Chris Cooper (00:02):
Black Friday happens on November 24th this year, and it can bring trouble for gym owners. Every year, gym owners ask questions about offering discounts and deals, and too many of them slash their rates when they don’t have to, or they cut prices in these desperate attempts to attract new members who are really just bargain seekers—and who won’t stick around for the long term. The best gyms in the world don’t offer discounts ever because they don’t need to, and especially not when Black Friday and the holiday season rolls around. Today, I’ll tell you why you should avoid discounts and exactly how you can say no to them. I’m Chris Cooper. This is “Run a Profitable Gym,” and if you have questions about gym ownership, including discounts and sales, go to gymownersunited.com. That’s our free group. You’re invited into that group to chat, ask questions. I’m in there about once a day. The Two-Brain mentors are in there more frequently, and it’s just our free service to help gyms grow. The first thing I want you to remember is that your mission is to build value for clients, not to offer them bargain basement memberships that come with a free bag of expired pre-workout powder. That means you need to build value and not weaken your foundation with discounts.
We’re going to start with why gyms, in general, shouldn’t have sales. The main reason is that you’re not selling a product, you’re selling a service. Your goal is not simply to sell more because your most valuable resource, which is time, is finite. You can run out of it. Product companies—people who are selling little toys and TVs and software even—they want to sell high volume because the cost of production decreases as they sell more units. They can buy more parts in bulk. They can negotiate volume discounts with suppliers. They can streamline their production. You can’t do any of those things. You can only sleep less or work out less. This means that it’s important to sell our service at the rate that will make us profitable, gain a professional image, and avoid problems that make our business unstable. Here are the reasons:
The best gyms don’t discount rates or have sales—from both sides of the coin. First, discounts attract the wrong people because we don’t have unlimited time and attention. Then, spending that same time and attention on a client who pays us 20% less than everybody else is robbing us of what we could earn in that same time. Our rent doesn’t go down 20% when we give a client a discount. All the savings come from a profit.
The second reason is that sales teach the right people bad habits. Ask yourself who is most likely to purchase a one-year paid-in-full discount membership. It’s the client who’s most likely to stick around for that year anyway, so why discount them? A 20% discount for paying upfront might seem like a good idea in January if you haven’t fallen into this trap before. But even a discount of 8.5% is equivalent to a free month. A 20% paid-in-full discount means that your best clients, the ones who are most likely to stick around for the full year anyway, are attending for free after October 15th. And worse, it teaches these great people to wait for another sale before signing up again. When you seize this bad habit of having these sales, they don’t think, “Well, that was good while it lasted. I was getting a bargain. I’m really thankful. I’m happy to pay full price.” Instead, they think, “Well, now I’ve got to pay 20% more for the same service.”
The number three, and maybe the biggest reason that you don’t need to give discounts, is you’re probably underpriced anyway. You’re probably discounting your rate based on your own budget or what you think people are willing to pay, and you really don’t have any margin left to cut. I mean, really, you should be charging probably about 40% more for your basic service. And if you wanted to, you could raise your rate 60% and then give a 20% discount, and you would be where you’re supposed to be, but you’re already probably undercharging. It’s very, very, very common for a gym to come into our program, and they’re in severe financial trouble, despite offering a great package, despite having great retention, despite having great coaches and great care, simply because they’re undercharging for their service. Do not slice that even further, or you’ll be slicing into your own flesh.
Finally, the fourth reason is that discounts and limited time sales are a downward spiral. There’s a limit to how many people your gym can train and keep. That limit might be determined by your size, but more often it’s determined by your client management. If people think that you are the same as every other gym, they’ll just keep price shopping until they get the lowest price. And if you offer discounts, you can’t make it up in volume because your churn will be too high. Toy manufacturers, booksellers, software companies—they can offer discounts because they can scale their service to infinity, and their cost of production decreases as they do. You can’t do that. Your time and attention are finite.
