Demographic data is lying to you.
In 2005, the average family income in Sault Ste. Marie was just over $85,000 per year. Thirteen years later, it’s slightly less than $64,500. Yet Catalyst’s gross revenue has increased 600% in that time. How can that be possible?
Because average is irrelevant.
The problem with demographic data is that we only think about the mean. The mean is what you calculate when you put all possible options into a pot, and then divide by the number of original options. For example, if you add 5 plus 14 plus 20 and divide by 3, you’ll get 13. 13 is the mean average of 5, 14, and 20…but it’s not actually the same as any of those. 13 is not 14. 13 is definitely not 20. And 13 isn’t even close to 5.
Why is this important?
Because on hundreds of free calls with gym owner, I’ve heard one of these:
“We live in the poorest state in America…”
“No one around here will pay that rate…”
…It’s always true. And it’s never important. Usually it’s an excuse.
You sell a high-value service. That means it’s not for everyone. The average family in the Sault might not be able to afford Catalyst…not unless their health is a huge priority. But the highest-earning 20% sure can. They’re still here.
In fact, if you looked at a modal distribution of my city’s earnings average, you’d see a bunch of families earning over $150,000 per year; many families earning around $75,000 per year; and many families who really need financial help. I do a lot to help people who need help, but they’re not my client. I’m charitable, but my business isn’t a charity. I don’t set my rates based on “the average”, because my service isn’t average.
I also don’t try to target “soccer moms” or “old people”. I try to target Kelly. And Rob. And then I try to target Sam.
People don’t come to Catalyst for average reasons. Their reasons are unique to them. So I ask, “How can I help your dad?” and then I offer to help their dad.
Our groups are not average groups. Our groups are an assembly of individuals training together. We’re CrossFit coaches, not choreographers. We explain how the workout will benefit them today; then we tell them how they’ll achieve that result with the thrusters or burpees or whatever. We don’t just address the group average; we coach the individual.
The key to good business is knowing exactly who your client is, and what they want. That will help you know exactly who your next client is likely to be, and why they’ll come to you. It will help you decide what to charge them for your personal attention. It will help you change your question from “Who will pay $200 per month for CrossFit in my town?” to “What service is worth $200 per month to Rob?”
Facebook is like the rap battle that never ends.
There’s no debating, just posturing. No point and counterpoint, no real discussion. Just one-upmanship and mic drops. There are no question marks on Facebook, not really; just a lot of exclamation points. Aggressive posts with passive-aggressive responses instead of arguments.
And you can’t leave the ring. Despite your best intentions and “facebook fasting”, your business needs you to maintain a media presence.
As the great strength coach Mel Siff once told me, “As soon as you plant your flag, people are going to start shooting.” You’re going to get a bad review, or negative comments. People will want to draw you into a fight. And every instinct you have will whisper, “Let’s do this!”
Here’s how to win the fights on Facebook:
- Don’t get into fights on Facebook. There’s no benefit to you, or your company. You don’t need to win to win.
- If you’re attacked, delete the post. What are they going to do: post again? If so, revisit the first part of this tactic.
- If you get a bad review, you can’t delete it. But you SHOULD respond. Try this: “We’re so sorry you had a bad experience. We do our best to deliver the best XYZ in town, and our feedback is usually very positive. I’m sorry this wasn’t a good fit.”
Sooner or later, everyone’s going to get a bad review. It’s like the first little scratch in your car: you can’t truly relax until it happens anyway.
- Go for a walk before you respond. Bad news can wait. They don’t deserve your full and immediate attention. Sun Tzu even recommends forcing your opponents to wait as a tactic in “The Art of War”.
- Read the entire post out loud to someone supportive. You’ll probably laugh. Get it out of your head and into the world where it can die of exposure.
Finally, ask yourself, what’s their REAL motive?
Several months ago, I was invited to a “facebook debate” with an aspiring business consultant. I declined, because I realized it wasn’t going to be a debate at all. It was just a chance for him to jump onstage and share some of the credibility and trust I’ve built over the last decade. I took a bit of flak, but no one even remembers the conversation now.
People want to share your limelight. Sometimes they’ll invite you to box just so they can say they touched you. But as my grandfather used to tell me, “You don’t wrestle with a pig, because you’ll just get dirty and the pig will like it.” In other words, they don’t really deserve your attention. The best way to kill an argument is to starve it.
(kidding! I always wanted to do that. But there are no mic drops on Facebook. Someone always picks the damn thing up and says, “My turn…”)
A mentor helps you build a plan and stick to it.
Entrepreneurship is cool now. Guys like Gary Vaynerchuk and Elon Musk make the dream accessible to the everyman.
That means there’s more information, more help, more ideas than ever before. Every single day, an entrepreneur can choose between 1000 new podcast episodes; 2000 blog posts; or hundreds of new videos on YouTube. Access to information is no longer the problem. Everyone has enough good ideas.
