myself since about 2001. This is how I got my first clients as a personal trainer. I was, you know, running a personal training business in the back parking lot of the treadmill store where I worked. And then I started producing content and got it into some local, like, online newspapers. They wanted articles. And so I built up to about 35 clients that way, opened a gym, Got my own website and started producing content there in 2005, and then you know grew that business to be really successful. Started writing don'tbuyads.com in 2009, and you know now I have the largest mentorship practice in the world for fitness, and it's because we're a media machine. You know, so if I'm telling a gym owner what to produce, it's think about the questions that people ask you. You know, we had Thanksgiving in the States last weekend. What questions did your relatives ask you that made you kind of roll your eyes like, oh God, doesn't everybody know that? You know, like, oh, I'm on keto. Well, you know, you can't just have turkey and gravy like those potatoes aren't— it's, it's this stuff that you think is super obvious that is really the best content that you can create. We all forget that we have— we're viewing things through the lens of expertise that nobody else has. If you're really stumped, go to a site like Quora.com or Reddit and look at the questions that people are actually asking about your service. You know, it's not like, how much is CrossFit? Or how much is the gym? Or like, how often should I do thrusters? It's like, how do I get abs and gain 20 pounds on my bench press at the same time? Right? These are the questions people are asking because they don't know how to answer any better. For me, because I send out a love letter to my email list every single day, there's 18,000 people on that list, just over 8,000 open that email, and 10 of them will write me back, and that'll actually form like the next series in my mind. So you have to make it a conversation with your audience.

Yeah, I think the biggest key too is Like, as a gym owner, they need— you really need to schedule it out and be consistent about it. Make sure you're giving yourself time every week to do this because consistency is super important. I know I personally will go to— can go to a page, and if I see that their last post was 3 or 4 months ago, to me that tells me they're not invested in that element. Or I could be wondering, are these guys even still in business, especially with the way 2020 has kind of caught people off guard, you know? So consistency is important. It's the long game. Like, you create the content and eventually it'll end up picking up momentum. So your first piece that you write and create may not get a lot of views. That's fine. You just got to keep it up, keep going. There's a guy, his name's Ben Hardy. He wrote a really good book called Willpower Doesn't Work.

Mm-hmm.

And he talks about the benefit of different environments instead of trying to like exercise this willpower muscle. He's one of the number— he's one of the top writers on medium.com, and he said you also need to repurpose your content. And in this case, he's almost saying like he'll find a piece that he wrote maybe 4 months ago, and if it did well, he may not even change the headline. He'll just repost it because for him, and you have to think about this too, The audience that now exists 4 months later is not the same audience it was 4 months ago. So there's new people on there. And like you just said, if 8,000 people are opening it, that's 10,000 people who didn't open it. So you could literally have this same content as a gym owner, and you're going to get more eyes on it the more you share it, the more consistent you are. So just know that too. It's not necessarily having to create 365 unique pieces. But I mean, I love your approach. If you don't know where to start, questions that you get asked is, is the best way because other people have the same questions.

Yeah. I mean, if you're super stumped and, you know, John, the thing is like, I give this advice to everybody in 2Brain, right? And I tell it, it's in my books, it's on our blog, produce content, produce content. It's the thing that I do that's made my gym super successful and still people just don't do it. Because they don't know what to do, what to say, or what to write, or like, oh, I'm worried I'm going to make a spelling mistake. Man, go, go to the drugstore, pick up a copy of Men's Health or Salon magazine or something like that. Just rip the front cover off. There's your titles. Like, these guys do not research what they write. They research the effect of their titles because they want to sell magazines, right? So just don't even worry about what they write about— the best ab exercise. Just take that title, what is the best ab exercise, and write the blog post as if somebody asked you that question at Thanksgiving dinner.

Yeah. And, you know, you're really good at writing, you enjoy it, others don't. That's fine. Get on a video like this, record yourself talking the answer out. Video blogging, or vlogs as they call them, that's also a thing. The idea is content, though. And for the record, if you record yourself, There are pretty inexpensive services that will actually take the transcription for you. And now you have a physically written article that you could quickly edit. And now there's a bunch of different ways you could repurpose that. So, man, that's a great one. That's a great ROI. And I love Mike Workington. So that's awesome to see him just take it to that next level. Really smart guy.

