State of the Fitness Industry: 2019

by Chris | Nov 25, 2019 | Behavioral, Best Practices, Blog, farmer, founder, FREE, Leadership, Mentoring, Research, retention, RSS, Running A Business, sales, staff, starting a new gym

Change is happening faster than ever before, bringing new challenges, new knowledge and new opportunities.

Online personal training, connected exercise devices and new microgym franchises are now in the market, and their popularity is growing rapidly.

Each brings new market awareness to the value of coached fitness. But each also competes with small owner-operator microgyms. Any of the three elements above could be a huge opportunity; or any could be the end.

In this series, I’ll share insights into industry data that matters to you. I’ll talk about what we know, what others know, and how it affects your business.

I’ll organize these recommendations by key topics:

1. What knowledge can you trust? (this article)

2. How you should position yourself for 2020 (should you affiliate?).

3. How can you leverage these new tools in the fitness world? (new tools)

4. The disappearing middle—why breakeven gyms are folding (my interview with economist Allison Schrager, author of “An Economist Walks Into a Brothel”—Thursday).

5. What should your gym evolve to be? (Saturday)

Some of these posts will be long. That’s because they’re important. As you’re building your annual plan for 2020, you’ll need to have a clear vision of what operational excellence will look like a year from now.

If you don’t write an annual plan—or don’t know how to write one—get to the Growth Phase of mentorship fast. Start with the Incubator.

Most gym owners won’t read this entire post. But the best ones will; you can be sure of it.

Before I get into it, let’s talk about where our information comes from.

First, I have the fortuitous viewpoint of someone who’s been commenting on the fitness industry for over 10 years. Starting with DontBuyAds.com, I’ve written every single day about best practices, ideas and new technologies.

But I’ve also shared what doesn’t work. I hate the online experts who sell untested ideas to gym owners. In my book, that’s close to fraud. Similarly, I don’t like the trolls who attack data-based knowledge just to get a share of the spotlight. So it’s important to understand where our knowledge comes from.

Stories and Data

Over the years, we’ve taken close to 3,000 free calls with gym owners. These calls last an hour. I did the first 1,500 myself. They cost us tens of thousands of dollars in phone bills and far more in time. We’ve also spent tens of thousands of hours on calls mentoring gym owners (we average around 270 hours on the phone every week). We tracked every story and followed every gym. We know where the real problems are, and we know what gyms have done to overcome them. That’s where our qualitative data comes from: real live conversations with real live gym owners.

Second, we’ve spent years building a quantitative tracking dashboard. Just over two years ago, I told the story of the industry’s need for objective, measurable data to prove what’s working, what’s not working, what has potential to work and what has stopped working.

Three years ago, I was having breakfast with some higher-ups at CrossFit HQ. We were sitting outside a cafe in Santa Cruz, California. I asked how many CrossFit gyms were owned by women; I had an idea that the number was higher than the U.S. average for small businesses. The short answer was, “We don’t know.”

I asked how many members the average box had; I got the same answer. I asked what the average lifespan of a gym was, and the same thing happened. I said, “Someone should be measuring this stuff,” and I got agreement. Then—dead air. So I decided to do it myself.

After hundreds of thousands of dollars spent trying to get an accurate measurement of gym health, we’ve finally got a working system: the Two-Brain Dashboard. To be clear, I don’t sell our dashboard. But spending that money and time allows us to figure out what’s actually working for gym owners, who’s really doing well and, ultimately, what’s true. We get daily data from a large sample size. We get real numbers. We get the truth. And we get it every day.

We’ve done it: the Two-Brain Dashboard is running and collecting data from 800 gym owners every single day. We have bedrock data. Now we can build on it.

Why We Don’t Trust Surveys

Several companies in the fitness industry attempt to publish an annual survey. Most of them ask us for help or commentary. But we don’t believe survey data is trustworthy for a few reasons.

First, respondents are biased by definition, so you get over-reporting from the best and worst gyms. Second, most surveys are ill defined, so questions can’t possibly provide an accurate measurement. And third, a combination of confusing software and confusing language means that many gym owners can’t provide their real numbers.

Last year, an accountant friend told me that he couldn’t even figure out the numbers required by an industry-leading survey. And I don’t know anyone else who would spend hours trying; most of us just guess.