The new problem is overwhelm. We fail to take action because we’re paralyzed by too many opportunities.
We don’t see how each idea or tactic or habit fits into a larger plan, so we take a shotgun approach to improving our business.
And we don’t have filters for the sources of our information, so we trust that everything on the internet is true, even when we know it’s not. We WANT to believe.
A mentor’s role is to help you sort ideas–your own, or the great ones you found elsewhere–and build them into your plan. Then a mentor’s role is to help you stick to your plan, or shift it to match your strengths.
If you’re trying to build a plan without a mentor, this might help: a hierarchy of business knowledge and actions:
Let’s start at the bottom: the lowest value use of your time and attention.
We all love motivational memes about business, but unless they clearly say “Do this one thing right now”, they’re useless. And even if they DO say, “Take this specific action”, unless there’s a clear path to increased revenue, invest your time on something more valuable.
Don’t read rants. They’re just texturbation.
The next layer (ideas, tips, tactics and episodes) has value, but also carries a huge potential for overwhelm. At TwoBrain, we publish every day. Every single blog post, podcast episode and video carries an actionable idea. Every idea has been tested and proven to work. But no one can do them all. A mentor’s job is to help you identify where you’re strong and keep you focused on those tactics. A mentor who simply throws ideas at you isn’t helping (and is probably slowing you down.)
The next layer of value for your time and attention is peer support. Online groups, masterminds, chambers of commerce, and business mixers all have value. The best groups are curated for quality people and moderated for quality discussion. But it’s almost impossible to tell the difference between opinion and advice, and definitely impossible to spot outright lies. No one posts their burned dinner on Facebook, and no one shares their business failings either. We actually tell our Incubator clients to take a short Facebook fast, and only invite them to our private Facebook group in Growth phase, where peer support is more important. Any entrepreneurs’ group, online or in person, is only as good as its filters.
More valuable than peer support is actual education. Presumably, lectures and books and seminars are written by people who have actually been successful, and are willing to share their tactics. This layer is more valuable because of the higher-level filters: editors, publishers and “stages”, like TED talks. Presumably, someone who knows something is filtering out the bad ideas and noise. But many good business books would make a great blog post (there’s not much past the first chapter) and the filters are lower than ever. My advice is to read (or watch) until the expert becomes repetitive, and then move on. Even in a one-way educational monologue, you still have the choice to close the book or leave the auditorium.
The next layer is a two-way education: a dialogue. These are courses, seminars and workshops, where the hosts help the attendee apply the content to their specific challenges. I no longer run two-day seminars where I get up and lecture, because they don’t help. Instead, we run action-based Summits, where a speaker introduces a topic and then attendees apply it to their businesses on the spot. One of the best tactics I learned last year was to leave a seminar as soon as you learn one good thing, and spend the rest of the weekend in your hotel room working on that thing. Far more valuable than amassing ideas and then taking action on none.
Now, all of these things, put together, form a plan. To make an effective plan, you need some distance from your current situation. You need an objective eye. That’s where a mentor comes in: to identify what you REALLY need, and help you identify the best tactics to get there; the best support; and the best accountability.
For example, many new TwoBrain clients say, “I need more clients.”
Then they’ll cite an Instagram tactic they saw in a Facebook group.
But then they’ll say “I don’t have time to do it.”
So the mentor guides them through the work that will get them more time first. That’s part of the Incubator.
Then the mentor says, “Let’s determine how we’re going to spend your time.” That’s part of building an annual plan, which comes at the start of Growth phase. If the Instagram tactic will actually get them more clients, the mentor builds it into their plan.
From there, the mentor’s role is to help the entrepreneur fill their time with the best courses, support and tactics for them at that moment.
Do you see?
You can try to do all.the.things. Or you can invest your time and budget wisely: doing the right things, at the right time, to the exclusion of all the noise and overwhelm.
You can spend 2019 the same way you spent 2018: making guesses, trying to do everything, and feeling overwhelmed. Or you can get a mentor. This is what I realized in 2008, when I found my first mentor. And it’s why I have a mentor today. As you become more successful, the choices just get bigger.
Click here to talk with one of our team for free. We don’t invite everyone into our mentorship practice, but there’s only one way to find out if you’re a perfect fit.
If you own a small business, you can share this with your local community. At TwoBrain, we’re here to serve YOU, because we believe in your mission to serve THEM. Thank you.
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The industrial economy is over.
For many reasons, that’s a good thing. Heavy industry is a big polluter. Heavy industry relies on humans behaving like cogs in a wheel. Heavy industry suppresses the earning potential of the workforce. But heavy industry also provided good jobs, with health benefits and a way to stop working at age 65. As industrial jobs disappear, so do the securities they carried.