He makes my stuff look a lot better, John. And there's some amazing stuff coming out. You know, the, the new book has great graphics. It's way more concise. It's readable where some of my other books really weren't. And that's all because of Warkenton.

Yeah. And he was a tremendous help for me personally on my Profit First for Microgyms launch. So yeah, really great guy.

Good to hear.

Um, all right. So number 1 on your list in this article, 10 Ways Gym Owners Can Improve ROI, is increase your ARM. So average revenue per member, what is this?

So average revenue per member is just a mean average of what a person pays to come to your gym. Now, we've been talking about this for a long time, but we just made the biggest study of data in the micro gym industry that's ever been done, and more than 55% of micro gyms earn between $50 and $100 per month from their clients. That's not enough. Like, that's the price of one personal training session, period. And that person's probably seeing you 12 times, you know, in that month. So the number one thing that you can do is improve your ARM. So if you've got 100 clients and they're each paying you, you know, $100 per month or whatever, and you can bring that ARM up to $110 by selling personal training to some of them or nutrition coaching to some of them, or just raising your rates by $10, I mean, that's another— a $12,000 ROI per year, and that's net profit. Your expenses don't go up with that, right? So that goes straight to your bottom line, and you can totally slam me on my math here, but, you know, $100 or 100 people paying $10 more per month for 12 months is $12,000 a year ROI right there.

Yeah, when I think about this, I think One of the reasons gym owners' arm is so low is that they actually don't have confidence subconsciously in what they're doing to be willing to ask for the higher price. Um, too many times I've seen the reason they came up with the current way they charge is because they looked at the gyms around them and tried to find a number close to them. Had nothing to do with the services they offer, had nothing to do with the quality of what they do, had no comparison to your trainers being better than the gym down the street, had nothing to do with the actual physical space and all— none of that. They just, oh, you're charging $75? Okay, I'm gonna charge $70, you know?

Oh yeah.

Let's, let's race down to the bottom of the barrel. So, that's one of the problems. And I think the other area I see is that they're not offering enough variety of services. It's like when I bought into my failing gym, they literally were doing group training. That was it. The trainers at the time, when I introduced the idea that I'd like us to start doing personal training, 2 of them said with their mouths, I'm offended that you're asking us to do this. One of them was a games athlete. And I'm like, okay, so when, when are you moving out of the state? Like, let's get rid of you as soon as possible.

Wow.

Um, and others were just burned out. But like, it's just, uh, you really need a variety of services because like you said, raising your arm, you're selling personal training to some of them. Not all your members are going to want personal training. Not all your members are going to want nutrition, but some of them are going to want those different services. And then those stack up and that's how you end up raising your arm. Yep.

It doesn't take much. You know, if you're charging $100 a month or if you have 100 clients, it really does not take a lot to make a huge difference. So the second one is increasing your leg. Leg is length of engagement, which is a retention metric, and leg is really a measure of how well you deliver your service. So the average gym right now only has a leg of about 7.8 months on average.

Hmm.

That number's a little bit skewed. I mean, if you really wanna dig into it, you should look at different cohorts and stuff, and people who are just signing up for a 6-week challenge obviously pull that number down. But from a meta level, if you can increase everybody's length of engagement by 3 months, so the average client stays 11 months instead of 8 months, that can earn you an extra $37,500 per year rolling. So, yeah, if you've got 100 clients, they're paying you $125 per month. If each client stays 3 more months than they would have, that's a $37,500 difference. And it didn't cost you a cent in ad spend. It didn't take any more marketing on your part.

Yeah, that's really good. And I love that we started with arm and leg. In my book, I kind of aggressively attack a metric called lifetime value of a client. I actually abhor the way that most people look at that metric and the idea that you can actually focus on that metric and improve it is actually false. And I kind of lay it out in my book. And the reason is, is it was a metric created by marketers designed to convince you, oh, if your average client, if the lifetime value of your client is $2,000, then you should be willing to spend $1,999 to acquire that client. Of course, a marketer would say that because they're not taking into consideration the coaches you paid to provide the service, your overhead that went into it, But the reality is lifetime value of a client is the way the world, most of the world looks at it. They're just guessing. It's all guesstimates. Well, I think they're gonna be this, I think they're gonna be that. So I love the approach that you guys have taken with arm and leg because it's actual data and you can make decisions that improve either one. Lifetime value of a client, the better value is to multiply your arm by your leg. That is your true lifetime value of a client. And that metric I like. And I just wanted to make sure we were talking about the same formula, right?