The value of an industry survey isn’t the data; it’s the analysis. Unfortunately, any analysis built on skewed data is automatically irrelevant.

This year, we published two specific and objective reports on gym management software and coaching software.

What Does the Real Data Show?

The best gyms are becoming very profitable faster than ever before. And the worst gyms are failing faster.

What makes a gym the “best” or “worst”? Well, it has very little to do with the quality of coaching. Not anymore. A decade ago, quality coaches stood out. But now social media has really leveled the playing field (and better instruction, like the CrossFit Level 1 Seminar, has raised the standard). There are still some mediocre coaches around but few dangerous ones.

The best gyms have the best systems, the most professional staff and a close, personal relationship with each client. I’ll talk more about this in the next article in this series.

The gyms in the middle are in trouble. If you’re selling group fitness—CrossFit, HIIT, bootcamp, whatever—you’re competing against commodity brands. Five years ago, this wasn’t a big threat. But now it is: You can’t run on low margins like Orangetheory or Barry’s. When prices drop, you can’t stay on the roller coaster; you just don’t have the reserves to do so.

But if your gym is really great at offering group training—and that’s all—then you’re facing downward price pressure and some very lean times in the next two years.

The 2019 Trends We Saw and What They Mean for Your Gym

Marketing: Six-week challenges remain popular, but retention sucks.

People are attracted to six-week challenges. They’re novel and exciting. There’s a clear end point. They align well with what clients see on TV. However, the things that make six-week challenges attractive also make them very poor for retaining clients.

Our solution was to use what works in ads (six-week challenges) in a way that improves long-term retention. We do personal six-week challenges, and the end of the first challenge leads to the start of the second personal challenge. This keeps the process exciting, keeps our clients ascending and keeps them around.

There are still the old bait-and-switch tactics out there: “Sign up for this free thing. Pay here. We’ll give you your money back at the end if you complete it and jump through many hoops—sorry, we’re keeping the money.” They’re crippling gyms.

Nearly 40 percent of the gym owners who booked a free call with our team in 2019 have had a horrible experience with this marketing tactic. Now they have a crazy churn rate, their best clients are gone, and they’re no further ahead.

Get our free Retention Guide with step-by-step instructions here. Money-back guarantee! Just kidding—it’s free.

You need to produce content now more than ever.

The spotlight is also swinging back toward long-term media production. Even Facebook now recommends producing long-form content to build trust (we’ve been calling this “authority” for over a decade).

It takes a while to gain momentum, but producing content regularly works. It’s worked for my gym for 14 years (and for me as a coach for three years before that). And authority compounds: I now publish less media for my gym than ever, but we still benefit from SEO, word of mouth and back linking.

Here’s how it shakes out: If you have a bunch of people who would like to try your bootcamp or HIIT class or CrossFit program but haven’t signed up yet, Facebook marketing will push them over the edge. They’ll come in. But if your systems aren’t excellent or you don’t have a plan to retain them after their first “challenge” ends, you’ll never see them again. But if you regularly produce videos and blog posts to help your community, you’ll retain people longer and have higher trust when they do come in. You need both.

If you’re a CrossFit affiliate, you lost your content engine when HQ essentially shut down its media department at the beginning of 2019. Many are just starting to notice the effects. But the effects compound. If you’re not telling your story, and your clients’ stories, and answering questions to serve your local community—no one is.

Retention is money—literally.

Great books like “Never Lose a Customer Again” and “Atomic Habits” were money in the bank for gym owners in 2019.

Our data shows that the average gym owner could make an extra $40,000 per year just by keeping the average client three months longer. That means learning how to keep people longer is a great use of your time.

There’s a ton of research money flowing into addiction now—specifically product addiction. We know how the brain becomes hooked. We can use that power for good instead of for evil.

We now teach the “100-day journey” in the Incubator (yes, it ties into personal six-week challenges). That’s a great start. Long term, you need more than pub crawls and the Open to keep people around. Download our Retention Guide for free here.

Competition you might not know about.

While many gym owners are eyeballing the big chains or other local HIIT gyms, they should really be looking at the fastest-growing sector of “coaching”: online workouts tied to equipment.