The only ones who can fill that vacuum–creating jobs, filling vacant buildings and pushing the economy forward–is entrepreneurs. Today, “Small-business Saturday”, is their day. Here’s why you should care.
- 64% of new jobs come from small business in the US. In Canada, 87.7% of new jobs come from small businesses. These trends are rising.
- Your kid will probably work for a local entrepreneur, or become an entrepreneur themselves.
- Local entrepreneurs give more to local charities.
- Local entrepreneurs support other local entrepreneurs, creating a cascading effect.
- Small businesses pay more in local taxes than you do.
- Small business owners pay their staff far more than they pay themselves.
- Small business pulls money INTO your city. Big business pulls it OUT.
- Small business creates sixteen TIMES more patents than large business does. That means more innovation, more future security, and more jobs.
But the real reason: the local business owner has probably been up since 5am, getting ready to serve you. They’ll probably still be going after you’ve had your dinner. They probably make less than you–for now–and they’re probably wondering if they’ll still be open in twelve months. The city your kids will inherit, and the opportunities presented to them, depend on the success of your local small businesses.
Here’s how to support them:
- Choose to support local service industries. I don’t say “buy local” because paying twice as much for milk doesn’t make sense to anyone. But signing up for local services, like gyms and dentists and lawyers, makes a huge difference. Franchisees are local too–you don’t have to stop visiting McDonald’s or Tim Horton’s–but corporate-owned stores like Starbucks pull money out of town.
- Tip their staff REALLY well. One of the hardest parts of owning a business is creating meaningful careers for your staff. When people like their jobs and earn enough money, they stay. They keep their kids in local schools and local sports; drive better cars; keep their yards clean. Be nice to the front-line worker.
- Decline their discounts. Most small-business owners will surrender a discount if you ask for one. Don’t. They’ll discount themselves to death, because they think they’re helping a friend. If you ask for a discount, you’re not being a friend; you’re taking advantage. I challenge you to go in the other direction and decline a discount when it’s offered.
- Forgive their mistakes. Big companies screw up all the time, but they make their mistakes in other cities, and then teach their staff how to avoid making the same mistake in the future. Local entrepreneurs have to make all of their mistakes on local people. A personalized experience means you’re dealing with a person. And people screw up. But people can also make it up to you.
- Tell your friends. Small businesses depend on referrals for growth.
- Take them a coffee. They need it.
No one’s asking for charity here. Some businesses deserve to be successful, and some don’t. But there’s a lot on the line: if you don’t want your kids to be labeling boxes for Amazon or losing their jobs to China, you need to support the people who will keep them employed locally.
Thank you, thank you, to our customers and clients! We care about you, too.
One of the most common questions asked by CrossFit gym owners is one of the most difficult to solve.
Like so many things in fitness, the correct answer is “It depends.”
But I’ve never been satisfied on that answer, and when I hear it, I always want to reply: “Depends on WHAT?” So here you go: the real answer.
Should you put your prices on your website?
It depends what phase of entrepreneurship you’re in.
If you’re not sure which phase you’re in, start by taking the test here.
If you’re in the Founder phase, keep your prices off your website. You need as many conversations with potential clients as possible. You might convert someone who would have been turned off by your rates before they experienced your coaching prowess; but more likely, you just need more practice doing consultations anyway. Get as many in the door as you can. Remain undaunted by price-objectors.
If you’re in the Farmer phase and have a high ARM (average revenue per member per month) and a high LEG (length of engagement), keep your prices off your website. You no longer WANT every client, but the high lifetime value (ARM x LEG) of the clients you DO get
If you’re in the Farmer phase and have either a low ARM or low LEG, put your prices on your website. Your best opportunity isn’t to get new people in the door. It’s to increase ARM and LEG for your current clients, and focus only on the clients who will drive those numbers out. Let people self-select based on price, and use the time on goal reviews with your current clients instead.
If you’re in the Tinker phase, put your prices on your website. Right up front. You no longer have time for people who need to be sold on price.
When Catalyst passed the point of 33% profit margin, I started experimenting with our prices. I put the prices on our site; then took them off. Without a doubt, fewer new people booked consultations with the prices on our site. But by that point, I didn’t want to talk to everyone.
The exact thing I said to our GM was: “If only four people out of ten are going to sign up after our consultation, then I only want to talk to those four.” The other six were mostly price objectors.
When I put our prices on our site, our conversion rate virtually reached 100%.
Did I miss a few people that I might have convinced? Maybe. But at that point, I was willing to let the “maybes” fall away, and focus only on the people who weren’t going to think about our rate every month.
One of the key differentiators between Founder, Farmer and Tinker phase is your Effective Hourly Rate (EHR). You determine your EHR by dividing the Time you spend into the Money you make (EHR is money divided by time.) We call this the Kingmaker Equation.