Exactly.

If I can increase the average revenue per member, but I don't change the length of engagement, I've still increased my lifetime value for no additional work, right? No additional ad spend. Or if I can increase how long they stay with me, but my ARMS stays the same, in turn, the lifetime value of that client still improves. But you have to focus on one or the other because each number is pointing you in a different direction on where you need to focus in your gym. It could be you need to add another revenue service. It could be you need to figure out how to keep your clients more engaged and happy to stay with you. Like, so that's— I like to be able to focus down to that minute and find the actual root cause instead of just this blatant Lifetime value of a client.

Yeah, that's great, man. I didn't put lifetime value in here, but there is another data point in there. So this is just for the nerds. But what you tend to find is that people with a higher ARM stick around longer because they're probably getting a service from you that's more one-on-one focused. And personal trainers have way better retention rates than any group class facility can have because of that one-on-one focus. So higher ARM does strongly correlate to a longer leg and Better lifetime value anyway. The third one that I've got is increase your profit margin. And I actually mentioned you guys here, which is absolutely wonderful. I wrote this 3 weeks ago. So the key to increasing profit margin— John's the expert here— but the bottom line is like, it's not getting more clients, it's not making more revenue, it's having a plan and then just deciding to make more profit. Dot, dot, dot. There's my, there's my slow and low over the plate, John.

Yeah, um, it actually is that simple. When you think about profit margin, you know, we have to talk about Parkinson's Law, which is what is really the problem as to why gym owners don't have great profit margin. Parkinson's Law states the demand for something will expand to match the supply. The demand for something expands to match the supply. The way that applies to us as gym owners is if I have one bank account, my expenses will continue to increase to the level of cash I have available to spend inside of that bank account. And so that's where the Profit First system comes into play. And we say, dude, we know you already have commitments. You have certain things you need to be paying yourself, owner's pay. You need to be giving yourself a quarterly profit distribution. You're going to have a tax obligation to your government, unfortunately, even though they suck at spending your money. We still have to legally do that. You have team— you have coaches and team members, like, they're doing work. You're going to need to pay them. Um, and so we just say those obvious expenses, let's create a separate account for those, put money in them. Now all of a sudden, when I look at my operating expense account, I've already taken out those big commitments, the important ones. Like paying yourself as a gym owner. Now that I've pulled those out, it's okay that my expenses are going to expand to match the cash available in my operating expense account because I've already isolated the other dollars and they're protected. They have boundaries around it. That is a great way to increase your profit margin.

Yeah, and honestly, man, that's where I gave myself my first raise was when I read the original Profit First book. So the 4th way to improve your ROI is actually closely related to this, and it's if you want to pay your staff more, grow the pie for them instead of giving them a bigger slice of a tiny little pie. And a lot of gym owners make this mistake. I'm going to give my, my coaches 70% of the personal training business that they do, and then the coach does like 1 or 2 clients. If you change the responsibilities and you say, I'm gonna pay the coach 44%, but I'm gonna feed them the personal training clients. I'm gonna pay myself, you know, the gym, what it's worth to generate personal training clients, they're gonna actually make a lot more money. And you can even raise your personal training rates so they're getting paid the same amount per hour, but you'll be incentivized to bring them more clients. And that's really what the Four Nines model and intrapreneurship is all about, is growing the pie, everybody doing their best work instead of, you know, I'll give you a big percentage of nothing.

Yeah, and that, that's really interesting, um, because I know there's others in the industry who don't like your 4 9s model. Um, mathematically it works, and I have analyzed financially fit gyms, and I did it for my book. And, uh, spoiler alert, financially fit gyms as a percentage of revenue actually pay their coaches less than 44%, which is 4/9. They're actually around 25%, and their staff is happy and they're professionals and they make a living. You know, when I was thinking, when you were talking about this, what came to mind was we have to also think about the skill sets, right?