Peloton is the most popular example, but if you haven’t heard of Zwift, TrainerRoad, The Sufferfest, Strava—I’ll spare you the whole list—then you’re missing the elephant in the room. Most treadmill manufacturers are positioning their equipment as part of the program instead of as a mere product for one-time purchase. Most blood-testing companies realize they can sell a coaching program or diet on the back end (and make more money). Many supplement companies are now gating their workout plans and unlocking them with purchase.

In a subsequent post, I’ll write about how to literally turn all of this around and get these ideas working for you. But if you want to read more about why these technologies are so addictive (and see some screen shots), you can read “Don’t Fear the Cyber” from last year.

Coaching is about “soft skills.”

The industry has always been dominated by tactical coaching: “Here’s how to teach the snatch better” or “Here’s how to apply the Zone Diet.” But education on the “soft skills”—how to greet people, how to keep them around, how to tailor a group workout to the individual—has always been sorely lacking. In 2019, the most remarkable shift in business thought leadership is that the soft skills are the real skills.

That means coaches should be excellent at speaking in public. They should be warm and encouraging and focus on getting the client to come back. The old coaches who loudly shout “I ain’t here to be no cheerleader!” are mostly gone. Most of the great cheerleaders are still around.

Josh Martin, one of our gifted Two-Brain Mentors, has built an amazing program for developing coaches. He starts with the skills they’ll need to deliver a program (any program) 1:1. Then he teaches them how to deliver a program to a group. Then he teaches them how to program 1:1, and then how to program for a group—using data instead of novelty.

It’s brilliant, it’s simple and it’s backed by an insurance underwriter. I’ve put all my coaches through the first two degrees. Josh is method agnostic (you can use CrossFit or bootcamp or any other tool to train people). I think every coach should start here.

Gyms need to be better at selling.

If you’ve followed our blog, you’ve probably noticed an uptick in posts and videos about “selling.”

This is where most gym owners fail.

I wrote “Help First” to provide the philosophy and strategy of selling as helping. But after going through a mountain of data, we realized that we needed to publish tactics, scripts and support. So here’s our YouTube Channel, and here’s my blog series on Building a Sales Engine.

In short, the data went like this: Gym owner closes warm leads well. Friends of clients always want to sign up when they visit for the first time. But their visits are too infrequent. And the referral rate is too passive (most of us just wait instead of taking control of referrals).

Gym owner starts marketing. New leads start coming in. First leads are warm. Gym owner doesn’t sign up everyone, but he or she signs up a ton of people.

Gym owner continues marketing. Leads get colder. Fewer leads sign up. Gym owner starts noticing a lot of no-shows and cancellations. And because the gym owner is not good at sales, the conversion rate is very low (usually 10-30 percent).

We can help best by boosting conversion rates, then by improving “show rates” for appointments, then by improving “set” rates for leads coming from ads. Basically, we walk up the funnel from the bottom and fix everything. We actually rebuilt the Incubator in 2019 to accomplish this better.

The flywheel must be round.

Out of the massive pile of data, we’ve identified six areas where gyms must improve. When a gym owner fixes one of these areas, that’s awesome: His or her business flywheel turns a couple of degrees. But if one area is lacking, the wheel is flat. The owner can push and push, but the wheel won’t turn.

Here’s my series on Building an Unstoppable Business (and here it is on YouTube).

We round out the flywheel in the Incubator with proven systems and tactics. Then, in Growth Phase, we push the six “handles” so your wheel turns faster and faster and your business grows. These are the six levers you can push to grow, and data supports the theory. Any coaching program, any book, any strategy that doesn’t take all six handles into account will just create a flat.

The Future Is Bright

As 2019 ends, I’m more excited than ever. I think first-time entrepreneurs can make an amazing living. I don’t think fitness entrepreneurs have to become slimy bait-and-switch marketers. I don’t think they have to sell shady supplements to make a decent income.

I think they can do all the right things for all the right people for all the right reasons and still become wealthy.

Other Articles in This Series

State of the Fitness Industry: Your Brand
State of the Fitness Industry: New Tools
State of the Fitness Industry: The Disappearing Middle
State of the Fitness Industry: Rebirth