So, here’s how to say no to discounts because you might be getting asked for them. The easiest ways to say no when somebody asks you for a discount are, number one: “We don’t have discounts.” This is my go-to. If you don’t have discounts for anybody, then it’s simplest to just say that discounts don’t exist at your gym, and this often solves all of the discount problems in gym. Right, and for me, when I finally got rid of discounts in my gym, it was really easy for me to just say, “We don’t offer discounts.” That ends the conversation and away you go, right. People don’t want a special deal; they want the best deal that you’re currently offering everybody else. If somebody else is giving discounts and the client comes to you and says, “Hey, I can get a 20% discount for blah, blah, blah at this other gym,” you should respond with, “We don’t play those games.” Because the nature of discount is subjective. It requires this human decision instead of an automated process.
It’s always easy to cast a shadow of doubt on the person who’s doing the discounts. Now, I saw this in action when I was selling high-end fitness equipment. We were always in this battle against department stores that ran these frequent sales on treadmills, but here’s what they were actually doing: They were overpricing their treadmills by 40%, and then at Christmas time they would discount the treadmills by 40%. It was this constant game. Once I realized that was the game that was being played, it drove me crazy.
In a gym world, what’s more likely to happen is that a new or a desperate gym runs this crazy price promotion where the owner really doesn’t know how to run their profitable business, and the clients are like, “Wow, 40% off at that gym.” And they come to your gym, and they’re like, “How come I can’t get 40% off?” And you know it’s because that gym owner doesn’t know what they’re doing, and they’re probably not going to be around in two years. But you’re still tempted to follow them down that road. So, when you say something like, “We don’t play those games,” what you might be doing is planting a seed of doubt in the client. Or if you say, you know, “We run a mature, respectable business,” or something like that, you’re not slandering the other guy, you’re just literally explaining why you don’t give discounts. So, when we were doing this with treadmills, and somebody asked us to match a price—or, you know, they’d have this 40% off sale—the client would come in and ask us, “Can you match their price?” And we’d say, “We don’t play those games.” And it worked. You could see a visible shift in the purchaser as he or she became suspicious of the chains offering the discount.
When somebody asks you for a specific discount—right so, let’s say that they’re a member of a service group, and some members of service groups receive discounts from other businesses, so they are inclined to ask for them everywhere. So, you know, “I’m in the military; can I have a 20% discount?” Right? Or “I’m a police officer; can I have a 20% discount?” What you say is “We treat all of our service professionals equally well because we know our service is critical for their safety.” The service that you provide to military personnel and police officers and firefighters and other safety workers. It’s not five bucks off. That’s not why you’re here. You’re here to keep their butts alive, so remind them gently and also use the peer anchor. “Nobody else gets a discount, and you don’t want to be different from the crowd.” Right.
Now, I need to kind of qualify this because I have a lot of gym owners who are former military in Two-Brain—or maybe current military even—and when they are asked, “Do you give discounts?” They often do, and I say, “Well, is that why you signed up for military service?” And they said, “Hell, no.” And some of them even get offended when they’re offered discounts by other people. But they still offer them in their gym, and they can’t give me a logical reason why not. So, these are often some of the people who are the first to get rid of discounts in their gym once they realize that the discount isn’t helping them. They might think that the discount is helping them with marketing—it’s not. I’ll talk to you about that later. All right.
So finally, when somebody says, you know, “Wow, your rates are so much higher than everybody else’s. You’re so expensive compared to that gym down the street,” what you say is, “This this rate is as inexpensive as possible for this level of service.” Now, you don’t ever say “cheap,” unless you’re talking about the competition, right? You never say like, “Well, this is as cheap as I can do it.” Second, you’re sticking a wedge into the conversation. When you say, “For this level of service, this rate is as inexpensive as possible for this level of service,” that should prompt an opportunity for more explanation, right? But you don’t have to expand unless you’re asked. Most people will say, “What do you mean?” and then you can explain why your service is better.
Here’s some additional advice when you’re asked for discounts. Number one: Don’t over explain. All these responses consist of one sentence—that I’ve shared with you, right? The more words that you use, the more handholds that you give the person asking for a discount, and it looks like you’re waffling; it looks like you’re backpedaling. Second, keep it black and white. If you give a discount to one person in your gym, you’re literally ripping off everybody else, right? Because you hope that they don’t find out. That’s hard to live with.