Yeah.

Like you mentioned, if you're giving a 70/30 split, the whole job of growing their client base has to be on their shoulders in order for that to make sense.

Absolutely.

But their skill set is being an amazing personal trainer, not marketing, not bringing in leads, not necessarily closing the leads. So if you're going to take that off of their plate, it makes sense that you're the one compensated for doing that work. And that's effectively what the Four Nines model is saying. Like, look, we're gonna let you focus on just showing up and teaching, uh, these people and training them, and obviously do a good job and retain them, and you're great. But all the other stuff we take off your plate. In fact, we have the risk in the equipment, like everything. And so, um, I— it's worth noting that that is kind of why this model makes sense. Certainly, I know in our gym, if we have a coach who wants to take on the building the business side of it, they do get more than 4 nights because there's— that's work now that we don't have to do. But at the same time, they still don't have the same skill set you usually have as the gym owner.

Yeah, in my experience, the greatest favor that you can do for them is to take on all the stuff that they don't know how to do. I mean, most of us can't figure out marketing. Why abdicate it to somebody who has no clue, right? So let's talk about marketing a little bit because that's where most people think when they think ROI. And so we're gonna, we're gonna talk about different stages of marketing and some different measurements that you can use. So when we talk to people about doing Facebook advertising, for example, And this is the question that most people ask their mentors, like, why don't Facebook ads work for me? What you're really doing is just seeing like the very tip of the iceberg. And so what we try to do is we measure leads that you generate every month, but then we also measure how many of those leads book an appointment to talk to you. So we call that the set rate. How many of those booked appointments show up? We call that the show rate. And then how many of the people who show up actually sign up, and we call that the close rate. And what we find is that most of the time Facebook is generating more than enough leads. You're just losing those people somewhere else in the funnel. And if it's a Facebook lead, most of the time it's the gym owner just can't sign them up. You know, we started this gym because we love CrossFit, or we love boot camp, or whatever. Our first 10 clients found us because they love CrossFit, or they love boot camp, or whatever. We had a conversion rate of 100%. And now we're running Facebook leads and we're talking to strangers for the first time and we don't know what to say. And so our, you know, 1 in 10 signs up or whatever. So one of the things that you can do to generate more ROI from your gym is generate more leads from paid ads. And I give an example in this article, but a better way is to improve your set rate, which is how many of those people book an appointment. An even better way is to improve your show rate— how many of the people who book an appointment actually show up for their consultation. And the best way is to improve your close rate, which is of the people who make the effort to find you, who are interested enough to book an appointment, committed enough to show up, how many of those people do you not scare away? That's your close rate.

I— this is awesome. Um, I'm thinking about— I met this accounting professional a few years ago, and she said, I have 100% close rate, like all my leads, I have 100% rate. And I'm like, wow, that's amazing. Um, but she was literally talking about when they sit down with her, she closes 100% of them.

Yeah.

She wasn't sharing with me how much money she was spending on ads. she wasn't sharing with me of those people, how many of them set up like the filter phone call, and of those, how many actually filled out the application. So, at the end of the day, her conversion rate's probably like 1%, but in her mind, she's set, she's golden. How can you prove 100%? You can't. So, I love that you've broken it out because a lot of gym owners don't do that, and the risk they run is that they're saying, oh, I'm spending $1,000 on Facebook, And I'm only closing one person, it's not worth it. That answer, that narrowing it down that way doesn't serve you as a gym owner to help you figure out what it is. So like what you guys teach other gym owners, this set rate and like the different ways you break it down, so critical because now you can see where in the process you need to focus on. Just saying I spend $1,000 and only close one doesn't do you any good. I spent $1,000. Oh, I had 20 people who actually expressed interest and scheduled an appointment, but I only have one that showed up. Now all of a sudden you see where the hole is and you can actually figure out how do I fix that hole instead of how do I fix my overall marketing? It could be you're 85% there, but the 15% is what's going to make the big difference on your ROI.