When your time isn’t worth much (your EHR is low), then spend it on consultations. Get people in the door. Work on talking to people and helping instead of selling.
When your EHR moves past $50 per hour (Farmer phase), you have to think about the value of each potential client. If your ARM and LEG are high, then it’s probably worth meeting as many people as possible, even if only 40% sign up, because their lifetime value is so big. If ARM and LEG are low, then you have bigger problems than how many leads you get anyway.
But when your EHR moves past $500 per hour (Tinker phase), you really don’t have time to waste on someone who doesn’t know your price. It’s not their fault they can’t afford you; do everyone a favor and save them the time.
If you’ve owned a gym for awhile, you probably have a Carolyn.
Carolyn came to “try CrossFit” when I opened my box in 2008. We gave her the crash course: up-and-down, that’s a thruster. Kick your feet, that’s a kip. Let’s Fran!
After a three-hour “onramp” that included 300 air squats and every barbell lift under the sun, Carolyn went home. She knew two things for sure:
- Her legs hurt; and
- CrossFit is too complicated.
Ten years later, I see Carolyn at the grocery store and think, “I sure wish I knew then what I know now! Carolyn would LOVE Catalyst…if only I had another shot with her!”
Some of Carolyn’s friends come to my 6am group. They bring up the subject with her. But she says, “Nah, I did CrossFit. I’ll stick with spin class.”
What does this have to do with digital marketing?
Well, imagine a class of 30 Carolyns. They’ve been attracted to CrossFit (or your challenge or bootcamp or whatever) by a really great video ad on Facebook. They’re all nervous but determined to survive the eight weeks (or six weeks, whatever). Most of them do. And then they never come back, because they’ve “done CrossFit.” They survived. Check!
I want every gym to be successful, whether a CrossFit box or not. And that means they need clients. More clients means marketing–AND excellent delivery, AND retention, AND sales. And if you’re going to spend money on marketing, Facebook and Google are still the best ROI, by far.
The key is to do it right.
Pumping 30 Carolyns into your gym at once is bad for everyone: it’s bad for your best members, bad for your coaches, bad for long-term cash flow, and bad for Carolyn. Sometimes it’s a nice revenue spike, and sometimes gym owners take that income and apply it to mentorship. But more often, the gym owner finishes their first real stab at digital marketing…and immediately needs to run another big group, because they need 30 new Carolyns to replace the 30 who just left.
The greatest danger to CrossFit gyms isn’t the kipping pull-up. It’s the risk of becoming a short-term, pump-em-in-and-out, “check that off my list” factory. And that’s what most digital marketing “experts” are selling: not a lifestyle, not health, but CrossFit speed dating.
I hate that.
When 30 new Carolyns start at the same time, they don’t stick around. The reason gyms fail is because they don’t have a consultative practice to ask clients what they want; they don’t vary their service to accommodate different preferences; they don’t prescribe the best service for each client; they don’t have recurring appointments to update client goals; and they don’t have a 1:1 relationship with each client in their group. In short, they’re just selling group workouts. And what does a short-term, 30-person, over-promised bait-and-switch ad get you? Short-term cash and then tumbleweeds.
And so, after years of travel to meet with experts; tens of thousands spent studying digital marketing; dozens of TwoBrain gyms testing the TwoBrain Marketing program; I feel compelled to make it available to everyone.
We’ve always taught business structure, SOPs, systems and optimization in the Incubator. We’ve always helped gym owners make careers for their coaches and a life for themselves. We’ve specialized in retention since day one, and Affinity Marketing is still mandatory. But knowing that we can teach digital marketing better than anyone; teach it as part of a logical business progression, instead of a band-aid; and do it one-on-one…well, it now feels like our duty to do so.
You can use the power of Facebook, Instagram and Google and still run your gym the right way.
Here’s how the Incubator breaks down now, including 3 one-on-one calls with digital marketing expert, Mateo Lopez:
There’s a reason for this progression, of course: we’d like you to keep Carolyn around after she signs up. And we’d like you to know how to sign her up when she comes in the door, and we’d also like her husband and coworkers to join. We’d like her to have an excellent experience, no matter whether she comes to the 6am class or the 9pm class, and we’d like her to have a goal review every few months. We’d like her to change her eating and fix her life–all the reasons you and me got into the business, my friend.
None of us got into the CrossFit business to meet 30 people, teach them to lift a piece of PVC, and then kiss them goodbye–did we? None of us can buy a house on a six-week cash flow cycle. And none of us can change a life if they don’t stick around for a few years.
Our goal at TwoBrain is to make 1,000,000 entrepreneurs profitable. We’re doing that one at a time, because a one-on-one relationship with a business mentor is the only thing that works. And we teach gym owners how to attract, retain and change clients one at a time for the same reason.