Third, your primary duty is to your current clients, so scrambling to recruit new clients with discounts that your current clients can’t get is like a breach of trust. You’re telling your current best clients: “These new people are more important than you, so I’m willing to do the same service that I’m giving you for less money.” Next, don’t run through all the scenarios in your head before a conversation starts. You’ll be trying to memorize your lines instead of giving honest answers, which come naturally. You can practice the lines that I’ve given you here if you want until they feel like your own. Especially if you’re using the really simple sentence, “We don’t give discounts,” communication becomes really easy and transparent.
Now, if a client says I’m going to go join that cheaper gym, then that’s good because you don’t want everybody. Don’t pour your care into fickle clients who are only after the cheapest rate because while you might be the cheapest rate today, soon somebody else will be, and they’ll go to them anyway. Finally, don’t presume that anybody wants a discount. This is the number one error that business owners make. We project our own budgets onto other people, so remember that lower prices require more clients to make the same money. Every time you give somebody a 20% discount, you have to increase the number of clients that you need to reach “Your Perfect Day.” You weaken your business, and you impoverish your family by chasing the wrong metric. You know why nobody ever asked the top gym owners for discounts? Because they don’t give any, even on Black Friday. So, I want you to ditch discounts and do this instead:
Instead of creating a special discount on Black Friday, here’s a plan to increase the value of your service to your clients. Step one: Have a conversation about goals. We call this a No Sweat Intro, but you can call it whatever you want. Just sit and talk about clients’ destinations before you start selling the maps. Step two: Draw a map. Now, you’re going to make a custom map for the client from the destination backward to where the client is now. You’re a coach; this is called coaching. Include all the elements the client will need to get to the destination, including an exercise plan, nutrition, accountability, and even sleep.
Step three: Walk the client through the plan. Step four: If the client agrees with the plan, they’ll tell you or you can ask them, “Does it sound like a good plan to you?” If they care about their measurements, take measurements, and then give them the price for that plan, or at least the first steps. Then, you’re going to plan your next meeting to occur within the next 90 days. So, “Here’s the plan. Do you agree? Great; here’s the price.” They’re signing up. “Let’s meet again within 90 days, and let’s measure you again.” And when you meet up again, celebrate every win with the client between their appointments. So, don’t wait 90 days to talk to them. Every time something goes right, celebrate that—text them, call them, send them an email, and then, when you do meet up again, measure their progress. If they’re not getting good results, change the map. If they’re getting great results, keep the map. That’s all you have to do. Change the price if the map changes, and schedule a third meeting, and then just repeat this forever.
This is called the prescriptive model, but it’s really just good coaching. How do you add value to your service? You provide what your clients need to be successful. You don’t cut your rate. Remember that value is determined by your clients, not by you. So, asking your clients, “Where do you struggle most in your pursuit of fitness?” is a great place to start, and they’ll tell you where you can add value to their lives—making your service more valuable instead of just looking exactly like everybody else and trying to do it for less. In general, we find that clients need help coaching in four areas: sleeping, eating, moving, and maybe their mindset. If you solve those problems, you’ll make more money, and you’ll never have to offer discounts again. So, as a special bonus, now I want to tell you how to sell with bonuses—a bonus of bonuses.
The main reason that gym owners give discounts is marketing. They somehow think that if they give 20% off, that’s going to attract more people, or that there’s this big herd of people waiting outside their door for the price to come down. There are a dozen reasons why discounting your price is bad marketing, and I’ve already covered a bunch of them: You’re attracting the wrong people; you’re teaching the right people bad habits; etcetera. There’s no denying that a limited time offer can push a teetering lead into signing up when they’re in your office.
The problem is that if you offer them a percentage off the membership price, you’ll give them a discount worth hundreds—or even thousands—of dollars, when a free water bottle might be enough. So, for example, if you charge 150 bucks a month and you offer 20% off to firefighters, and your average client stays for a year and a half, then that’s a gift worth 540 dollars to every firefighter in your gym. Could you afford to pay 540 dollars to recruit every new client? Could you afford to donate 540 dollars to a local firefighter right now? How about every firefighter who just walks in your gym? See, most of us don’t do the math. We don’t figure out what it’s actually costing us. We try to solve a short-term problem, which is how to get them to sign up, but we create a long-term problem in the future, which is not enough cash and unfair pricing.