Yeah, for sure, John. I mean, even if you're spending $1,000 a month and you're getting a decent ROI on Facebook ads, you can improve that ROI by improving your sat rate, show rate, or close rate. They all multiply against each other. So yeah, I mean, we were working with a gym owner one time and he was running his Facebook ads, he was getting leads, they were showing up, His conversion rate was zero and he was saying, Facebook ads don't work for me. So we get on a Zoom call and I'm like, okay, so there you are. You know, it looks like you're sitting in your apartment. There's laundry hanging behind you. You know, you, you're not wearing a shirt. Um, where do you do these intros? Can you take me there while we're on Zoom? And he's like, we're there. So the best, the best ROI for this gentleman was put a shirt on. You know, or, you know, maybe just like take your laundry down. And that's, that's the key, man, is like if you just look at the overall picture without breaking it down, you really can't find the thing that needs to be fixed. And I'm listening to McCalloway's Fix This Next right now, and that's what the whole book is about.

Yeah, and I think, um, I just read one of the pieces you put out, I think it was this week, um, with Jim Leeds Machine. You guys found the same problem. Like, people are complaining Facebook ads don't work, but in reality, as you broke down the process, you realized actually it is driving a bunch of traffic. It's your website that sucks. That's where the hole is. You needed to fix the website to compel them to actually schedule the meeting.

Yeah.

Same concept. You have to break down the process to actual activities so that you can then ask yourself, how do I improve this activity? And that's what a key performance indicator is, is you're breaking it down per activity, not just a generic, my Facebook ads and then one closed deal. Like, you got to break up the process.

Yeah, I'm sure every coach listening to this has heard a relative say squats hurt my knees. Right. And so your initial instinct is like, why do squats hurt your knees? Let's see you do a squat. And then you watch them 3 or 4 times, you walk around them, you know, you kind of get a different perspective. And you break down the squat in their mind and you say, oh, this is the problem. You know, you're wearing high heels right now or whatever it is. Right. And we just do the exact same thing with your marketing funnel. You know, we do squat therapy on your Facebook ads.

Nice. Yeah.

And everything else. So the next way to improve your ROI, honestly, is get more referrals. Your close rate on referrals are going to be incredible. Your set rate is going to be 100%. Your show rate is probably going to be 100%. Because their friend is going to bring them in, you know, by the throat and you're going to sign them up. So this is, this is a really scary one for people. And that's why I mentioned it after Facebook ads. Facebook ads aren't scary and that's why people do them. So getting more referrals has an incredible ROI because somebody who comes in from a referral is going to stay longer. They're probably going to sign up for a higher value service. They're going to be a higher value client. They're basically going to reflect whatever the client that brought them in is doing. They're going to sign up for the same thing. The key is you have to know how to get referrals instead of just waiting for referrals to happen, because they won't. Your clients are not walking billboards for you. They won't talk about you. They'll answer questions if they're asked. But they're probably not going to get asked. So the key is to say, like, you know, John, I know your wife loves to golf. How's her golf game? I think I can help. And that's how you get referrals, you know.

Yeah, there's a couple thoughts I have, but the first one, I think, like, you guys have— Two Brain Business has an incubator program, and then you have, like, the growth program for those who graduate. right, from Incubator.

Yeah.

And I know that one of what I loved about the approach, because our gym went through it, is that this is one of the first things you teach gym owners how to do. Obviously, there's a system side that you train them on as well, but like, it doesn't cost you money to put effort into trying to get more referrals. Where, you know, if you're not a profitable gym, you might not have the cash flow to invest into paid ads, not to mention I mean, what 2Brain— what you guys help them gyms find out is where the other holes are. So it's like, you could spend $10,000 on Facebook ads and bring in all these new members, but you have a ton of holes and you're actually losing them right out the other side because your retention isn't good or whatever it may be. You guys do a really good job of helping each individual gym owner find that. So I think it's important for people to know, like, your ROI on this is super exponential because it's your time that you're investing. more so than actual dollars. Certainly, there's some things you can spend money on to make things pretty and presentable, but not the same as a Facebook ad. And the other concept, I think it's important for gym owners to realize this. I learned this through my accounting practice. Clients who refer other clients to you like to refer. Those who do not it doesn't matter what type of incentive you provide, they're just not going to refer more people. It's just some of us have different personalities. I personally am not a phenomenal spokesperson for anything. I just, that's my personality. I feel like I'm being nosy and pushing myself in other people's business. So I don't generally, I'm not generally one of those like mega mouth You know, advocates. I'm sure we all have those.

I am.

We have a few in our gym and they're awesome. And guess what? We've assigned them to certain roles like Joy Girl and other things because they already naturally want to do it. So, um, we found instead of— because I've created elaborate, very lucrative incentive plans for people to refer clients to Insight Tax. And what we found is the same people who were referring prior to this program are still the ones who are referring and no one else is still referring. So we stopped it and we just said, we're just going to go out of our way to thank those specific members. And so once a quarter, we actually look, and it's important that you track who's referring members into your gym and send them a thank you. Certainly send them a thank you when they give you the referral. But those who refer more, give them a bigger thank you after the fact. So we'll go through and then we'll have a team member stalk them on Facebook and social media and things like that to find out a genuine thing that they like. It's not just a typical, like, you know, just a generic gift. We want them to feel that it's authentic. So those are some concepts to consider.

Your listeners have to hear this story. Because you're the best at this. So when— I mean, if you ask me like, what would it cost? How much would I have to pay you to refer somebody to Insight Tax? I would say like, you can't buy that, you know. And when I referred my first client to Insight Tax, you found my local hockey team, the Sault Greyhounds, okay, which is— that's pretty obscure— and found out my jersey size and sent me a Sault Greyhounds jersey. Right, like that. And you know what, dude, what was that, 5 years ago? Like, I still remember that. I still remember that. And, and it's, it's not because I know what a jersey costs. I have no idea. But it's the thoughtfulness that went into that thank you, you know? And I've just been your biggest fan ever since.

Yeah, you're one of those. You, you were so nice and generous referring to us, uh, that that's our way of saying thank you. Like Because look, there's also self-interest in that, right? That's a story you remember. When you see that jersey, you think of us. And because you're already referring, now that you're thinking of us, something will come up in a conversation with someone else and you're like, oh, you know, I was thinking about John earlier today and Insight Tax. And like, so there's benefits in helping your members who you know already refer keep you top of mind by sending them gifts like that. There is a book, I think it's called Giftology, maybe.

Yeah, Giftology.

Yeah, super great book because there's definitely some no-nos. Um, you actually don't want to send branded, like, a gift. I wouldn't want to send a gift that has Insight Tax's logo on it, right? Yeah, now it's the backfires.

Yeah, you're right, man. But anyway, that's how you get referrals, by thanking up, not by trying to, you know, offer somebody like, um, I'll give you $500 to refer me. I, I gotta tell you, you know, we're working with some people right now, and when we don't possess what I would say is like exceptional knowledge in one area, we go outside and we buy it. And we were working with this sales professional, um, and we're trying to figure out like how can we help gyms boost their conversion rate. And this guy was trying to pay me for referrals. And he's like, I'll pay you $500 for every gym owner that signs up for my sales program. And I'm like, no, it's not worth it to me, you know. Well, holy— I'll pay you $1,000, Chris. No, it's just not worth it to me, you know. But if you take the time to figure out like what the Sue Greyhounds jersey is and you get clients amazing results, then yes, I'm your biggest fan, you know. And that's— I mean, you've been a, you've been a 2 Brain partner for a long time, John. You've seen that field shrink and shrink and shrink and Like, part of that is you have to be providing an amazing service or we're just not going to recommend you. And I think that's the same thing in gyms. You have to ask yourself first, am I really providing, you know, an exemplary, commendable service that people want to talk about?

Yeah. Is my service actually referable?

Exactly. Yeah, that's it. And, uh, you know, for my first 5 years as a trainer, I got a ton of referrals, but I wasn't getting people a lot of results. Had I been honestly getting people amazing results at the same time, I might've had double.

Yeah.