So how do we push potential clients to sign on the dotted line? With bonuses. Bonuses that don’t break the bank are what we’re after here. A little added value beats a lower price. So, think about these options. Number one: If you register for our On-Ramp before Christmas, I’ll give you a holiday meal planner guide for free. It’s usually $79, but I think it would really help you out. Now, in this case, you’re giving them an asset that you’ve built once, and you can sell forever or give away forever if you want to. Maybe you don’t ever sell it, but it’s on your site listed as a $79 value. The point, though, is that it’s worth $79 to them. It has to actually be valuable.
Second option is: “I think nutrition coaching is your ideal starting point, but I’d like to help you build an exercise routine while we’re dialing in your nutrition habits. So, if you’re up for it, sign up for our nutrition program, and I’ll give you a 30-day walking plan if you’re ready to start today. How does that sound?” Okay? So, again, the 30-day walking plan is something that you’ve built once that you just are willing to give them because it has value, even if you’re not selling it for a price point anywhere else.
The third option is you say, “Hey, I’ll tell you what. I was going to say let’s start after the holidays, but that story you told me really hits home. Why don’t we bring your husband in for a two-on-one personal training session next week? It’s usually $105, but this time it’s on me. I think that will help keep you on track. How does that sound?” Now, remember the bonus that you give must be valuable to the client. That doesn’t mean that it’s expensive to produce or it takes a lot of effort on your part. So, if a client is booking a one-on-one session, telling them to bring their spouse in to do a two-on-one is great marketing. It’s a great support for the client, and it doesn’t cost you any more time. Here’s a real-world example. This is my favorite bonus ever.
I was sitting in this No-Sweat Intro session with an undercover cop, and we were talking about his job and the long hours that he was spending just sitting in trucks waiting for something to happen. So, I made him a prescription, you know, “Here’s what you need,” and I gave him some homework, or I promised that I’d give him homework that he could do to keep from seizing up on stakeouts when he was just sitting in his truck. You know kind of kyphotic posture all day. But then I asked, “How do you keep from getting bored all the time?” And he said, “Well, it’s a real challenge, so I just listen to audiobooks.” So, I pulled up my audiobook catalog, and I showed him some of my favorites, and he’d read some of them. But we spotted three others that I thought he would absolutely love.
So, I said, “Okay, I’m going to send you these three audiobooks. It’s on me; you’re going to love them.” And he was really taken aback. He said, “What?” And I said, “I’m going to ask you what you think about them when we’re doing our personal training sessions. Is that cool?” And he said, “Are you giving me homework?” Like he laughed, and I said, “Yeah, I’m serious. I’ll give you these books. We’ll talk about them in your PT sessions.” And he said, “Okay, sign me up.” And then he said, “This was great. You know, before I came in, I was worried this was going to be some kind of sales pitch or something.” So, he signed up for our $400 per month premium service, and then he brought in his wife and son too, and what it cost me was about $36 in audiobooks.
When you’re signing people up, you need to consider value, not discounts. Bonuses can help you sign up a client who’s not sure, but there’s no need to injure your business long term by giving a lifetime discount or even an annual discount. Do not mortgage the future for the sale today. What’s an asset that has value to the client but can be given away by the gym for free? You know? Think about a free guide, or a template, or a planner, or even a course that you can deliver online that doesn’t require any more of your time. Don’t give away a free month of classes. Don’t give away a free one-on-one personal training session. Don’t give away anything that other people are paying for, but give something of value to help push people over the line.
I’m Chris Cooper. This is “Run a Profitable Gym.” Look, you’re probably charging way too little already. Don’t discount any more. Don’t kill yourself for the sake of Black Friday. This is the death spiral that kills so many gyms, and I’m really desperate to save them. Instead, offer bonuses to help get people signed up on time, get going before Christmas, and change their life. If you have more questions about this, please go to gymownersunited.com. That’s our free Facebook group and discussion for gym owners. There’s over 8,000 gym owners in there right now. It’s incredibly helpful, as anybody in there will tell you. We share resources, tips, and conversation all the time. Thank you for your service.