So anyway, that's— and the last ROI is just get more clients however you could do it. And you can do the math on that. All the formulas are right in the blog post that John and I have been talking about. But the bottom line is if that's your first go-to to increase your income or your revenue, Then you need to know, like, that has the least effect on how much you actually get paid because costs rise with the new member. You know, it's not like you're selling a product where the cost of production approaches zero. It's like your expenses keep scaling up as your client base scales up. So the best thing that you can do is actually start at the top of the list and work down instead of starting with, I just need more marketing.

No, and that's absolutely I mean, that— I love that principle because, um, especially with our Profit First passion, um, if you don't have these other things in place and you bring in more clients, your expenses are going to increase at the same pace, if not more, than your income because you haven't put any boundaries around anything. You haven't identified your nonproductive expenses. You haven't isolated how do I get my arm up Because, you know, if you're not offering enough services, that could be an issue. Like, oh, I just do group training. Well, let's do personal training and nutrition. Let's at least add those 2 other major components that at least some of your members are going to want those. Then you can start adding on specialty classes and other things as you continue to grow. But length of engagement— wow, man, why aren't they staying? You know, in our, in our case, we had a really Dr. Jekyll, Mr. Hyde type of coach. And members knew that. Um, I— because he was always on for me, I got the pleasant person. But man, I'm not in all of his classes to see how he treats members. And little did I know that the members are like walking on eggshells around this guy because they didn't know if he's going to be a pissed-off person or happy person. Like, that's a reason why the retention for his specific time slot of those members that went to that class sucked. But I wouldn't have known that if I didn't start looking at my leg and figuring out why is it so low specifically. Then I broke it out, you break it out per class, like why is this class so much different? Like this is crazy. So yeah, by focusing on these other things, then when you get to the point of just get more clients, whatever method possible, the other places, like you have the stronger foundation.

Yeah, you also avoid the flywheel or the, you know, the hamster wheel of having to get more clients all the time. You know, there was a— there was somebody who was pretty CrossFit famous for a while who was saying, I've got 300 members a month, you know, and so it doesn't matter if my retention isn't great. But the bottom line is like this guy had to get 30 new members every month, like a new member a day. To stay where he was, and he's gone now, you know. So I don't want that to be you. I really do think that the model that's emerging from all this data is around 150 members in around 4,000 square feet with around, you know, 40% expenses and 15% profit, with an ARM just over $200 a month and a length of engagement around 14 months. That seems to be like the recipe. And it doesn't mean there's not other ways to do it. It doesn't mean you can't scale beyond that. It just means like that is the— that's the target on which you're sighting your rifle.

And what's awesome is literally, if you're listening, he just gave you as a gym owner, um, gold. Like, that is gold. He just gave you the goals to shoot towards and to work towards. So if your numbers aren't in those like 5 or 6 that he just listed, set your goals to get there. Like, and with his list, I would go in order. Like, so the first thing you start with, if you're not a $200 ARM, what do you need to do to get there with your current members? What services can you add? Is there a service you're undercharging? And let's say you don't feel like you're undercharging a service, but you know that you need to charge more. Find out how to make it more valuable so that people will pay more for it. Certainly, none of us are ever encouraging you to just jack up your prices to rip clients off. Always return value for value. And so, you know, look at that too.

Absolutely. Yeah, the key to value is not how could I charge that, but how can I charge that? And that's something I learned from Robert Kiyosaki 20 years ago. And that really helped us through the COVID crisis when these gyms were shutting down. And I was like, oh my, how are these guys going to make any money? Immediately, the next question in my mind was like, how can they continue to provide the same value but do it online? And yeah, you know, our— the 2 brand gyms performed so much better than average. Like 50% better than a lot of the average numbers that I've seen. And that's it. It's, it's really that mindset. And that's what drives up ARM. That's what drives up value and probably engagement too.

Very cool. Chris, I super appreciate your time. I know how busy you are and all the good you're doing for the industry.

Always my pleasure.

Thanks again. We're, you know, when we post this video, we'll make sure to have a bunch of links to your stuff and specifically the article for sure. But man, if you guys aren't on his list, it's like 2 to 3 pieces of great content every day. And if you really just read the free stuff he puts out, that alone can transform your gym to be profitable. And if you imagine what you get at the free side, just imagine what you get if you pay them for some of their structured programs. So thanks again, Chris, for your time.

Thanks, John. Really appreciate it, man.

Take care.